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1 – 10 of over 8000Tae-Hyung Pyo, JaeHwan Kwon, Thomas Gruca and Dhananjay Nayakankuppam
The endowment effect is arguably one of the most robust phenomena documented in economics, behavioral decision theory and consumer research. However, the endowment effect has…
Abstract
Purpose
The endowment effect is arguably one of the most robust phenomena documented in economics, behavioral decision theory and consumer research. However, the endowment effect has traditionally been studied as a fairly static phenomenon at the transactional level of analysis.
Design/methodology/approach
This paper documents this “contagious” endowment effect using lab experiments and such field data as eBay transactions and discuss the managerial implication of these findings.
Findings
This study suggests that the endowment effect is not limited to the level of the specific object, but can manifest itself with the more abstract class of objects to which a specific object happens to belong.
Research limitations/implications
A logical next step would be to examine the boundary conditions – how similar does the subsequent object have to be for the endowment effect to transfer over to it? A related aspect would be whether there are boundary conditions arising from the quality of the endowment.
Practical implications
The effects reported here probably underlie the success of the many types of “bait and switch” schemes that have been used by the more unsavory type of marketer. As such, these findings might have implications for policy in the area of consumer protection.
Originality/value
This paper argues for and presents evidence consistent with the notion that the endowment effect is dynamic and can be transferred from one transaction to another and refer to this generalization of the endowment effect to other, similar products as “contagious endowment.”
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Noppanon Homsud and Nopadol Rompho
This study aims to determine the effect of cognitive biases, that is, anchoring effect, illusion of control, and endowment effect, on customer satisfaction.
Abstract
Purpose
This study aims to determine the effect of cognitive biases, that is, anchoring effect, illusion of control, and endowment effect, on customer satisfaction.
Design/methodology/approach
An experimental design was applied using 524 undergraduate students as participants. A three-way ANOVA was employed for data analysis.
Findings
Positive relationships were found between cognitive biases and customer satisfaction. However, no such relationships were found between the interactions of various types of cognitive bias and customer satisfaction, except the interaction between illusion of control and endowment effect.
Research limitations/implications
This study focuses only on three types of cognitive biases; thus, it cannot be generalized to other such systematic patterns.
Practical implications
Marketers can introduce cognitive bias when implementing marketing campaigns to boost customer satisfaction.
Originality/value
This study expands the knowledge boundary by addressing the impact of the interaction between various aspects of cognitive bias that drive customer satisfaction.
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Khalid Ballouli, Jason Reese and Brandon Brown
Although current literature offers support for understanding sport consumer behavior from psychological and sociological perspectives, there is a lack of research that examines…
Abstract
Purpose
Although current literature offers support for understanding sport consumer behavior from psychological and sociological perspectives, there is a lack of research that examines the effect of one’s emotional response to team outcomes on subsequent economic decisions. The purpose of this paper is to bridge this gap by studying how emotional responses to sport events moderate a typical endowment bias in the secondary ticket market.
Design/methodology/approach
This research comprised a 3×2×2 between-participants design with emotional state (positive, negative, and neutral), role (seller, buyer), and fan identification (high, low) as the three factors. Prospect theory and social identity theory guided hypothesis development whereby it was proposed that, depending on the affective response of study participants to positive, negative, or neutral publicity concerning the team, team identification would impact the transaction function (buyers vs sellers) on price values for tickets to a future event.
Findings
Findings revealed an interaction effect of emotions and team identification on the endowment effect to the extent that bargaining gaps between sellers and buyers increased or decreased depending on mood states and levels of identification with the team.
Originality/value
This study adds to the literature on emotions and the key role they play in effecting pricing decisions and consumer behavior, especially given fan identification is such a significant area of study with numerous implications for sport business and management.
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In managing hierarchical loyalty programs (HLP), firms often use a reward point expiration and status demotion policy to reduce financial liability and to encourage repeat…
Abstract
Purpose
In managing hierarchical loyalty programs (HLP), firms often use a reward point expiration and status demotion policy to reduce financial liability and to encourage repeat purchases. This study aims to examine how point expiration and status demotion policies affect customer patronage, the role of extension strategies in mitigating the negative effects of these policies on customers and the moderating role of status endowment in the effect of point expiration on customers patronage following status demotion experience.
Design/methodology/approach
Three experiments were conducted using the hotel industry as the context. The hypothesized relationships were tested using ANOVA and a serial moderated mediation analysis using SPSS PROCESS Macro.
Findings
Customers subjected to reward point expiration exhibited a higher level of anger and perceived severity of the problem than those subjected to status demotion in HLP. Consequently, when customers experienced both point expiration and status demotion, the point extension strategy rather than the status extension strategy was found to be a more effective remedy for reducing perceived unfairness, although there was no change in the level of patronage reduction between the two extension strategies. Importantly, the effect of point expiration on patronage reduction was stronger among endowed-status customers than earned-status customers, serially driven by heightened feelings of embarrassment and perceived unfairness.
Originality/value
The study adds to the existing literature on HLP by comparing the effects of point expiration and status demotion on customer patronage with practical insights for HLP managers.
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Thong Le Pham, Nghiem Tan Le, Nhi Nhat Phuong Ho and Thanh Cong Le
This study aims to analyse the consumption inequality between farm and non-farm households in rural Vietnam, using the data from the 2016 Vietnam household living standards survey.
Abstract
Purpose
This study aims to analyse the consumption inequality between farm and non-farm households in rural Vietnam, using the data from the 2016 Vietnam household living standards survey.
Design/methodology/approach
The present paper applies the “recentered influence functions (RIF)” in “Oaxaca-Blinder (OB)” type decomposition as proposed by Firpo et al. (2018) to allow for the flexible distribution of the outcome variables and the non-randomness of non-farm employment that violates the classical linearity assumption.
Findings
Non-farm households have significantly higher per capita consumption expenditure than farm households for the entire distribution. The gap in expenditure is large at low percentiles and narrowing with higher percentiles. At 10th percentile, the gap is estimated at 27.1%, but it is decreasing to 11.1% at 90th percentile. Most of the gaps are explained by the differences in the observed characteristics between farm and non-farm households such as ethnicity, education, income, internal transmittances and household composition. Non-farm households are endowed with more productive factors that result in higher per capita consumption expenditure.
Originality/value
Gaps in ethnicity and education are found to be key predictors of the inequality in consumption expenditures between farm and non-farm households, then, government policies that are aimed at increasing access to non-farm employment and education for ethnic minorities and for rural poor households are pathways to improve rural household welfare and hence reduce inequality.
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Thi Kieu Van Tran, Ehsan Elahi, Liqin Zhang, Van Huyen Bui, Quang Trung Pham, Thuy Duong Tran, Thi Lien Ta and Munawar Hassan
The purpose of this paper is to investigate the determinants of the gender gap in the gross value of rice yield in Vietnam.
Abstract
Purpose
The purpose of this paper is to investigate the determinants of the gender gap in the gross value of rice yield in Vietnam.
Design/methodology/approach
A panel data set of 12 provinces of Vietnam from 2010 to 2014 was used, collected from the Vietnam access to resources household survey. To measure the gender gap in the gross value of rice yield, two-stage least squares and Blinder – Oaxaca decomposition methods were used.
Findings
The gross value of rice productivity of male-headed households was 10.3 percent higher than that of female-headed households. The gender gap in rice productivity is caused by the endowment and structural effects; the endowment effect explained 53 percent of the gender gap in rice productivity and the structural effect 42 percent.
Practical implications
In order to reduce the gender gap and improve the gross value of rice yield, the following policies are suggested: female education and access to institutional services (extension and credit) should be improved and future research is needed to determine the reasons for gender discrimination in the agricultural production system.
Originality/value
The findings suggest that the difference in the gross value of rice yield between male- and female-headed households were mainly caused by endowments and returns from those endowments.
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Lucas Liang Wang, Qing Dai and Yan Gao
New venture status is the most prominent feature of entrepreneurial startups, but its performance implications have remained under-studied. This study aims to bridge this…
Abstract
Purpose
New venture status is the most prominent feature of entrepreneurial startups, but its performance implications have remained under-studied. This study aims to bridge this knowledge void and offer precise guidelines for startup managers in boosting performance.
Design/methodology/approach
The study develops and tests a multi-perspective model on the linkage between new venture status and firm performance by integrating I/O economics, resource-based view and dynamic capability perspective. The arguments from the first two perspectives point to an adverse effect of new venture status, which is contingent, respectively, on business differentiation and resource endowments. The third perspective grounds a positive relationship between new venture status and performance, which is more pronounced for firms with weaker dynamic capabilities.
Findings
Quantitative evidence from a sample of new and established firms in China shows that the direct effect of new venture status is negative but insignificant. Neither business differentiation nor dynamic capabilities moderate the relationship. Low resource endowments, however, reinforce the negative influence of new venture status. New venture status, thus, shapes firm performance through resource scarcity from resource-based view rather than competitive vulnerability from I/O economics or strategic flexibility from dynamic capability perspective.
Originality/value
Newness and new venture performance have both been extensively examined in literature. But the relationship between them has remained largely omitted. The multi-perspective model and the findings in this study help clarify the confusion as to whether newness is good or bad in the context of an emerging market and reveals the subtle mechanism the effect of newness unfolds.
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Christoph Bühren and Marco Pleßner
What if companies try to combine the IKEA and Trophy winner effects? The purpose of this study is to understand the similarities and differences between both effects. This is not…
Abstract
Purpose
What if companies try to combine the IKEA and Trophy winner effects? The purpose of this study is to understand the similarities and differences between both effects. This is not only theoretically but also practically important for the way that companies interact with their customers.
Design/methodology/approach
Successful work – invested either to create or to obtain a product – increases the customers’ valuation of the product. This phenomenon known as the IKEA or Trophy winner effect. This study directly compares both effects using experiments with two different products (paper planes and 3D puzzles). Moreover, this study tests whether they reinforce each other.
Findings
The Trophy winner effect looms larger than the IKEA effect for inexpensive items. For slightly more expensive products, this study finds a Trophy loser effect. Positive emotions of trophy winners drive the results for inexpensive products, whereas negative emotions of trophy losers drive the results for slightly more expensive products.
Research limitations/implications
The relevance of the IKEA and Trophy effects is influenced by the type of product. Customers’ labor invested in the product itself is of greater importance the more expensive the product is. As soon as customers interpret the interaction with other customers as competition, the effect on valuation can be substantial even for inexpensive products. Future studies could try to replicate our results with different product categories.
Originality/value
Although the IKEA and Trophy effects are no new phenomena in consumer psychology and behavioral economics, they have not been compared to each other or combined yet. The results are useful for researchers and practitioners alike. They yield implications for product customization and customer empowerment.
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Xu He and Takeshi Sakurai
Total farmland value exceeds its value in agriculture but is not directly perceptible to villagers in China. Thus, the exceeded part is often neglected when discussing farmer’s…
Abstract
Purpose
Total farmland value exceeds its value in agriculture but is not directly perceptible to villagers in China. Thus, the exceeded part is often neglected when discussing farmer’s land transaction decision. This study aims to revisit the question about how land titling project affects farmer’s land renting-out and investigate how this unobservable land value would distort the intentional effects of land titling.
Design/methodology/approach
This paper first modifies a two-period model by incorporating the unobservable part of land value into the farmers’ leasing decision problem. Following the implications from the theoretical analysis, this study then exploits the difference-in-differences and the triple-differences approach to confirm the distorting effects that are resulted from the unobservable land value.
Findings
The modified theoretical model of this study reveals that land titling would encourage farmers to rent out land when the unobservable land value is predicted to be low but discourage farmers’ willingness to rent-out when this value is predicted to be high. The core reason for this significant conclusion lands in the uncertainty of the unobservable land value. Empirical analysis then provided two evidences for this presumption. Furthermore, this study also gave a disproof of the argument that the uncovered discouraging effect is due to a stronger endowment effect.
Originality/value
This paper contributes to the literature by highlighting the unobservable land value in the farmers’ land-related decisions. This part of land value is always neglected in previous discussions about the land tenure system, but it would cause distorting effects especially in regions without private land ownership.
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