Decision Making & Negotiations

The common image of a lone folk scientist laboring to make sense of a single agent's behavior is helpful but incomplete in its recognition of social context as it surrounds the perceiver and as it is reflected in the perceiver's folk theories. In this chapter, we review insights from social and cultural psychology that both confirm and expand the perceiver-as-scientist view. We proceed in three parts.

We examine consumers' price sensitivity using a new approach that incorporates probabilistic thresholds for price gains and price losses in the reference price models. We model the threshold as a function of company, competitor and consumer specific factors. Model application to scanner panel data for coffee shows that our model is superior in fit compared to ordinary logit and two existing reference price models.

A long and rich tradition in Western-dominated social psychology has examined the effects of people's observations of their own behavior on their subsequent attitudes and behaviors. Studies in this tradition examine and find moderating effects of various contextual factors (e.g., volition and publicness) on people's tendencies to align their attitudes/behaviors with their observed behaviors. Conversely, there has been a historical tradition for examining the effects of social influences and group pressure on human thought and behavior.

This paper considers the current thrust in marketing to create global products, brands and strategies but also to "act local" when appropriate. Deciding which elements have similar effects and which are significantly different conceptually requires meta-analysis of each of the elements. Reviews some applications of marketing meta-analysis with a focus on international research.

For almost half a century, researchers have examined consumer knowledge of prices, often with disturbing and conflicting results. Although the general findings suggest that consumer knowledge of prices is poorer than assumed in neoclassical economic theory, significant variations among results exist. The authors synthesize findings from prior studies to determine the impact of research design choices on price recall accuracy measures.

A study uses Procter & Gamble's value pricing strategy as an opportunity to examine consumer and competitor response to a major, sustained change in marketing-mix strategy. The study estimates an econometric model to trace how consumers and competitors react to such changes. For the average brand, the study finds that deals and coupons increase market penetration and surprisingly have little impact on customer retention as measured by share-of-category requirements and category usage.

This research examines, across 2 studies, the interplay between the valence and arousal components of affective states and the affective tone of a target ad. In the first study, music was used to induce a pleasant or unpleasant mood, while controlling for arousal. Participants were subsequently exposed to an ad that either had a positive-affective tone or was ambiguous in its affective tone. As predicted, the valence of the affective state colored the evaluation of the ad in a mood-congruent direction, but this coloring effect occurred only when the ad had an ambiguous-affective tone.

The paper "Whence Reform?" by the Polish economists Marek Dabrowski, Stanislaw Gomulka, and Jacek Rostowski (DGR) is a welcome and revealing commentary on what is called the "Stiglitz Perspective." Our main response is gratitude at DGR's agreement with the main theses of "Whither Reform?" such as the critiques of voucher privatization and of the attempts to quickly install institutional reforms involving long agency chains. Our positions are not poles apart.

From the publisher: From the "guru to Wall Street's gurus" comes the fundamental techniques of value investing and their applications. Bruce Greenwald is one of the leading authorities on value investing. Some of the savviest people on Wall Street have taken his Columbia Business School course on the subject. Now this dynamic and popular teacher, with some colleagues, reveals the fundamental principles of value investing, the one investment technique that has proven itself consistently over time.