Consumer Behavior

We analyze an airline yield management problem on a single flight leg in which the buyers' choice of fare classes is modeled explicitly. The choice model we use is very general and includes a wide range of discrete choice models of practical interest. The optimization problem is to find, at each point in time, the optimal subset of fare classes to offer. We characterize the optimal policy for this problem exactly and show it has a surprisingly simple form.

This paper has three objectives. First, we develop an equilibrium pricing model in which consumers have incomplete information about both product qualities and prices. Specifically, manufacturers can use high prices to signal high quality to uninformed consumers. Furthermore, prices of any given brand can vary geographically across retail outlets. We show that previous models are special cases of our model. Specifically, the hedonic regression model assumes that consumers have full information about all product qualities and prices.

The telecommunications industry is a fragmented market, characterized by a tremendous amount of customer heterogeneity. This paper shows how such customer heterogeneity dramatically affects nonlinear pricing strategies: (i) First, if there are unbalanced calling patterns between different customer types, networks make larger profits on the least attractive customers. In addition, the nature of the calling pattern substantially affects how networks discriminate implicitly between different customer types.

This paper develops a stochastic general equilibrium model for an oligopoly, in which all inventory constraint parameters are endogenously determined. We propose several systems of demand processes whose distributions are dunctions of all retailers' prices and all retailers' service levels. We proceed with the investigation of the equilibrium behavior of infinite-horizon models for industries facing this type of generalized competition, under demand uncertainty.

This study examines whether the quality of online buying experience represents a competitive advantage for Internet firms focused on business to consumer e-commerce (“e-commerce” firms). Forrester Research, a consulting firm, estimates that revenues in the business to consumer segment will grow from $20 billion in 1999 to $184 billion by 2004. Such explosive growth is due, in part, to the superior shopping experiences that new e-commerce firms offer.

Recent field and laboratory studies have shown that, although extensive choice is initially appealing, it may hinder motivation to buy and decrease subsequent satisfaction with purchased goods. The following investigation examines whether these findings generalize to employees who are making decisions about whether to invest in 401(k) retirement savings plans.

Companies are collecting increasing amounts of information about their customers. This effort is based on the assumption that more information is better and that this information can be leveraged to predict customers' behavior in a variety of situations and product categories. For example, information about a customer's purchase behavior in one category can be helpful in predicting his potential behavior in a related category, which in turn could help a firm in its cross-selling efforts.

The authors propose that the revenue premium a brand generates compared with that of a private label product is a simple, objective, and managerially useful product-market measure of brand equity. The authors provide the conceptual basis for the measure, compute it for brands in several packaged goods categories, and test its validity. The empirical analysis shows that the measure is reliable and reflects real changes in brand health over time.