Consumer Behavior

The purpose of this chapter is to discuss how regulatory focus theory (Higgins 1997, 1998, 2002)—a theory of motivation and self-regulation that has been rapidly gaining prominence in consumer research (e.g., Aaker and Lee 2001; Briley and Wyer 2002; Pham and Avnet 2004; Zhou and Pham 2004)—can be drawn upon to explain a variety of consumer decision-making phenomena. We briefly review the major tenets of the theory, which proposes a fundamental distinction between two modes of self-regulation called promotion and prevention.

In this paper, we investigate the equilibrium behavior of decentralized supply chains with competing retailers under demand uncertainty. We also design contractual arrangements between the parties that allow the decentralized chain to perform as well as a centralized one.

This paper conducts a probabilistic analysis of an important class of heuristics for multi-item capacitated lot sizing problems.

Prior research suggests that bicultural individuals (i.e., individuals with 2 distinct sets of cultural values) shift the values they espouse depending on cues such as language. The authors examined whether the effects of language extend to a potentially less malleable domain, behavioral decisions, exploring the extent to which bilingual individuals shift the underlying strategies used to resolve choice problems.

We study a model of imperfect competition and limited production capacity, in which a choice of low product quality enables firms to increase total production. We find that in the presence of limited capacity, such reduced quality often results in increased social welfare. We also explore the relation between the extent of competition and the choice of quality. We find that, in some cases, reduced competition leads to increased production, decreased average quality, increases total welfare, and makes consumers better off.

Using pooled cross-sectional data from the Surveys of Consumer Finances, and new panel data from TIAA-CREF, we examine the empirical relationship between age and portfolio choice, focusing on the observed relationship between age and the fraction of wealth held in the stock market. We illustrate and discuss the importance of the well-known identification problem that prevents unrestricted estimation of age, time and cohort effects in longitudinal data.

This empirical investigation tests the hypothesis that the benefits of personal choosing are restricted to choices made from among attractive alternatives. Findings from vignette and laboratory studies show that, contrary to people's self-predictions, choosers only proved more satisfied than non-choosers when selecting from among liked alternatives. When selecting from among disliked alternatives, the reverse is observed - that is, non-choosers proved more satisfied with the decision outcome than choosers.

The contribution of the feelings-as-information hypothesis to our understanding of the role of affect in judgment and decision making is discussed. Basic principles and regularities in how affective feelings guide judgments and decisions are then identified. Based on these principles and regularities, it is argued that the role of feelings in judgment and decision making may be more adaptive than has been assumed in most academic circles.