Consumer Behavior

We study the bidding strategies of vertically differentiated firms that bid for sponsored search advertisement positions for a keyword at a search engine. We explicitly model how consumers navigate and click on sponsored links based on their knowledge and beliefs about firm qualities. Our model yields several interesting insights; a main counterintuitive result we focus on is the "position paradox." The paradox is that a superior firm may bid lower than an inferior firm and obtain a position below it, yet it still obtains more clicks than the inferior firm.

Several researchers have proposed models of buyer behavior in noncontractual settings that assume that customers are "alive" for some period of time and then become permanently inactive. The best-known such model is the Pareto/NBD, which assumes that customer attrition (dropout or "death") can occur at any point in calendar time. A recent alternative model, the BG/NBD, assumes that customer attrition follows a Bernoulli "coin-flipping" process that occurs in "transaction time" (i.e., after every purchase occasion).

More and more firms are engaging in greenwashing, misleading consumers about their environmental performance or the environmental benefits of a product or service. The skyrocketing incidence of greenwashing can have profound negative effects on consumer and investor confidence in green products. Mitigating greenwashing is particularly challenging in a context of limited and uncertain regulation.

This guest editorial of JAR considers what the "new normal" of marketing will be and suggests that it will be the digitization of everything, the need for constant change and adaptation affected by the continuous flow of knowledge. Involving consumers in co-creation will be increasingly important, while raw data for market research has increased massively and so will require the tools and people to mine it.

This article considers scientific and public understandings of climate change and addresses the following question: Why is it that while scientific evidence has accumulated to document global climate change and scientific opinion has solidified about its existence and causes, U.S. public opinion has not and has instead become more polarized? Our review supports a constructivist account of human judgment.

Consider a firm that sells products over repeated seasons, each of which includes a full-price period and a markdown period. The firm may deliberately understock products in the markdown period to induce high-value customers to purchase early at full price. Customers cannot perfectly anticipate availability. Instead, they use observed past capacities to form capacity expectations according to a heuristic smoothing rule. Based on their expectations of capacity, customers decide to buy either in the full-price period or in the markdown period.

In many service industries, companies compete with each other on the basis of the waiting time their customers experience, along with other strategic instruments such as the price they charge for their service. The objective of this paper is to conduct an empirical study of an important industry to measure to what extent waiting time performance impacts different firms' market shares and price decisions.