Breaking the Cycle: How the News and Markets Created a Negative Feedback Loop in COVID-19
New research from CBS Professor Harry Mamaysky reveals how negativity in the news and markets can escalate a financial crisis.
New research from CBS Professor Harry Mamaysky reveals how negativity in the news and markets can escalate a financial crisis.
Adapted from “Global Value Chains in Developing Countries: A Relational Perspective from Coffee and Garments,” by Laura Boudreau of Columbia Business School, Julia Cajal Grossi of the Geneva Graduate Institute, and Rocco Macchiavello of the London School of Economics.
Adapted from “Online Advertising as Passive Search,” by Raluca M. Ursu of New York University Stern School of Business, Andrey Simonov of Columbia Business School, and Eunkyung An of New York University Stern School of Business.
This paper from Columbia Business School, “Meaning of Manual Labor Impedes Consumer Adoption of Autonomous Products,” explores marketing solutions to some consumers’ resistance towards autonomous products. The study was co-authored by Emanuel de Bellis of the University of St. Gallen, Gita Johar of Columbia Business School, and Nicola Poletti of Cada.
Co-authored by John B. Donaldson of Columbia Business School, “The Macroeconomics of Stakeholder Equilibria,” proposes a model for a purely private, mutually beneficial financial agreement between worker and firm that keeps decision-making in the hands of stockholders while improving the employment contract for employees.
At Columbia Business School, our faculty members are at the forefront of research in their respective fields, offering innovative ideas that directly impact the practice of business today. A quick glance at our publication on faculty research, CBS Insights, will give you a sense of the breadth and immediacy of the insight our professors provide.
As a student at the School, this will greatly enrich your education. In Columbia classrooms, you are at the cutting-edge of industry, studying the practices that others will later adopt and teach. As any business leader will tell you, in a competitive environment, being first puts you at a distinct advantage over your peers. Learn economic development from Ray Fisman, the Lambert Family Professor of Social Enterprise and a rising star in the field, or real estate from Chris Mayer, the Paul Milstein Professor of Real Estate, a renowned expert and frequent commentator on complex housing issues. This way, when you complete your degree, you'll be set up to succeed.
Columbia Business School in conjunction with the Office of the Dean provides its faculty, PhD students, and other research staff with resources and cutting edge tools and technology to help push the boundaries of business research.
Specifically, our goal is to seamlessly help faculty set up and execute their research programs. This includes, but is not limited to:
All these activities help to facilitate and streamline faculty research, and that of the doctoral students working with them.
We propose and test new adaptive question design and estimation algorithms for partial-profile conjoint analysis. Polyhedral question design focuses questions to reduce a feasible set of parameters as rapidly as possible. Analytic center estimation uses a centrality criterion based on consistency with respondents' answers. Both algorithms run with no noticeable delay between questions. We evaluate the proposed methods relative to established benchmarks for question design (random selection, D-efficient designs, adaptive conjoint analysis) and estimation (hierarchical Bayes).
In this research, we tested the effects of chronic and temporary sources of accessibility on impression formation. Although some research suggests that chronicity amplifies temporary effects because of greater susceptibility to external primes, other research suggests that chronicity masks temporary effects because of redundance. We demonstrate in a thought listing study that in the domain of gender stereotypes, trait stereotypes may be routinely applied by those with a medium or high tendency to stereotype women, making external primes redundant.
This research focuses on the diffusion patterns of the adjacent generations of technology and its relation to the time that elapses between them (intergeneration time). The authors analyze 45 new technologies in 15 industries and find that the adoption curves systematically vary across generations from 2 years for dynamic random-access memory (DRAM) chips to more than 30 years for steelmaking. The longer the intergeneration time, the slower the adoption of the subsequent technology.
This paper studies dynamic competition in markets characterized by the introduction of technologically advanced next-generation products. Firms invest in new product effort in an attempt to attain industry leadership, thus securing high profits and benefiting from advantages relevant for the success of future product generations. The analysis reveals that when the current leader possesses higher research and development (R&D) competence, it tends to invest more in R&D than rivals and to retain its lead position.
As more firms adopt a customer asset management approach to their business, it has become increasingly important to understand how customer management efforts relate to the financial performance of the firm. Of specific interest to shareholders is the relationship between traditional financial measures and customer-centric measures. The customer-centric measure that has received the most attention is customer lifetime value (CLV).
This article proposes a model of judgment revision, which posits that counterattitudinal challenges to a brand initially trigger a memory search for proattitudinal information about this brand. The proattitudinal information accessible from memory is then aligned with information contained in the challenge in order to assess the diagnosticity of the challenge, that is, how much it "damages" the retrieved brand information. If the challenge is not perceived to be diagnostic, the retrieved brand information is used to defend the previous attitudinal position.
Pricing is one of the most crucial determinants of sales. Besides the actual price, how the price offering is presented to consumers also affects consumer evaluation of the product offering. Many studies focus on "price framing," i.e., how the offer is communicated to the consumer?is the offered price given along with a reference price, is the reference price plausible, is a price deal communicated in dollar or percentage terms. Other studies focus on "situational effects," e.g., is the evaluation for a national brand or a private brand, is it within a discount store or a specialty store.
The author studies the pricing of information with private value (e.g., management consulting, legal advice, medical diagnosis). Anecdotal evidence shows that in some of these markets, competing information sellers split the business to sell only first or second opinions to their customers. The author explains this pricing practice by showing that second-opinion markets are a result of temporal differentiation.
For the past four decades, dozens of researchers have studied consumer price knowledge, often with disagreements on the extent of consumer' ignorance about prices. While some of these disagreements have been attributed to research design variations among studies, no inquiry has yet been made on the role of the economic environment on consumer price knowledge. Nevertheless, environmental factors such as interest rates, unemployment, and economic growth may significantly influence consumers' knowledge of prices.
Multidisciplinary evidence suggests that people often make evaluative judgments by monitoring their feelings toward the target. This article examines, in the context of moderately complex and consciously accessible stimuli, the judgmental properties of consciously monitored feelings.
Traditionally the management of brands has been entrusted to middle management. However, it is becoming increasingly apparent that brands are of such critical strategic importance, that they are more appropriately placed under the direct responsibility of senior management. Indeed, we believe that senior managers should act as brand custodians. For this new responsibility, senior managers need integrative overviews of brands and their management.
Traditionally the management of brands has been entrusted to middle management. However, it is becoming increasingly apparent that brands are of such critical strategic importance, that they are more appropriately placed under the direct responsibility of senior management. Indeed, we believe that senior managers should act as brand custodians. For this new responsibility, senior managers need integrative overviews of brands and their management.
Despite the importance of decisions regarding international brand names, research on brand naming has focused primarily on English name creation. The authors conceptualize the local brand-name creation process in a multilingual international market. The authors present a framework that incorporates (1) a linguistic analysis of three translation methods—phonetic (i.e., by sound), semantic (i.e., by meaning), and phonosemantic (i.e., by sounds plus meaning)—and (2) a cognitive analysis focusing on the impact of primes and expectations on consumer name evaluations.
The authors suggest that people strategically manage—specifically, lower—their expectations to increase future satisfaction. Consumers who are more disconfirmation sensitive, that is, those who are more satisfied (dissatisfied) when a product performs better (worse) than expected, are hypothesized to have lower expectations. In contrast, the authors expect that consumers who are perfectionists will have higher expectations than those who are not. Results from a laboratory experiment and a field study are consistent with the hypotheses.
This paper argues that it is important to include the other party's payoff in a competitor's utility (satisfaction) function. Examples of the impact are provided as well as implications for multi-stage games (competitions). A sample of 200 provides empirical support for the critical role other party results play in satisfaction, in particular the importance of relative payoffs. Several implications emerge, including a parsimonious explanation for the exponential pattern of shares in mature markets.
Previous research suggests that attitudinal resistance to information that challenges a prior evaluation increases with the amount of information underlying the prior evaluation. We revisit this proposition in a context in which a set of important claims about a target brand are presented either alone—a lower amount of "isolated"? information—or along with other favorable, but less important claims— a higher amount of "embedded" information. Results from two experiments show that when the challenge occurs immediately after the initial evaluation, a greater amount of "embedded"?
The authors examine two aspects of brand loyalty, purchase loyalty and attitudinal loyalty, as linking variables in the chain of effects from brand trust and brand affect to brand performance (market share and relative price). The model includes product-level, category-related controls (hedonic value and utilitarian value) and brand-level controls (brand differentiation and share of voice). The authors compile an aggregate data set for 107 brands from three separate surveys of consumers and brand managers.
The authors investigate two competing hypotheses about how chronic vividness of imagery interacts with the vividness and salience of information in decision making. Results from four studies, covering a variety of decision domains, indicate that chronic imagery vividness rarely amplifies the effects of vivid and salient information. Imagery vividness may, in fact, attenuate the effects of vivid and salient information. This is because, relative to nonvivid imagers, vivid imagers rely less on information that appears obvious and rely more on information that seems less obvious.
To understand really new products, consumers face the challenge of constructing new knowledge structures rather simply changing existing ones. Recent research in categorization suggests that one strategy for creating representations for these new products is to use information already contained in familiar product categories. While knowledge from multiple existing categories may be relevant, little research has examined how (and if) consumers process information drawn from more than one domain.
Although diffusion models have been successfully used to predict the adoption patterns of new products and technologies, little research has examined the psychological processes underlying the individual consumers adoption decision. This study uses the knowledge transfer paradigm, studied often in the context of analogies, to demonstrate that both existing knowledge and innovation continuity are major factors influencing the consumers adoption process. In two experiments, the authors demonstrate that the relationship between expertise and adoption is relatively complex.
It has been recently suggested that sponsor identification may be biased in favor of prominent brands. All things equal, consumers are more likely to attribute sponsorship to brands that they perceive to be more prominent in the marketplace, such as large-share brands. This article offers additional empirical evidence for this phenomenon and examines the underlying processes. The results of a controlled laboratory experiment replicate the phenomenon and show that this bias arises only when consumers are unable to retrieve the name of the sponsor directly from memory.
It has been recently suggested that sponsor identification may be biased in favor of prominent brands. All things equal, consumers are more likely to attribute sponsorship to brands that they perceive to be more prominent in the marketplace, such as large-share brands. This article offers additional empirical evidence for this phenomenon and examines the underlying processes. The results of a controlled laboratory experiment replicate the phenomenon and show that this bias arises only when consumers are unable to retrieve the name of the sponsor directly from memory.
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.
Professional services firms (e.g., consultants, accounting firms, or advertising agencies) generate and sell business solutions to their customers. In doing so, they can leverage the cumulative experience gained from serving their customer base to either reduce their variable costs or increase the quality of their products/services. In other words, their "production technology" exhibits some form of increasing returns to scale.
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.
Tests for mediation and moderation are widely employed, usually in a formulaic manner. However, these tests are only a means to the goal of developing a causal understanding of a phenomenon.
The author is asked to consider the following: For a meta-analysis, how should one decide if the same independent variable was used in all studies? When one is studying the effect of a drug, it is relatively easy. However, in consumer experiments, all the experimenters may state that they manipulated the same construct, but they actually manipulated the construct in two different ways, and the type of manipulation produces differences in the results.
In view of the distressingly low rate of success in new product introduction, it is important to identify predictive guidelines early in the new product development process so that better choices can be made and unnecessary costs avoided. In this paper, a framework for early analysis based on the success potential embodied in the product-idea itself and the circumstances of its emergence. Based on two studies reporting actual introductions, several determinants are identified that significantly distinguish successful from unsuccessful new products in the marketplace.
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.
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.
Returns policies are usually thought of as being a way to insure retailers against excess inventory. The work of Pellegrini (1986), Chu (1993), Lin (1993) and Padmanabhan and Png (1997) highlights the fact that there is considerably more to returns policies than just a mechanism for insurance. Our work identifies a heretofore undocumented rationale for returns policy: its role in learning the demand for a new product. The model of manufacturer?retailer interaction assumes that the demand is uncertain but correlated across time periods.
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.
A study examines the sale of a product across channels. Using data from 35 movies, exponential sales curves are estimated for both theater attendance and video rentals. How knowledge of the sales parameters in the first channel helps predict sales in the subsequent channel is demonstrated.
In four experiments we examine the ability of simple concurrent disclosures to correct invalid inferences about brand quality based on advertising claims. We ensure that the disclosure is always encoded, yet we find that it is utilized to correct invalid inferences only under high-capacity conditions. Across the experiments, cognitive capacity is operationalized as opportunity to process (time), ability (explicitness of disclosure), and motivation (accuracy incentive).
The authors propose a new methodology called the "coupled-hazard approach" to study the global diffusion of technological innovations. Beyond its ability to describe discontinuous diffusion patterns, the method explicitly recognizes the conceptual difference between the timing of a country's introduction of the new technology (the so-called implementation stage; Rogers 1983) and the timing of the innovation's full adoption in the country (the confirmation stage).
The authors study global adoption processes where the units of observation are countries, which sequentially adopt a particular technology. The authors’ goal is to provide a better understanding of how exogenous and endogenous country characteristics affect this diffusion process. They develop a general model of global adoption processes, which allows researchers to test extant theories of cross-country adoption, and illustrate the approach using data from the cellular telephone industry for 184 countries.
Prior evaluations are frequently challenged and need to be revised. We propose that an important determinant of such revisions is the degree to which the challenge provides an opportunity to compare the target against a competitor. Whenever a challenge offers an opportunity, the information contained in the challene will carry a disproportionate weight in the revised judgments. We call this proposition the comparison-revision hypothesis.
Cultural commentators addressing the differences between high art and mere entertainment have suggested that the standards of popular appeal governing the tastes of ordinary consumers differ from the criteria for excellence employed by professional critics in rendering expert judgments. These concerns appear in discussions of the cultural hierarchy (distinguishing among levels of tastes) and in claims that commercialism tends to degrade cultural objects (by catering to tastes that represent the lowest common denominator).
Affective states of the same valence may have distinct, yet predictable, influences on decision processes. Results from three experiments show that, in gambling decisions, as well as in jobselection decisions, sad individuals are biased in favor of highrisk/high-reward options, whereas anxious individuals are biased in favor of low-risk/low-reward options. We argue that these biases occur because anxiety and sadness convey distinct types of information to the decision-maker and prime different goals.
Marketers all over the world agree that the Internet will have a major impact on the way firms do business. What changes will exactly occur, however, is hard to predict as the Internet is in a phase of rapid growth and constant change. Patterns are difficult to isolate, especially since despite its explosive growth, today, the Net is still in its infancy, only being available to a small proportion of people. In spite of this general lack of reliable patterns, one consensus among managers seems to be that the Internet is likely to intensify price competition.
This article examines the time between product development and market launch, and its relation to the subsequent diffusion of consumer durables. We find that this "incubation time" is long. Further, it is a useful predictor of the shape of the subsequent sales diffusion curve. Using the Bass model as a base, we find that the longer the incubation time, the lower the coefficient of innovation (p) and the longer the time to peak sales. Further, using the incubation time in a Bayesian forecasting model significantly improves forecasts early in the life cycle.
This article examines the time between product development and market launch, and its relation to the subsequent diffusion of consumer durables. We find that this "incubation time" is long. Further, it is a useful predictor of the shape of the subsequent sales diffusion curve. Using the Bass model as a base, we find that the longer the incubation time, the lower the coefficient of innovation (p) and the longer the time to peak sales. Further, using the incubation time in a Bayesian forecasting model significantly improves forecasts early in the life cycle.
Different theories, areas of substantive interest, and methods are needed to prevent consumer behavior from becoming increasingly isolated and of marginal relevance in market research. More progress will be made by focusing on relatively underresearched areas, such as: 1. focus on time, 2. the adaptive consumer, and 3. relevant dependent variables. Avenues for substantive focus include: 1. important decisions, 2. not just price and advertising, and 3. the impact of major events. Issues that arise with respect to the methods used to study consumer behavior include: 1.
This article analyzes how Knowledge Management (KM) is likely to affect competition in the management consulting industry. KM represents a fundamental and qualitative change in this industry's basic production technology. Because management consultants acquire information directly from their customers, for these firms, KM technology exhibits increasing returns to scale. As such, although KM clearly represents an opportunity for some consultants to build a sustainable competitive advantage, it is likely to lead to a shake-out.
Consumers make multi-category decisions in a variety of contexts such as choice of multiple categories during a shopping trip. While complementarity gives managers some control over consumers' buying behavior, co-occurrence or co-incidence is less controllable. Other acts that may affect multi-category choice may be household preferences or household demographics. Not accounting for these 3 factors simultaneously could lead to erroneous inferences.
Generalized knowledge comes from cumulating results across studies, a process known as meta-analysis. Efficiently increasing generalized knowledge in a defined area-estimates of price or advertising, for example-is one important goal for research. Because (1) most meta-analyses are based on highly inefficient and unbalanced natural experiments or designs and (2) additional studies are costly, carefully selecting the next study is important.
It has been suggested that evaluations may be based on a "How-do-I-feel-about-it?" heuristic, which involves holding a representation of the target in mind and inspect feelings that this representation may elicit. Previous studies have shown that reliance on such feelings depends on whether they are believed to be representative of the target. This paper argues that it also depends on whether feelings toward the target are regarded as relevant.
This study investigates factors influencing causal attributions in managerial decision making. Three categories of factors are identified: (i) prior beliefs (ii) background frequencies, and (iii) covariation cues. The impact of factors in each of the above categories on causal attribution are studied in a marketing decision making context. Subjects demonstrated a bias toward assigning causality to variables that occurred infrequently or were controllable. Also, subjects were particularly influenced by the joint-occurrences of cause and effect variables.