Seminar Series

Spring 2015

Friday, February 20, 2015

PRobert Zeithammer
Time: 12:00-1:30 pm

Location: 1-142 Carlson School

Who: Robert Zeithammer, Associate Professor, Anderson School of Management - University of California, Los Angeles

Title: Optimal Selling Strategies When Buyers Name Their Own Prices

Abstract: This paper models a name-your-own-price (NYOP) retailer who allows buyers to initiate their retail interaction by describing a product and submitting a binding bid for it. The buyers have an outside option to buy the same good for a commonly known posted price that also acts as an informative upper bound on the cost the NYOP retailer faces. We conceptualize a selling strategy of such a NYOP retailer to be the probability that a buyer’s bid gets accepted that is a function of only the bid-level and the commonly known outside spot-market price, but does not depend on the exact realization of the retailer’s procurement cost. Using mechanism design techniques, we characterize the optimal selling strategy and the equilibrium bidding function that best responds to it. We show that the optimal strategy implements the first-best ex-post optimal mechanism: for every cost realization, the retailer can make as much profit as he would if he could learn his cost first and use the optimal mechanism contingent on it. The complexity involved in credibly communicating an entire bid-acceptance function to buyers can make firstbest strategy impractical in some real-world markets, so we also analyze several simpler NYOP strategies: setting a minimum bid, charging a participation fee, and accepting all bids above cost. When both the distribution of buyer valuations and seller cost are uniform, the minimum-bid strategy dominates the other alternative strategies, and approaches the first-best strategy in terms of profit as the outside price for the same good drops.


Wednesday, March 25, 2015

Speaker: Patrick Hanlon, Founder & CEO, Thinktopia

Brand Matter: Thinktopia

Register now!


Friday, April 3, 2015

Associate Professor Ting Zhu
Time: 12:00-1:30 pm

Location: 1-142 Carlson School

Who: Ting Zhu, Associate Professor, Sauder School of Business - The University of British Columbia

Title: Can Online Price Matching Defeat Showrooming?

Abstract: We study the impact of Best Buy's recent online price matching policy on the price competition between Best Buy and Amazon, and examine whether the policy can defeat the practice of "showrooming." We first empirically explore Best Buy and Amazon's pricing patterns by using unique data sets we collected from different sources. We find that both retailers react to the new policy; Best Buy and Amazon adjust prices in the same directions. However, the directions vary across product categories. For products that a consumer can obtain a large value from physical store experiences, i.e., the "showrooming products," we find that prices went down for both Best Buy and Amazon. In addition, Amazon cut prices more aggressively than Best Buy. For the rest "non-showrooming" products, or the products that consumers benefit less from store experiences, we find the opposite patterns -- prices went up for both Best Buy and Amazon after the implementation of online price matching.

We then develop an analytical model to explain the observed data patterns. Two retailers competing on a Hotelling line are assumed to focus on both profit maximization and beating competitors. Consumers who may or may not be aware of price matching guarantee optimally decide which store(s) to visit and where to make the purchase. We show that the effect of price matching guarantee depends on the additional value consumers obtain from visiting a physical store. Both retailers would raise prices when this value is small but would compete more aggressively on prices when this value is large, which is consistent with the data. We also show that for the "showrooming products," both retailers' profits are lower as a result of price matching guarantee, but the online retailer's payoff may actually increase because of the success in beating its competitor. Finally, online price matching can reduce the degree of showrooming practices, but at the cost of reduced profits and payoffs for Best Buy.


Friday, April 10, 2015

MN Camp Web Logo 2015

Time: 8:00 am - 6:00 pm

Location: 1-109 Hanson Hall

The Minnesota Camp brings to our campus, four top researchers in the field of marketing for a full day of presentations and research interactions. The goal is to foster academic inquiry via exposure to and collaboration with top minds in the field. This initiative started in 2012. The camp not only aims to energize the passion for research among our faculty and PhD students, but also to showcase our expertise and superb facilities.

Sponsored by: Institute for Research in Marketing

*By invitation only


Professor Aradhna KrishnaWho: Aradhna Krishna, Professor of Marketing, Ross School of Business - University of Michigan



Title: Embodied Mental Simulation and Other Mental Imagery

Abstract: The theory of grounded cognition holds that our bodily states, actions, and even mental simulations are used to generate our cognitive activity. One of the more prominent findings within this literature is the effect of bodily states on persuasion. For instance, Wells and Petty (1980) show that participants nodding their heads up and down (vs. side to side) leads to increased persuasion of an editorial message. Other research supporting the concept of embodied cognition has focused on metaphorical transfers of meanings. For example, participants rated hypothetical individuals more positively on socially warm characteristics when they had previously held a warm (vs. cold) cup of coffee (Williams and Bargh 2008). Despite the recent interest in embodied cognition, bodily states are only one of the ways in which cognition is grounded (Barsalou 2008). Mental simulation, or the reenactment of perceptual experiences, is another way in which cognition is grounded and is the focus of this talk. By mental simulation, I refer to a more automatic form of mental imagery that is initiated by exposure to verbal or visual representations of objects. Across a series of studies, I provide evidence for such embodied mental simulation and other mental imagery.


Professor John Lynch
Who: John Lynch, Professor of Marketing, Leeds School of Business - University of Colorado Boulder



Title: Resource Slack: A Theory of Perceived Supply and Demand

Abstract: We present a general theory of “resource slack,” the degree to which perceived supply of a resource exceeds or falls short of perceived demand for that resource. Our theory makes five main arguments. First, perceptions of resource slack influence when and how people change consideration sets for proposed resource uses and how they plan to conserve the focal resource. Second, perceived resource slack deviates from objective slack due to a set of psychological processes that influence recruitment of subsets of potential supply and demand. Moreover, goal and subgoal pursuit influence perceived slack and cause impatience that alters relative evaluations of a proposed resource use and salient alternatives uses. Third, these processes explain why it is common for perceived slack for a proposed resource use to be different when it is for now rather than for the future. Fourth, slack is influenced by of properties of resource supply such as fungibility, specificity of budgets, and other factors that can differ across resources and can affect the ambiguity of slack perceptions. These general resource characteristics can have different levels for different resources, such as time and money. Fifth, these psychological processes that determine perceived slack can explain many phenomena in intertemporal choice and connect judgment and decision making phenomena that have heretofore not been seen as related, such as opportunity cost consideration, discounting of future resource expenditures, procrastination, the planning fallacy, and other intertemporal phenomena in the judgment and decision making literature.


Assistant Professor Tat Chan
Who: Tat Chan, Assistant Professor of Marketing, John M. Olin School of Business - Washington University in St. Louis



Title: Information Asymmetry, Manufacturer-Retailer Contracts, and Two-Sided Entry

Abstract: We investigate the economic determinants of contract structure and entry in an empirical setting with transfer contracts, which specify that manufacturers directly sell their products in retail stores while retailers collect the sales revenue and return a transfer to the manufacturers. Using a unique dataset describing the entry decisions of clothing manufacturers into a retail department store, we estimate a two-sided, asymmetric-information entry model. We then use this model to compare welfare estimates under transfer contracts to counterfactual welfare estimates obtained under common alternative contract formats. Results show that transfer contracts dominate other contract formats when adverse selection is severe. We also find that, even in the absence of adverse selection, it is mutually beneficial for the retail store and the manufacturers to reduce information asymmetry.


Associate Professor Jeff ShulmanWho: Jeff Shulman, Associate Professor in Marketing, Foster School of Business - University of Washington



Title: Regulating Illicit Markets with a Cross-Tariff

Abstract: Caremark, one of the largest pharmacy benefit managers in the US, recently began charging customers a surcharge on any prescriptions filled at a pharmacy selling tobacco products. One goal of this surcharge is to reduce the use of tobacco products. In this research, we develop an analytical model to study whether such a penalty, which we refer to as a cross-tariff, can be more effective than a regular tariff in shrinking the illicit market. We also explore how a cross-tariff impacts prices and firm profitability. The results show that under certain conditions, a cross-tariff can reduce sales in an illicit market more than an equivalent regular tariff. Analyzing firm profits under cross-tariffs, we find that cross-tariffs can actually increase profitability of competing firms. Allowing for asymmetry in firm quality, we find under certain conditions the profit of the inferior firm can even be higher than the superior firm. Our results have implications for regulators and marketers dealing with illicit goods.  



Friday, May 1, 2015

Assistant Professor Yi ZhuTime: 12:00-1:30 pm

Location: 1-142 Carlson School

Who: Yi Zhu, Assistant Professor, Carlson School of Managment - University of Minnesota



Fall 2014

Fall 2014


Wednesday, September 10, 2014

Marketing PhD Candidate Xiaolin LiTime: 12:00-1:30 pm
Location: 2-224 Carlson School
Who: Xiaolin Li, Marketing PhD Candidate, University of Minnesota - Carlson School of Management


Title: The "Shadow of the Future" in Procurement Auctions

Abstract: Buyer behavior for procuring large, complex, customized items consists of initial phases where firms first specify the needed item(s) and pre-qualify vendors, following which an auction is used to choose the contractor. Despite the rigid rules and detailed specifications accompanying auctions, it is striking that procurement auctions in industries like information technology (IT) display very large differences between the initially agreed-to payment and the actual payments because of negotiations during the execution phase. However, these revisions are ignored in the theoretical and empirical auction literature. After developing a mathematical model to specify how bidders accommodate post-auction modifications, I develop a method to take my model to a comprehensive dataset of IT procurement auctions. I find that the prospects of modifications lower bidders’ “latent” costs, leading to more aggressive bids, especially by bidders without a previous contract with the buyer. To see the magnitude of this effect, I consider a buyer who commits credibly to a no-modification policy, and find that such a commitment would increases bids by 27%, all else equal. I also find that the size of this “shadow of the future” is larger for lump-sum bids. To see this magnitude, I consider a buyer who switches the auction bid format from a lump-sum bid to a more flexible bid format (e.g., time and materials), and find that bids are lower by 16%, all else equal. These large effects form the basis of my recommendations for improving procurement auctions. They also contribute to long-standing theory concerns studied in transaction cost economics. My findings support the Williamsonian critique of procurement auctions as a solution for the ex-post monopoly problem; my estimates of demonstrate that ex post modifications remain an intrinsic aspect of procurement auctions. However, auctions remain a valuable procurement device for customized goods in complex, fast-moving environments, particularly when used with more flexible payment formats.


Friday, September 12, 2014

Yajin WangTime: 12:00-1:30 pm
Location: 1-135 Carlson School
Who: Yajin Wang, Marketing PhD Candidate, University of Minnesota - Carlson School of Management


Title: The Devil Wears Prada: How Luxury Consumption Influences Social Behavior

Abstract: Does the Devil wear Prada? Or does wearing Prada lead people to behave more like the Devil? We propose that using luxury products boosts people’s perception of social status, which then alters their behavior. In four experiments, women used either a luxury or a non-luxury product. We then tested whether the consumption experience triggers behavior that is more selfish (take more for the self) or generous (give more to others). Using luxury products often led women to be more selfish, such as sharing fewer resources. However, luxury products made women more generous (donating more money to others) when doing so could enhance their reputation. Thus, we show that luxury products can lead people to be more selfish or more generous depending on the situation.


Friday, September 26, 2014

Visiting Marketing Professor Liangyan WangTime: 12:00-1:30 pm
Location: 2-213 Carlson School
Who: Liangyan Wang, Shanghai Jiao Tong University - Antai College of Economics & Management (Visiting Professor at Carlson School)


Title: When Shanzhai Compete with Originals: Increased Satisfaction with Originals due to Low Quality Shanzhai but Decreased Satisfaction with Originals due to Moderate Quality Shanzhai

Abstract: “Shanzhai” connotes copycat manufacturing and is a significant phenomenon in developing countries. The prevailing belief is that Shanzhai are always detrimental to the original products. However we find that Shanzhai, depending on their relative quality, can elicit either dissatisfaction or satisfaction with the originals and thereby decrease or increase sales of the originals, such as the Apple iPhone. Study 1 found that compared with a separate display of the original only, a joint display of a low quality Shanzhai and the original caused a contrast effect, increasing satisfaction with and intent to purchase the original. In study 2 conducted in a retail store, a joint display of a moderate quality Shanzhai and the original caused an assimilation effect, reducing shoppers’ satisfaction with and intent to purchase the original. Study 3 in an electronics center found corresponding effects on the original’s sales. Study 4 in a retail store found the effects were mediated by disconfirmation of expectations about the original due to the juxtaposed Shanzhai. Study 5 found further evidence of disconfirmation using a taste test.


Friday, October 3, 2014

Mitchell Lovett  Time: 12:00-1:30 pm
  Location: 1-103 Hanson Hall
  Who: Mitchell Lovett, University of Rochester - Simon Business School



Title: The Role of Paid, Earned, and Owned Media in Building an Entertainment Brand: Reminding, Informing, and Enhancing Enjoyment

Abstract: Firms can communicate about their brands in numerous ways. We study three--advertising (paid media), word-of-mouth and other social media (earned media), and brand websites and other owned content (owned media--in the context of building an entertainment brand. We develop a structural model of viewing behaviors and apply the model to a new television program setting using a data set that contains both viewing and stated expectations and experiences. We use this model to not only assess the relative impact of paid, earned, and owned media, but also to distinguish multiple roles that they might play--reminding (i.e., activating memory), informing (i.e., learning about the quality of the program), or enhancing enjoyment (i.e., gaining additional utility from socializing about the program). We present descriptive analyses and results from our structural model, which indicate that paid and earned media effects are relatively small and that owned media has a negligible effect. The effects primarily operate through reminding, but earned media plays a small, yet statistically significant enhancing enjoyment role. Information about the show comes primarily from watching episodes. Our results imply that the average effect of paid media is larger than that of earned and owned media, but that if earned media strategies can expand the proportion of frequent socializers, it can have a profound effect on viewership.


Friday, October 17, 2014

Sridhar Moorthy  Time: 12:00-1:30 pm
  Location: 1-105 Hanson Hall
  Who: Sridhar Moorthy, University of Toronto - Rotman School of Management



Title: Advertiser Prominence Effects in Search Advertising

Abstract: Online search ads feature two types of prominence: prominence due to ad position and prominence due to advertiser market prominence. This paper examines how these two types of ad prominence interact in determining the click-through-rate (CTR), order of clicks, and consumer' perceptions of the underlying qualities of the advertisers.  We develop a structural model of consumers' click-through behavior as a directed  search through search ads. What consumers are searching for is the best offer on a branded product from a set of advertising retailers; ad prominence provides direction to this search. Using individual-level click-stream data from Microsoft Live Search, and measures of advertisers' market prominence from, we estimate  a structural model to recover the unobserved qualities of the retailers' offers, and determine how ad position and advertiser  prominence interact in determining CTR.    Contrary to previous assertions in the literature, we find that ad position and advertiser prominence are substitutes, not complements. Specifically, a retailer not in the top-100 of Alexa rankings increases its click-through-rate by as much as 150% in going from the bottom ad position to the top, while a retailer in the top-100 of Alexa rankings increases its click-through-rate by less than 50% for the same change in positions. Finally, order of clicks and offer quality are positively correlated, suggesting that ad prominence, of either type, is not a significant source of market power for the search advertiser. We conclude that while search advertising is not very different from traditional TV or print  advertising in the way it directs search, in its power to inform and persuade directly, it is necessarily more limited.


Friday, October 31, 2014

Cutright, Keisha
  Time: 12:00-1:30 pm
  Location: 2-215 Carlson School
  Who: Keisha Cutright, University of Pennsylvania - Wharton School



Title: In God's Hands: How Religion Dampens the Effectiveness of Fear Appeals

Abstract: Though God and religion play an important role in the lives of many consumers, little research has examined their implications for consumer behavior. This article focuses on understanding how reminders of God might affect consumer compliance with fear-based advertising. Results across several studies demonstrate that when the concept of God is salient, consumer compliance and persuasion in response to fear appeals is dampened.


Friday, November 7, 2014

Seiler, Stephan
Time: 12:00-1:30 pm
Location: 2-215 Carlson School
Who: Stephan Seiler, Stanford University - Stanford Graduate School of Business



Title: Consumer Search: Evidence from Path-Tracking Data

Abstract: We estimate the effect of consumer search on the price of the purchased product in a physical store environment. We implement the analysis using a unique data set obtained from radio frequency identification tags, which are attached to supermarket shopping carts. This technology allows us to record consumers' purchases as well as the time they spent in front of the shelf when contemplating which product to buy, giving us a direct measure of search effort. Controlling for a host of confounding factors, we estimate that an additional minute spent searching lowers price paid by $2.10.


Friday, November 14, 2014

Rucker, DerekTime: 12:00-1:30 pm
Location: 2-215 Carlson School
Who: Derek Rucker, Northwestern University - Kellogg School of Management


Title: Power: An Agentic-Communal Model

Abstract: This talk invokes the concepts of agency and communion to understand how psychological states of power transform behavior. The model puts forth the idea that one aspect of high power is that it promotes an agentic orientation whereby people think about and navigate their social world largely in terms of the self. In contrast, a key aspect of low power is that it fosters a communal orientation whereby individuals think about the self in relation to others. Evidence for the relationship between power and the constructs of agency and communion is provided, and key implications for gift-giving behavior, persuasion, and ethical behavior are demonstrated. Limitations of the model are recognized, and future research directions are discussed.

Spring 2014

Spring 2014


Friday, March 28, 2014

Kevin WilliamsTime: 12:00 - 1:30 pm
Location: L-126 Carlson School
Who: Kevin Williams, PhD Candidate, University of Minnesota - Department of Economics


Title: Zone Pricing and Spatial Menu Costs: Evidence from Drywall

Abstract: In the empirical industrial organization literature, the standard approach models prices as being set at the market level. In practice, retail firms often use zone pricing; that is, they set uniform prices over large geographically contiguous areas. In this paper, we conduct an empirical analysis of zone pricing for the two largest home improvement retailers in the United States. We introduce the concept of "spatial menu costs," which we interpret as a type of friction that has induced firms to set the zone price structure we observe. Using a new micro-level data set, we estimate prices and profits under different pricing regimes to find bounds on the spatial menu costs needed to force zone pricing. We find that even small spatial menu costs can prompt zone pricing and deter retailers from using market power in their monopoly markets. We also evaluate the role zone pricing has on the competitive interaction of firms. In particular, we find that market level pricing in the absence of menu costs would bring lower industry profits compared to the observed zone structure.


Thursday, April 3, 2014

Brand Matters April 2014


Friday, April 4, 2014

Marketing PhD Candidate Xiaolin LiTime: 12:00 - 1:30 pm
Location: L-126 Carlson School
Who: Xiaolin Li, Marketing PhD Candidate, University of Minnesota - Carlson School of Management


Title: The "Shadow of the Future" in IT Procurement Bids

Abstract: The procurement of complex goods and services involving large transactions between firms, or between government and private firms, is very common, e.g., governments engaging construction firms to construct highways, and corporate firms outsourcing tasks to specialist vendors. These situations share a number of features; the tasks are complex and long drawn out; these agreements are governed by detailed contracts that describe the client's expectations about deliverables, the expected payments, and mechanisms for the resolution of disputes. Finally, the contractor is often selected via a competitive sealed bid auctions.

A striking empirical fact is that these large transactions are almost always subject to changes during the execution phase. It is reasonable to suppose that an anticipation of these changes would be an important part of the bidding calculus of contractors. Surprisingly, the prior literature has almost completely ignored this "shadow of the future" in examining these transactions.

This paper attempts to address the gap just identified by trying to quantify the "shadow the future". The challenge is to set up a mathematical model of bidding behavior wherein far-sighted bidders recognize the possibility of future changes and adjust their bids accordingly. I develop and apply such a model to a comprehensive dataset of IT procurement transactions, and overcome significant methodological hurdles to estimate the "shadow of the future". I find that this shadow has a significant effect on winning bids. On average, the shadow of the future accounts for almost half of the size of the winning bids.


Friday, April 18, 2014

MN Camp 2014

Time: 8:00 am - 6:00 pm
Location: 2-260R Carlson School (Executive Center Suite)

The Minnesota Camp brings to our campus, four top researchers in the field of marketing for a full day of presentations and research interactions. The goal is to foster academic inquiry via exposure to and collaboration with top minds in the field. This initiative started in 2012. The camp not only aims to energize the passion for research among our faculty and PhD students, but also to showcase our expertise and superb facilities.

Sponsored by: Institute for Research in Marketing

*By invitation only


Pradeep ChintaguntaWho: Pradeep Chintagunta, Professor of Marketing, University of Chicago - Booth School of Business



Title: Service Quality Variability And Termination Behavior

Abstract: While researchers have documented a positive relationship between the average quality of a service and customer retention, the effect of variability on customer retention has been viewed more ambiguously in the literature. We investigate the roles of the level and variability in quality in the context of a new video on demand service in driving customer retention. We find that while high average quality helps in retaining customers, high variability leads to higher termination rates. Apart from these main effects we empirically document the presence of an interaction effect between average service quality and its variability on termination rates; customers who experience low variability are more responsive to mean quality compared to those experiencing high variability. As an extreme outcome, at the lower end of the quality spectrum, customers experiencing high variability have a higher retention rate than those experiencing low variability; this is contrary to what the main effect of variability would imply. We postulate a mechanism involving risk aversion and learning, which can induce this interaction effect and test this against several alternative explanations. Our results reinforce the notion that high service quality is associated with lower termination rates. Moreover, our estimates suggest that households exhibit risk aversion, implying that, on average, variability increases termination. Based on the model and estimation results, we document that in the context of new services where customers are likely to learn about their quality, households that experience low variability in service are more likely to be more responsive to the quality level. This differential responsiveness results in an interaction effect between service quality level and its variability. In terms of managerial implications, we show that while increasing the average quality might be effective in retaining customers at low quality levels, lowering variability is likely to be more appropriate at high quality levels.


Amna KirmaniWho: Amna Kirmani, Professor of Marketing, University of Maryland - Smith School of Business


Title: Which Agent Will You Choose: The Moral or the Competent?

Abstract: Consumers often make tradeoffs between competence and morality when choosing among financial advisors, salespeople and other agents. A couple selling their house might be torn between real estate agent A, who is a top producer in her firm but is rumored to cheat on her expense accounts, and agent B who has only a moderately good selling record but is known for being honest. In this example, one agent is highly competent but morally deficient and the other is less competent but stands on highter moral ground. Competence reflects an agent's skill or effectiveness in achieving goals, while morality reflects an agent's honesty. In this paper, we examine how consumers make tradeoffs between the competence and morality of agents in situations in which competence and morality are independent, meaning that the success of the agents is not due to their immoral behavior.

The trade-off involves at least two goals: upholding the value of behaving morally and the goal of being successfully accomplishing the taks for which the agent is being hired. Economic self-interest would dictate that consumers choose the competent agent, as this will further their hiring-related goal. We examine the situation when consumers choose a moral agent against their economic self-interest and test the hypotheses in four studies.


Michael NortonWho: Michael Norton, Associate Professor of Business Administration, Harvard Business School



Title: Happy Money: How Prosocial Spending Improves Happiness - and the Bottom Line

Abstract: Can money make you happy? Our research suggests that it can - if you give it away. We show that encouraging people to spend on others - for example, by giving them $20 in the morning and asking them to give it away by the end of the day - makes people happier than spending on themselves. In addition, the positive impact of behaving charitably can improve organizational health. When we gave employees in two organizations "prosocial incentives" (bonuses for themselves), both employee satisfaction and job performance improved dramatically. I will discuss how these findings change the way organizations should think about incentivizing employees - and how we should think about spending our own money.


Jiwoong Shin

Who: Jiwoong Shin, Associate Professor of Marketing, Yale School of Management



Title: Managing Buzz

Abstract: We model the incentives of individuals to engage in word of mouth (or buzz) about a product, and how a firm may strategically influence this process through its information release and advertising strategies. Individuals receive utility by improving how others perceive them. A firm restricts access to information, advertising may crowd out word of mouth and a credible commitment not to engage in advertising is valuable for a firm. Finally, we find that the ability of the firm to target advertising to well-connected consumers may be detrimental to the signaling value of word of mouth.


Tuesday, May 6, 2014

Brand Matters Pearson's


Fall 2013

Fall 2013

We hope you can attend one of our upcoming Brand Matters events here at the Carlson School!

To register:

Wednesday, October 30, 2013

Speaker: Carlos Torelli, Carlson School of Management

Carlos Torelli

Tuesday, September 17, 2013

Speaker: Krae Lausch, Life Time Fitness

Krae Lausch

Spring 2013

Spring 2013

Friday, March 29, 2013

Christopher Federico

Who: Christopher Federico, Associate Professor of Psychology and Political Science, University of Minnesota

Title: "Ideological Asymmetry in the Relationship Between Needs for Certainty, Order, and Security and Political Interest and Engagement"

Abstract: In this paper, we argue that those high in needs for certainty, order, and security will show less political interest and engagement when their beliefs imply goals that run counter to these needs. Specifically, these needs should be associated with reduced interest and engagement to a greater extent on the political left than on the right because left-leaning politics which challenges the status quo threatens more instability and uncertainty. Data from four surveys of Americans and Europeans provide evidence for this with respect to the need for closure (Study 1), the authoritarian predisposition (Study 2), and security and conformity values (Study 3). Moreover, comparative data from Study 3 indicated that this interaction was found in "Westernized" political cultures, in which the traditional left-right difference is clearly defined, but not in Eastern European countries, where its meaning is less distinct due to a recent communist past and rapid transition to democracy.

Time: 12:00 - 1:30 pm

Location: 2-224 Carlson School

Friday, April 5, 2013

Raghunath Rao

Who: Raghunath Rao, Assistant Professor of Marketing, University of Texas at Austin - McCombs School of Business

Title: Conspicuous Consumption and Dynamic Pricing

Abstract: How do firms develop strategy when consumers seek to satisfy both quality and status-related considerations? Our analytical model seeks to help us understand this issue, examining both pricing and product management decisions in markets of conspicuous durable goods. Our analysis yields many interesting and non trivial insights. First, we demonstrate that high intrinsic quality indirectly generates exclusivity via pricing effects; in turn, this exclusivity conveys high social status to a large audience when consumption is greatly visible. This insight reverses the direction of causality in the existing literature, wherein only status considerations matter and mere price increases may enhance consumer utility. Second, our dynamic model indicates that more visible products earn greater profits in equilibrium; however, since visible products entail status motivations, these items endure substantially higher price depreciation. Third, we examine the product management strategies used by firms to preserve early adopter exclusivity. Finally, we discuss the boundary conditions of our results, as well as our results' implications for managerial and policy issues.

Time: 12:00 - 1:30 pm

Location: 2-224 Carlson School

Friday, April 12, 2013

Minnesota Camp

The Minnesota Camp brings to our campus, four top researchers in the field of marketing for a full day of presentations and research interactions. The goal is to foster academic inquiry via exposure to and collaboration with top minds in the field. This initiative was initiated last year. The camp not only aims to energize the passion for research among our faculty and PhD students, but also to showcase our expertise and superb facilities.

Time: 8:00 am - 6:00 pm

Location: 2-260R Carlson School (Executive Center Suite)

Presentations will include:

Darren Dahl

Who: Darren Dahl, Professor of Marketing, University of British Columbia - Sauder School of Business

Title: Earning the Right to Eat Organic: How Moral Judgments Depend on the Nature of the Target's Income

Abstract: The current research takes a behavioral ethics approach to examining how individuals are evaluated differently according to societal norms based on income for engaging in the same prosocial activity – namely, purchasing organic food. We propose that because organic food is associated with both health and wealth, the moral judgments people form of consumers and organizations (e.g., charities) who buy organic versus conventional food will differ based on the nature of the target’s income. More specifically, across seven studies we demonstrate that organic food choices polarize moral judgments: whereas high-income individuals choosing organic food (versus conventional) are perceived as significantly more moral, those in the lowest income bracket who are receiving government assistance are perceived as significantly less moral. In so doing, our work makes an important contribution to the literature by showing that the same prosocial action may lead to opposing moral judgments depending on who committed the act.

Sharon Shavitt

Who: Sharon Shavitt, Professor of Business Administration and Marketing, University of Illinois at Urbana-Champaign

Title: How Does Cultural Self-Construal Affect Price-Quality Judgments?

Abstract: Is there a relation between cultural factors and consumers' tendency to use price to judge quality? Several experiments designed to address this question revealed that people with a more interdependent (vs. independent) cultural self-construal - operationalized by ethnicity, nationality, measured self-construal, or manipulated salient self-construal - have a greater tendency to use price information to judge quality. This difference arises because interdependents tend to be holistic (vs. analytic) thinkers who are more likely to perceive interrelations between the ele- ments of a product. These effects hold regardless of whether the price- quality relation was assessed with a standard self-report scale or via actual product judgments, and whether thinking style was measured or manipulated. However, cultural differences only emerged in situations that afforded interdependents (vs. independents) a relational processing advantage. These findings establish the mechanisms underlying the effects and identify novel boundary conditions for the influence of self-construal and thinking style on consumer judgments.

K. Sudhir

Who: K. Sudhir, Professor of Private Enterprise, Management and Marketing, Yale School of Management

Title: A Dynamic Structural Model of Search across Stores and across Time

Abstract: Price dispersion across stores and across time is widespread in many retail settings; in response, consumers can search across stores and across time. Yet the existing literature on structural models of search focuses either on modeling search across stores or across time but not both. This paper introduces a dynamic structural model that nests a finite horizon model of search across stores within an infinite horizon model of search over time. We formulate the dynamic structural model estimation problem as a mathematical program with equilibrium constraints (MPEC), and embed it within an iterative E-M algorithm that accommodates latent class heterogeneity. We use data on household choice in the milk category to estimate the model. Omitting either the across-store or across-time dimension of search biases the estimated search costs and price elasticity - suggesting the importance of accounting for both dimensions in structural models of search. Further; we provide intuition for how the direction of bias is dependent on the relationship between purchase and promotional frequency. Finally, contrary to conventional wisdom that promotions increase cherry picking behavior, we find that in the presence of search costs, price promotions can be a loyalty enhancing device for stores.

Gerry Tellis

Who: Gerry Tellis, Professor of Marketing, University of Southern California - Marshall School of Business

Title: Make, Buy, or Ally: Patterns and Paradoxes in Making versus Buying for Innovations

Abstract: Firms constantly grapple with the question of whether to internally develop (make), acquire (buy) or partner (ally) for innovations. The literature has not analyzed the choice of and payoff to these alternate routes to innovation for the same firm. To address this issue, the authors collect and analyze the choice and payoff to 3260 make, buy, and ally for innovations for 192 firms across 108 industries over a period of 5 years.

The authors find that on average, make and ally generate positive and highter payoff than buy, which generates a negative payoff. Nevertheless, firms continue to buy for two reasons. First, firms seem to have no memory for the payoff to buy even though they have a memory for the payoff to make. Second, firms tend to buy when they lack commercializations, even though the stategy seems not to pay off. These results suggest that firms see buy as a quick fix for what may be a deep strategic problem. Nevertheless, buy can pay off if acquirers are experienced and the target is related and offers high customer benefit. Conversely and surprisingly, make and ally each pay off for unrelated innovations. The authors offer explanations for and implications of the results.

Fall 2012

Fall 2012

Friday, September 7, 2012
Paola Mallucci

Who: Paola Mallucci, Marketing PhD Student, University of Minnesota - Carlson School of Management

Title: "The Effect of Social Pressure on Corporate Social Responsibility"

Abstract: The goal of this study is to better understand consumers' reactions to products associated with Corporate Social Responsibility (CSR). I identify “warm glow” and “social pressure”' as the two principal drivers. On one hand, products offered by CSR-engaged firms are more appealing because of the warm glow consumers derive from choosing a product associated with a donation to their favored causes; such products directly enhance customer utility. On the other hand, once donations reach a threshold amount, consumers might feel social pressure to reciprocate the firm's donation. While such pressure can move some consumers to purchase the product, it reduces utility and can lead some consumers to opt out of the market. Plainly, warm glow is favorable to selling CSR products, but does social pressure aversion imply that rational firms will never employ such appeals? Large numbers of firms do rely on social pressure-based appeals (e.g., the Pink theme campaign for breast cancer). When and why is this a wise choice?
In two separate experiments, I find evidence for warm glow and social pressure effects. I formalize and quantify these effects with a novel utility function that embodies these opposing effects and find them to be of the same order of magnitude; hence, both are managerially relevant. To develop this idea further, I build a model of a profit-maximizing firm that recognizes these warm glow and social pressure aversion preferences of its customers. Under both monopolistic and duopolistic market structures, I show that if warm glow is large enough, a firm will also engage in social pressure appeals, despite its customers' aversion to social pressure. Put differently, despite the negative effect on consumers' preferences, employing social pressure in a CSR context can be profitable. Why? Intuitively, social pressure diminishes price sensitivity.

Friday, September 21, 2012

Linli Xu

Who: Linli Xu, Assistant Professor of Marketing, University of Minnesota - Carlson School of Management

Title: "Price Advertising by Multiple Channel Members"

Abstract: The central prediction of this paper is that manufacturer price advertising is less effective than dealer price advertising. Two experiments show that consumers who received a price advertisement from an automobile manufacturer indicate lower potential demand than consumers who received a price advertisement from a dealer. An econometric analysis of market data shows a pattern of results consistent with the experimental results: dealer price advertising is estimated to have larger effects on both perceived quality and price sensitivity than manufacturer price advertising. Counterfactual experiments suggest that a unified channel would shift 7-11% of its price advertising budget from the manufacturer to the dealer.

Friday, October 19, 2012
Jannine Lasaleta

Who: Jannine Lasaleta, Marketing PhD Student, University of Minnesota - Carlson School of Management

Title: "Nostalgia Weakens the Desire for Money"

Abstract: Nostalgia is prevalent in the marketing of goods and services. The current research tested whether its effectiveness is due to the fact that nostalgia weakens the desire for money. Drawing theoretical connections among nostalgia, desire for money, and meaning in life, five experiments demonstrated that nostalgia weakens the desire for money using perceptual, behavioral, and cognitive measures. Process evidence demonstrated that nostalgia’s influence on desire for money is due to its potential to heighten perceptions of meaning in life.

Friday, October 26, 2012
Joseph Redden

Who: Joseph Redden, Assistant Professor of Marketing, University of Minnesota - Carlson School of Management

Title: "Two Approaches to Encourage Healthier Eating"

Abstract: Obesity is a growing public health concern in the United States, especially among minority populations. This research will talk about two different approaches to encourage healthier eating. The first approach examines the role of satiation in managing the consumption of healthy and unhealthy foods. Specifically, we find in a series of studies that people with greater trait self-control satiate faster on unhealthy foods because they devote more attention to how much they are eating (and vice versa for healthy foods). The second approach tests the effectiveness of three "nudges" in encouraging elementary school children to eat more vegetables. Study 1 finds that a 50% larger portion increased carrot and orange intake 49% and 154% respectively, Study 2 created norms using photos on trays to increase carrot and green bean intake 177% and 133% respectively, and Study 3 served carrots first and increased intake 430%.

Friday, November 9, 2012
Maria Ana Vitorino

Who: Maria Ana Vitorino, Assistant Professor of Marketing, University of Minnesota - Carlson School of Management

Title: "Drip Pricing when Consumers have Limited Foresight: Evidence from Driving School Fees"

Abstract: This paper empirically investigates the add-on pricing behavior of firms in the Portuguese market for driving instruction. We develop a framework along the lines of Gabaix and Laibson (2006) where consumers purchase a base and, with some probability, an add-on product from the same firm, but are not always aware of the possible need for the add-on product. We show that a typical loss-leader pricing strategy emerges in horizontally differentiated markets whereby markups on the base product are artificially lowered, while firms price the add-on at monopoly levels. We test the implications of the model using a detailed snapshot of industry data on student characteristics and preferences, school attributes including prices and costs, and market demographics for a cross-section of local markets with differing numbers of school competitors. We find significant evidence in support of our model predictions, including that firms face a substantial profit motive in the add-on market. Most notably, markups for the base product, but not the add-on products, decline in the number of competitors a firm faces, a prediction that has not been established in the literature to date.

Tuesday, November 20, 2012

Roy Baumeister
Who: Roy Baumeister, Eppes Eminent Professor of Psychology, Florida State University

Title: "How Rejection Affects People"

Abstract: If the need to belong is one of the most important foundations of human motivation, then social rejection, which thwarts that need, should produce striking effects. This talk covers the past decade’s work in my laboratory on how social rejection affects people. Their behavior changes drastically, including effects on aggression, helping, self-defeating behavior, intelligent performance, self-regulation, and the rational pursuit of enlightened self-interest. It explores cognitive factors and emotional ones. Surprisingly, the immediate impact of aggression appears to involve a numbness akin to shock reactions, characterized by a loss of emotion and even of sensitivity to pain.