A dynamic choice model of hybrid behavior in the attribute-space

This paper presents a dynamic choice model in the attribute space considering rational consumers that discount the future. In light of the evidence of several state-dependence patterns, the model is further extended by considering a utility function that allows for the different types of behavior described in the literature: pure inertia, pure variety seeking and hybrid. The model presents a stationary consumption pattern that can be inertial, where the consumer only buys one product, or a variety-seeking one, where the consumer buys several products simultane-ously. Under the inverted-U marginal utility assumption, the consumer behaves inertial among the existing brands for several periods, and eventually, once the stationary levels are approached, the consumer turns to a variety-seeking behavior. An empirical analysis is run using a scanner database for fabric softener and significant evidence of hybrid behavior for most attributes is found, which supports the functional form considered in the theory.Consumer choice models, state-dependence models, consumption patterns, variety seeking, hybrid behavior

Towards an Applicable True Cost-of-Living Index that Incorporates Housing

A dynamic model of consumer behavior that incorporates the demand for housing is specified such that it is consistent with the general purpose of a consumer price index. From this model a true cost-of-living index that includes housing is derived. Being an ideal index it cannot be computed without imposing additional assumptions about the behavior of the consumer, but it is possible to draw conclusions about the prices and weights that should be used in conventional approximations to such an ideal index.True cost-of-living index; compensation index; price index of housing

Globalization, Expectations Model of Economic Nationalism, and Consumer Behavior

Purpose – The goals of the paper are to propose, measure, and empirically test the expectations model of economic nationalism. The model posits that economic nationalism is reflected in people’s expectations of their government, domestic firms, and the general public, in terms of restricting the activities of foreign firms. Design/methodology/approach – A confirmatory factor analysis is conducted to test the model, using the LISREL procedure. Findings – Results show acceptable fit for the proposed model. Reliability of each of the three dimensions of economic nationalism is in the acceptable range. A nomological validity test showed that economic nationalism is related to other constructs not included in the model. Research limitations/implications – A limitation of the model is that it is based on a single sample. Future studies can test the generalizability of model with samples from different countries. Practical implications – The implication of the study is that increasing globalization might lead to an increase in economic nationalism. Business executives, therefore, need to focus not only on the benefits that they will derive from entering a country, but also the benefits they will deliver to the domestic economy by entering the country. Originality/value – The paper presents an expectations model of economic nationalism. The model is based on the premise that people’s expectations of their government, domestic businesses, and the general public in terms of their role in restricting the activities of foreign firms are reflective of economic nationalism. The more people expect of these three players the more economically nationalistic they will be. The value of the paper is to researchers in international business and global marketing and to business executives involved in managing global operations

Testing Models of Consumer Search using Data on Web Browsing and Purchasing Behavior

Using a large data set on web browsing and purchasing behavior we test to what extent consumers are searching in accordance to various classical search models. We nd that the benchmark model of sequential search with a known distributions of prices can be rejected based on the recall patterns we observe in the data. Moreover, we show that even if consumers are initially unaware of the price distribution and have to learn the price distribution, observed search behavior for given consumers over time is more consistent with non-sequential search than sequential search with learning. Our ndings suggest non-sequential search provides a more accurate description of observed consumer search behavior. We then utilize the non-sequential search model to estimate the price elasticities and markups of online book retailers.consumer search, electronic commerce, consumer behavior

'Unserved' interpretations of service satisfaction

Satisfaction with services has traditionally been explained with the help of service attributes. While these attributes have been good predictors of satisfaction, the relationship could possibly be better explained with the inclusion of additional variables. We draw on the literature in consumer behavior where situational variables in combination with product and consumer characteristics have been shown to be better predictors of consumers' behavior than consumer or product characteristics by themselves. Studies in consumer behavior have also established a direct link between affective state and consumers' behavior, the argument being that different states prime different goals, thus affecting the importance of attributes relevant under different situations. This is the basis of our study to show that situation-related affective state moderates the effects of service characteristics on satisfaction and the resulting outcomes of such satisfaction. A model incorporating the effects of situation-related affective state in the existing relationship between service characteristics and satisfaction is developed and tested to not only demonstrate the moderating role of situational emotions in the relationships but also its impact on the strength of these relationships.Services marketing, Satisfaction paradigm, Consumer behavior, Situation, Affective state

The Importance of Character Education for Tweens as Consumers

Tweens is a term that denotes a market segment mentality that falls between children at the lower end and teens at the upper end. Tweens marketing strategies are considered critical for most global brands. Advocates against excessive consumerism and materialism polluting innocent childhood, specifically tweens, call for values implantation through character education in the school to breed more educated consumers. The effect of implanting character building programs in schools on the consumer behavior of the exposed children in the marketplace, however, has never been tested before. This research endeavor is, in essence, an overlap between consumer behavior and educational psychology, investigating the link between personality and behavior in the market. It falls under both positivist and interpretive consumer research, specifically the consumer socialization of children. The aim of this work is to develop a conceptual model linking character education to purchasing lifestyles and consumption patterns of the exposed children as consumers. Following, prospects for future research are highlighted.Educational psychology, character education, attitudes and lifestyles, opinion-leadership, humanitarianism, ethnocentrism, adolescents and middle schools

Evolution of Consumers’ Preferences due to Innovation

The integration process between evolutionary approach and conventional economic analysis is very essential for the next development of economic studies, especially in the fundamental concepts of modern economics: supply and demand analysis. In this presentation, we use the concept of meme to explore evolution of demand. This study offers an evolutionary model of demand, which views utility as a function of the distance between the two types of sequences of memes (memeplex), which represent economic product and consumer preference. It is very different from the conventional approach of demand, which only views utility as a function of quantity. This modification provides an opportunity to see innovation and transformation of consumer preferences in the demand perspective. Innovation is seen as a change in sequence of memes in economic products, while the transformation of consumer behavior is defined as a change in the aligning memes of consumer preference. Demand quantity is the result of the selection process. This model produces some interesting characteristics, such as: (i) quantitative and qualitative properties of evolution of demand, (ii) relationship between consumer behavior and properties of evolution of demand that occurred and (iii) power law on the distribution of product lifetime. At the end we show the improvement of utility function, in the concept of meme, might create a new landscape for the further development of economics

Sales and Consumer Inventory

Temporary price reductions (sales) are quite common for many goods and usually result in an increase in the quantity sold. We explore whether the data support the hypothesis that these increases are, at least partly, due to dynamic consumer behavior: at low prices consumers stockpile for future consumption. This effect, if present, has broad implications for interpretation of demand estimates. We construct a dynamic model of consumer choice and use it to derive testable predictions. We test the implications of the model using two years of store-level scanner data and data on the purchases of a panel of households over the same time. The results support the existence of household stockpiling behavior.

Real Wages and the Business Cycle in Germany

This paper establishes stylized facts about the cyclicality of real consumer wages and real producer wages in Germany. As detrending methods we apply the deterministic trend model, the Beveridge-Nelson decomposition, the Hodrick-Prescott filter, the Baxter-King filter and the structural time series model. The detrended data are analyzed both in the time domain and in the frequency domain. The great advantage of an analysis in the frequency domain is that it allows to assess the relative importance of particular frequencies for the behavior of real wages. In the time domain we find that both real wages display a procyclical pattern and lag behind the business cycle. In the frequency domain the consumer real wage lags behind the business cycle and shows an anticyclical behavior for shorter time periods, whereas for longer time spans a procyclical behavior can be observed. However, for the producer real wage the results in the frequency domain remain inconclusive.real wages, business cycle, frequency domain, time domain, Germany, trend-cycle decomposition, structural time series model, phase angle