Targeted Advertising and Social Status

This paper shows how a firm can use non-targeted advertising to exploit consumers' desire for social status. A monopolist sells multiple varieties of a good to consumers who each care about what others believe about his wealth. Advertising allows consumers both to buy different varieties and to recognize them when others buy. In equilibrium, the firm advertises each variety to those who will buy but also to all poorer consumers who will not, so that they understand what having the goods signals. If concern for status is sufficiently high, then the firm will only place a single variety on the market

Capacity Constraints and Beliefs about Demand

This paper examines how a firm can strategically choose its capacity to manipulate consumer beliefs about aggregate demand. It looks at a market with social effects where consumers want to do what is popular, to buy what they believe others want to buy. By imposing a capacity constraint and setting a price just low enough for it to bind, the firm can fool certain naive consumers into believing that demand is greater than it actually is. This will in turn increase the willingness to pay of all consumers through social effects. In equilibrium, the firm will impose a capacity constraint whenever demand is lower than expected, even when the number of naive consumers is arbitrarily small

The Breakdown of Morale

This paper studies how morale in teams can break down. It interprets high morale as team members working together productively, either because of a sense of fairness or because of implicit incentives from repeated interactions. Team members learn that lay-offs will occur at a fixed future date, which will eventually cause morale to break down. The paper shows that the breakdown of morale can vary in size and the equilibrium outcomes can be Pareto ranked. A firm's measures to encourage cooperation may actually hurt morale, by convincing opportunistic team members to imitate and later take advantage of cooperative colleagues

Strategic use of product delays to shape word-of-mouth communication

This paper investigates the advantages a seller can gain by strategically creating product scarcity to manipulate consumer word-of-mouth communication. The seller offers a product of uncertain quality and sets a service speed that determines whether opinion leaders are immediately served or delayed when attempting to purchase the product. Opinion leaders subsequently share their experiences with other consumers, influencing these consumers’ beliefs about product quality and their purchase de cisions. We show that delaying opinion leaders can significantly impact consumer learning by altering both the content and level of word-of-mouth communication. Specifically, the content effect alone can incentivize the seller to delay opinion leaders, except in niche markets where private information is highly accurate. In settings where information about purchased products spreads more easily than information about delays, the level effect limits the potential for suppressing service speed, particularly in markets with high expected product quality and many opinion leaders

Capacity Constraints and Beliefs about Demand

This paper examines how a firm can strategically choose its capacity to manipulate consumer beliefs about aggregate demand. It looks at a market with social effects where consumers want to do what is popular, to buy what they believe others want to buy. By imposing a capacity constraint and setting a price just low enough for it to bind, the firm can fool certain naive consumers into believing that demand is greater than it actually is. This will in turn increase the willingness to pay of all consumers through social effects. In equilibrium, the firm will impose a capacity constraint whenever demand is lower than expected, even when the number of naive consumers is arbitrarily small.capacity constraints, bandwagon effects, naive consumers, bounded rationality

Targeted Advertising and Social Status

This paper shows how a firm can use non-targeted advertising to exploit consumers' desire for social status. A monopolist sells multiple varieties of a good to consumers who each care about what others believe about his wealth. Advertising allows consumers both to buy different varieties and to recognize them when others buy. In equilibrium, the firm advertises each variety to those who will buy but also to all poorer consumers who will not, so that they understand what having the goods signals. If concern for status is sufficiently high, then the firm will only place a single variety on the market.advertising, targeting, social status