Economics Insights @ CBS

The current research explores how roles that possess power but lack status influence behavior toward others. Past research has primarily examined the isolated effects of having either power or status, but we propose that power and status interact to affect interpersonal behavior. Based on the notions that a) low-status is threatening and aversive and b) power frees people to act on their internal states and feelings, we hypothesized that power without status fosters demeaning behaviors toward others.

The authors propose that a crowded product space motivates consumers to better discriminate between options of different quality. Specifically, this article reports evidence from three controlled experiments and one natural experiment that people are prepared to pay more for high-quality products and less for low-quality products when they are considered in the context of a dense, as opposed to a sparse, set of alternatives. To explain this effect, the authors argue that consumers uncertain about the importance of quality learn from observing market outcomes.

Groups are very prevalent in organizations and society. Previous experiments on groups have mainly investigated how "minimal groups," which are only arbitrary labels, like "red" and "blue" group, can influence prosocial behavior, like altruistic cooperation and norm enforcement. But real groups are often more than just a label; they also involve social interactions leading to social ties, i.e., emotional bonds, between group members. Our experiments compare randomly assigned minimal groups to randomly assigned groups involving real social interactions.

Past research in marketing and psychology suggests that pricing structure may influence consumers' perception of value. In the context of two commonly used pricing schemes, pay-per-use and two-part tariff, we evaluate the impact of pricing structure on consumer preferences for access services. To this end, we develop a utility-based model of consumer retention and usage of a new service. A notable feature of the model is its ability to capture the pricing structure effect and measure its impact on consumer retention, usage, and pricing policy.