Download or read book Signaling Through Price and Quality to Consumers with Fairness Concerns written by Xiaomeng Guo and published by . This book was released on 2016 with total page 67 pages. Available in PDF, EPUB and Kindle. Book excerpt: Consumers with inequity aversion experience some psychological disutility when buying products at unfair prices. Empirical evidence and behavioral research suggest that consumers may perceive a firm's price as unfair when its profit margin is too high relative to consumers' surplus. We develop a game-theoretic model to investigate the effects of the consumer's inequity aversion on a firm's optimal pricing and quality decisions. We highlight several interesting findings. First, because of the consumer's uncertainty about the firm's cost, the firm's optimal quality may be non-monotone with respect to the degree of the consumer's inequity aversion. Second, stronger inequity aversion makes an inefficient firm worse off, but may benefit an efficient firm. Third, we show that stronger inequity aversion by the consumer can actually lower the consumer's monetary payoff (economic surplus) because the firm may reduce its quality to a greater extent than it reduces its price. Lastly, as the expected cost-efficiency in the market decreases, both the expected quality and the social welfare may increase rather than decrease.

Download or read book Competitive Implications of Consumer Fairness Concerns written by Mushegh Harutyunyan and published by . This book was released on 2017 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: When consumers perceive that a firm's price or markup is unfairly high, they become less willing to purchase that firm's product. Hence, one might intuit that the existence of such fair-minded consumers would tend to induce firms to reduce their prices, lowering their profits and increasing the consumers' surplus. Contrary to this conventional wisdom, our analysis reveals that having a segment of fair-minded consumers in the market has a non-monotonic effect on the firms' profits. More specifically, if the fraction of consumers having fairness concerns is small, consumers' fairness concerns can actually alleviate price competition, making firms better off and consumers worse off. Within that range, an increase in the fraction of fair-minded consumers can increase the firms' profits and reduce the consumers' surplus. But when the fraction of fair-minded consumers is sufficiently high, the firms will compete more aggressively, in which case consumers' fairness concerns will benefit consumers and reduce the firms' profits.

Download or read book Pricing written by Ragnhild Silkoset and published by Walter de Gruyter GmbH & Co KG. This book was released on 2023-01-30 with total page 168 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book on pricing decisions gives practical guidance on how to identify customer value, estimating customers’ willingness to pay for these benefits, and on how psychology affects customers’ perception of prices in a market. This strategic view on pricing gives the reader a competitive advantage. It empowers them with means to plan and perform a pricing strategy based on their value propositions. The target group for this book is managers, entrepreneurs, and business students. The book guides students in understanding how economics, strategy, marketing, and psychology are combined when it comes to pricing decisions. Further, the chapters contain step-by-step procedures that help managers and entrepreneurs to succeed with complex pricing decisions in busy workdays. The analysis is based on the basic edition of Microsoft Excel software. In sum, the book helps the reader to strategically plan, execute, and win price competitions. The book covers topics such as dynamic pricing, estimation of customers willingness to pay, price competition and wars, customers’ reaction to unfair prices, and price tactics and strategy. The book includes specialized chapters on pricing in e-commerce, and pricing in the sharing economy.

Download or read book Do Consumer Fairness Concerns Soften Price Competition The Role of Declining Costs written by Guowei Liu and published by . This book was released on 2020 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: Firms enjoy declining cost per unit of output with increasing cumulative output in a variety of industries, which gives rise to consumer concerns about transaction fairness. Consumers are less likely to purchase from a firm if it continues to reap an unfairly high profit margin. Intuitively, such consumer fairness concerns will induce firms to lower their prices. We develop an analytical framework to show, however, that firms may set higher prices with increasing consumer fairness concerns in the presence of competition. The indirect effect that consumer fairness concerns soften price competition caused by cost reductions dominates the direct effect that they intensify price competition caused by product substitution, when the cost-declining impact is sufficiently strong. Moreover, whether consumer fairness concerns increase or decrease social welfare also depends on the strength of the cost-declining effect. We also show the robustness of our main results by extending our model to a channel setting with quantity-discount contracts.

Download or read book Price Discrimination Under Uncertainty of Consumers Fairness Concerns written by Tomohisa Okada and published by . This book was released on 2018 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores the effects of the unpredictability of consumers' fairness concerns on monopolistic third-degree price discrimination. We develop a simple repeated game framework to consider the monopolist's pricing strategy in the long run. In contrast to previous studies, we focus on an information disclosure mechanism derived from unpredictability of consumers' fairness concerns: the intensity of the resulting backlash is unknown until firms treat consumers unfairly. Although consumers' fairness concerns tend to lead to uniform pricing even in the absence of fairness unpredictability, this mechanism enhances this tendency and works to sustain uniform pricing in the long run.

Download or read book Consumer Reviews and Dynamic Price Signaling written by Stepan Aleksenko and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Consumer reviews do not reflect absolute product quality but rather quality relative to the price. We analyze a reputation model with a privately informed monopolist repeatedly selling its product to uninformed but rational consumers, who learn about product quality through past reviews and the current price. We show that in a fully dynamic model where price signaling is permitted, high and low-quality firms pool when product rating is high and separate when product rating is low. In the separating equilibrium, the high-quality firm discounts its good heavily, whereas the low-quality firm sells its good at face value. The amount of price discounting depends on the review process. Overall, our findings have the surprising implication that consumers benefit from extreme reviews and rating manipulation, at the expense of low-quality firms.

Download or read book Prices as Signals of Quality written by Carla Guadalupi and published by . This book was released on 2015 with total page 79 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the optimal pricing strategy for newly introduced experience goods in a two-period monopoly market with experimentation and private information about quality. Consumers learn about quality through price signaling and experimentation, and communicate their ndings to other buyers via word of mouth. We show the existence of a unique separating equilibrium that satis es the intuitive criterion. In this equilibrium, a high-quality seller signals high quality through a low introductory price that rises in the next period (after experimentation has occurred), while a low-quality one charges a high introductory price, which declines over time because the revealed information is likely to be bad. This result helps explain recent empirical evidence and case studies on the introductory pricing strategies of rms entering foreign product markets.

Download or read book Consumer Deliberation and Quality Signaling written by Liang Guo and published by . This book was released on 2021 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Consumers are often uncertain about their product valuation before purchase. They may bear the uncertainty and purchase the product without deliberation. Alternatively, consumers can incur a deliberation cost to nd out their true valuation and then make their purchase decision. This paper proposes that consumer deliberation about product valuation can be an endogenous mechanism to enable credible quality signaling. We demonstrate this point in a simple setup in which product quality influences the probability that the product has high valuation. We show that with endogenous deliberation there may exist a unique separating equilibrium in which the high-quality fi rm induces consumer deliberation by setting a high price whereas the low-quality fi rm prevents deliberation by charging a low price. Compared to the case of complete information, the price of the high-quality rm can be distorted upward to facilitate consumer deliberation, or distorted downward to avoid the low-quality fi rm's imitation. In an extension we show that dissipative advertising can facilitate quality signaling. The high-quality fi rm can utilize advertising spending to avert imitation from the low-quality fi rm without distorting price downward, earning a higher profi t than that without advertising. However, advertising mitigates the distortion at the expense of consumer surplus and social welfare.

Download or read book Is All that Unequal Unfair On the Perceived Fairness of Price and Wage Disparities written by Nofar Duani and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In a prominent Forbes magazine piece, Anderson (2019) asks whether ethics really matter to today's consumers. The answer to this question appears to be a resounding yes. “Unlike any other time in history, consumers are truly demanding more from the companies with which they do business. Today's shoppers are looking for ethical, eco-friendly brands that put people and the planet ahead of profits.” One need not look far for prominent examples of consumers' moral outrage over injustice and unfairness in the marketplace. Critiques of discrimination and unequal economic outcomes are abound, and often spread like wildfire in today's virtual spaces. Whether these changes reflect a fundamental shift in consumers' preferences or merely platformed and elevated by social media, it is undoubtable that companies face increasing pressures to behave more ethically. One survey of UK consumers found that more than half of those surveyed wanted companies to take a stand on issues they care about such as sustainability, transparency and fair employment practices (Accenture Strategy 2018). Companies that do not align with customer beliefs pay the price. Consumers avoid sellers they perceive as unfair and are more likely to demand refunds, complain, and spread negative word of mouth upon encountering unfair tactics (Fehr and Schmidt 1999; Xia and Monroe 2017; Xia, Monroe, and Cox 2004). In this research I study consumers' fairness concerns in two domains. In essay 1, I examine the perceived fairness of demographic price discrimination. In this joint work with Alixandra Barasch and Vicki Morwitz we study the demographic price discrimination in the digital age. We find that consumers' fairness perceptions depend on who consumers believe is responsible for implementing it--a person or an algorithm. Contrary to the substantial literature emphasizing consumers' algorithm aversion, we show that consumers view demographic-based price discrimination as more fair when prices are determined by algorithms (versus humans). We also offer evidence for a mechanism we propose: when demographic price discrimination is performed by algorithms, people are less likely to attribute the discriminatory action to the agent's moral agency. In essay 2, I explore consumers' perceptions of the fairness of the gender pay gap. In this work, conducted with Alixandra Barasch and Amit Bhattacharjee, we examine how consumers evaluate unequal economic outcomes arising from explicitly unbiased institutional processes. Three studies find that men perceive gender pay gaps as equally fair regardless of direction, while women perceive the exact same outcomes as more indicative of institutional unfairness when they are disadvantaged than when men are disadvantaged. Our findings highlight one reason for the contentiousness of discussions on outcome inequality: evidence for institutional discrimination and perceptions of what constitutes unbiased treatment may be in the eye of the beholder.

Download or read book Pricing and Revenue Optimization written by Robert L. Phillips and published by Stanford University Press. This book was released on 2021-05-18 with total page 503 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book offers the first introduction to the concepts, theories, and applications of pricing and revenue optimization. From the initial success of "yield management" in the commercial airline industry down to more recent successes of markdown management and dynamic pricing, the application of mathematical analysis to optimize pricing has become increasingly important across many different industries. But, since pricing and revenue optimization has involved the use of sophisticated mathematical techniques, the topic has remained largely inaccessible to students and the typical manager. With methods proven in the MBA courses taught by the author at Columbia and Stanford Business Schools, this book presents the basic concepts of pricing and revenue optimization in a form accessible to MBA students, MS students, and advanced undergraduates. In addition, managers will find the practical approach to the issue of pricing and revenue optimization invaluable. With updates to every chapter, this second edition covers topics such as estimation of price-response functions and machine-learning-based price optimization. New discussions of applications of dynamic pricing and revenue management by companies such as Amazon, Uber, and Disney, and in industries such as sports, theater, and electric power, are also included. In addition, the book provides current coverage of important applications such as revenue management, markdown management, customized pricing, and the behavioral economics of pricing.

Download or read book The Conflict of Price Differentiation and Price Fairness written by Luisa Domanska and published by . This book was released on 2019-03-19 with total page 112 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2018 in the subject Business economics - Business Management, Corporate Governance, grade: 1,7, Cologne Business School Köln, language: English, abstract: The thesis describes the conflict of price differentiation strategies and the consumers' perception of price fairness in different manners. By that, the role of a price is explained in detail in the role of marketing, as well as it's role in behavioral economics regarding price fairness. Different examples, being a highly discussed topic in the current state of the art, are brought together to demonstrate the variety of this price policy. Uber, the haircutting industry as well as typical gender-based pricing or emergency situations represent crucial practices that are discussed in regard of moral and ethical limitations in terms of price fairness. Finally, the work aims to understand the limitations on price differentiation in the context of price fairness and tries to answer questions as: When is price differentiation acceptable for consumers and when should firms reconsider differential price strategies due to a perceived abuse of trust, anger or similar emotions of targeted customers? For that, an empirical social research is considered to bring first and secondary data together, and to enable the defintion of those limitations to become a little clearer.

Download or read book A Note on Pricing of Product Quality for Status Concerns written by Kangsik Choi and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper analyses the optimal pricing of the product quality scheme when concerns for relative standing exist among consumers. We demonstrate that if the proportion of high-value consumers is over (respectively, under) 1/2 of the total consumers, a firm has an incentive to select a large (respectively, small) quality gap among products. Therefore, there exists a cut-off level for status concerns, which eliminates quality differences, and the firm assigns the same quality to all the consumers. These results indicate that consumers' qualities will reflect distortions at the top and bottom. Accordingly, the firm's profit depends on which consumer category is larger.

Download or read book A Stakeholder Approach to Corporate Social Responsibility written by Philip Kotler and published by Routledge. This book was released on 2016-03-16 with total page 459 pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate social responsibility has grown into a global phenomenon that encompasses businesses, consumers, governments, and civil society, and many organizations have adopted its discourse. Yet corporate social responsibility remains an uncertain and poorly defined ambition, with few absolutes. First, the issues that organizations must address can easily be interpreted to include virtually everyone and everything. Second, with their unique, often particular characteristics, different stakeholder groups tend to focus only on specific issues that they believe are the most appropriate and relevant in organizations' corporate social responsibility programs. Thus, beliefs about what constitutes a socially responsible and sustainable organization depend on the perspective of the stakeholder. Third, in any organization, the beliefs of organizational members about their organization's social responsibilities vary according to their function and department, as well as their own managerial fields of knowledge. A Stakeholder Approach to Corporate Social Responsibility provides a comprehensive collection of cutting-edge theories and research that can lead to a more multifaceted understanding of corporate social responsibility in its various forms, the pressures and conflicts that result from these different understandings, and some potential solutions for reconciling them.

Download or read book Warranty and Price as Quality Signals written by Sultan Alaswad Alenazi and published by . This book was released on 2011 with total page 110 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Oxford Handbook of International Business written by Alan M. Rugman and published by Oxford Handbooks Online. This book was released on 2009-01-15 with total page 878 pages. Available in PDF, EPUB and Kindle. Book excerpt: As globalization explodes, so has international business scholarship. This second edition of the Oxford Handbook of International Business synthesises all the relevant literature of the last 40 years in 28 original chapters by the world's most distinguished scholars. Reflecting the changes and development in the field since the first edition this new edition has a changed structure, all the chapters have been updated to take account of the latest scholarship, and five new chaptersfreshly written.The Handbook is divided into six major sections, providing comprehensive coverage of the following areas:• History and Theory of the Multinational Enterprise• The Political and Regulatory Environment• Strategy and International Management• Managing the MNE• Area Studies• Methodological IssuesThese state of the art literature reviews will be invaluable references for students in business schools, social sciences, law, and area studies.

Download or read book The Effect of Drip Pricing on Consumers Fairness Perceptions written by Somak Banerjee and published by . This book was released on 2018 with total page 85 pages. Available in PDF, EPUB and Kindle. Book excerpt: Price fairness is an important area of consumer research and marketers ought to be cognizant of what triggers perceptions of (un)fairness, especially when they employ novel pricing tactics/tools. One such novel practice is drip pricing. The US Federal Trade Commission (FTC), the Office of Fair Trading (OFT) in the UK and the Australian Competition & Consumer Commissions (ACCC), have taken a keen interest in the drip pricing phenomenon since 2012, presumably because of its deceptive potential. However, there has been scarce research in drip pricing, especially in the behavioral domain. Also, the definition of the practice seems to be inconsistent across the literature and past research in drip pricing has reported of contrasting findings. In this dissertation, we first defined the practice of drip pricing, distinguished it from related practices and developed a typology of drip pricing. In the process, we cleared the current state of confusion surrounding the conceptualization of drip pricing. Next, through four experiments, we examined the behavioral effects of drip pricing and underscore our contribution to the pricing literature. In the first three studies, we compared the effects of drip pricing with common pricing practices (all-inclusive and standard partitioned) on perceptual outcomes such as consumer's purchase intention, their perception of price unfairness and the extent to which they perceive this practice to be deceptive. We also tested for multiple mediation hypotheses that explain the process behind the effects of drip pricing on consumer's perceptions using cognitive (perception of deception of the pricing practice and perceived granularity of price information) and affective factors (irritation) as mediators. Finally, in study four, we tested for boundary condition using 'expectation of drip pricing̕̕'.

Download or read book Doctors and Their Workshops written by Mark V. Pauly and published by University of Chicago Press. This book was released on 2009-05-15 with total page 143 pages. Available in PDF, EPUB and Kindle. Book excerpt: Doctors are obviously influential in determining the costs of their services. But even more important, many believe, is the influence physicians have over the use and cost of nonphysician health-care resources and services. Doctors and Their Workshops is the first comprehensive attempt to use economic analysis to understand some of the physician effects on nonphysician aspects of health care.