Decision Making & Negotiations

In light of consumers’ growing dependence on their smartphones, this article investigates the nature of the relationship that consumers form with their smartphone and its underlying mechanisms. We propose that in addition to obvious functional benefits, consumers in fact derive emotional benefits from their smartphone—in particular, feelings of psychological comfort and, if needed, actual stress relief. In other words, in a sense, smartphones are not unlike adult pacifiers.

Submitting queries to search engines has become a major way for consumers to search for information and products. The massive amount of search query data available today has the potential to provide valuable information on consumer preferences. In order to unlock this potential, it is necessary to understand how consumers translate their preferences into search queries. Strategic consumers should attempt to maximize the information content of the search results, conditional on a set of beliefs on how the search engine operates.

We study multi-period sales-force incentive contracting where salespeople can engage in effort gaming, a phenomenon that has extensive empirical support. Focusing on a repeated moral hazard scenario with two independent periods and a risk-neutral agent with limited liability, we conduct a theoretical investigation to understand which effort profiles the firm can expect under the optimal contract.

Marketing research relies on individual-level estimates to understand the rich heterogeneity of consumers, firms, and products. While much of the literature focuses on capturing static cross-sectional heterogeneity, little research has been done on modeling dynamic heterogeneity, or the heterogeneous evolution of individual-level model parameters. In this work, the authors propose a novel framework for capturing the dynamics of heterogeneity, using individual-level, latent, Bayesian nonparametric Gaussian processes.

This article starts with the premise that while Design Thinking has value, there are yawning gaps in the research components of the process. More disciplined research will enable design thinkers to create better, more human-centered designs.

Many financial markets are operated as electronic limit order books (LOBs). Over short time scales, seconds to minutes, LOBs can be best understood and modeled as stochastic dynamical systems, and, specifically, ones that exhibit interesting and relevant queueing phenomena. I will offer a brief overview of algorithmic trading in a limit order book, and highlight how queueing phenomena play an important role in trade execution, and as a consequence in market behavior.

Qualitative research is often used by marketers to develop new brand positionings. This case illustrates how two sequentially applied qualitative approaches were used to generate positionings for a pet food brand. The methods included psychologically oriented focus groups and anthropologically informed ethnographies. When implemented independently by a single market research company, the two approaches inspired highly distinctive brand positionings.

In a multi-armed bandit (MAB) problem a gambler needs to choose at each round of play one of K arms, each characterized by an unknown reward distribution. Reward realizations are only observed when an arm is selected, and the gambler's objective is to maximize cumulative expected earnings over some planning horizon of length T. To do this, the gambler needs to acquire information about arms (exploration) while simultaneously optimizing immediate rewards (exploitation). The gambler's policy is measured relative to a (static) oracle that knows the identity of the best arm a priori.