Moral Hazard and Customer Loyalty Programs

Frequent-flier plans (FFPs) may be the most famous of customer loyalty programs, and there are similar schemes in other industries. We present a theory that models FFPs as efforts to exploit the agency relationship between employers (who pay for tickets) and employees (who book travel). FFPs "bribe" employees to book flights at higher prices. While a single airline offering an FFP has an advantage, competing FFPs can result in lower profits for airlines even while ticket prices rise. Thus, in contrast to switching-cost treatments of FFPs, we may observe prices and profits moving in opposite directions. (JEL D82, L93, M31)

FIFRA Scientific Advisory Panel Office of Science Coordination and Policy

Office of Science Coordination and Policy Attached, please find the meeting minutes of the FIFRA Scientific Advisory Panel open meeting held in Arlington, Virginia on February 15- 18, 2005. This report addresses a set of scientific issues being considered by the Environmental Protection Agency pertaining to the Nmethyl carbamate cumulative risk assessment: pilot cumulative analysis. Attachment 1 of 11