Columbia Business School Research

Purchase intentions are frequently measured and used by marketing managers as an input for decisions about new and existing products and services. Purchase intentions are correlated and predict future sales, but do so imperfectly. I review and summarize research on the relationship between purchase intentions and sales that has been conducted over the past 60 years. This review offers insights into how best to measure purchase intentions, how to forecast sales from purchase intentions measures, and why purchase intentions do not always translate into sales.

Just as we have learned a great deal in consumer psychology by focusing on understanding how different sub-groups of humans think, this paper suggests that we can also learn from examining how different types of animals think. To that end, this manuscript offers a review of literature on topics in animal cognition that have also been investigated by consumer researchers.

We investigate the impact of pharmaceutical innovation on longevity, hospitalization and medical expenditure in Turkey during the period 1999–2010 using longitudinal, disease-level data.

This paper studies the optimal level of discretion in policymaking. We consider a fiscal policy model where the government has time-inconsistent preferences with a present bias towards public spending. The government chooses a fiscal rule to trade off its desire to commit to not overspend against its desire to have flexibility to react to privately observed shocks to the value of spending. We analyze the optimal fiscal rule when the shocks are persistent.

We investigate whether homeowners respond strategically to news of mortgage modification programs by defaulting on their mortgages. We exploit plausibly exogenous variation in modification policy induced by U.S. state government lawsuits against Countrywide Financial Corporation, which agreed to offer modifications to seriously delinquent borrowers with subprime mortgages throughout the country. Using a difference-in-difference framework, we find that Countrywide's relative delinquency rate increased more than ten percent per month immediately after the program's announcement.

Chetty, Friedman, and Rockoff (2014)[CFR] evaluate the degree of bias in teacher value-added (VA) estimates using a “teacher switching” research design, regressing changes in mean test scores across cohorts on changes in mean teacher VA. Recent studies (Kane, Staiger, and Bacher-Hicks 2014, Rothstein 2014) have found that regressing changes in mean scores in the prior grade on changes in mean VA also yields a positive coefficient, a result we confirm in our data.

This research examines how core consumers of selective brands react when core users obtain access to the brand. Contrary to the view that non-core users and downward brand extensions pose a threat to the brand, this work investigates the conditions under which these non-core users enhance rather than dilute the brand image.

This research examines how oral haptics (due to hardness/softness or roughness/smoothness) related to foods influence mastication (i.e., degree of chewing) and orosensory perception (i.e., orally perceived fattiness), which in turn influence calorie estimation, subsequent food choices, and overall consumption volume. The results of five experimental studies show that, consistent with theories related to mastication and orosensory perception, oral haptics related to soft (vs. hard) and smooth (vs. rough) foods lead to higher calorie estimations.

The emergence of large longitudinal datasets linking students to teachers has led to an explosion in the study of teacher effects on student outcomes by economists over the last decade. One large literature has documented wide variation in teacher effectiveness that is not well explained by observable student or teacher characteristics. A second literature has investigated how educational outcomes might be improved by leveraging teacher effectiveness, through processes of recruitment, assignment, compensation, evaluation, promotion, and retention.

Power transforms consumer behavior. This research introduces a critical theoretical moderator of power's effects by promoting the idea that power is accompanied by both an experience (how it feels to have or lack power) and expectations (schemas and scripts as to how those with or without power behave). In some cases, the psychological experience of power predisposes people to behave one way, whereas attention to the expectations of power suggests behaving in another way. As a consequence, power's effects for consumer behavior can hinge on consumers' focus.

Five studies examined the relationship between talent and team performance. Two survey studies found that people believe there is a linear and nearly monotonic relationship between talent and performance: Participants expected that more talent improves performance and that this relationship never turns negative. However, building off research on status conflicts, we predicted that talent facilitates performance — but only up to a point, after which the benefits of more talent decrease and eventually become detrimental as intrateam coordination suffers.

We propose a new definition of skill as a general cognitive ability to either pick stocks or time the market at different times. We find evidence for stock picking in booms and for market timing in recessions. Moreover, the same fund managers that pick stocks well in expansions also time the market well in recessions. These fund managers significantly outperform other funds and passive benchmarks. Our results suggest a new measure of managerial ability that gives more weight to a fund's market timing in recessions and to a fund's stock picking in booms.

We conduct the first nationwide study of incentives under the No Child Left Behind (NCLB) Act, which requires states to punish schools failing to meet target passing rates on students' standardized exams. States' idiosyncratic policies created variation in the risk of failure among very similar schools in different states, which we use to identify effects of accountability pressure.

We conduct and analyze two large surveys of hypothetical annuitization choices. We find that allowing individuals to annuitize a fraction of their wealth increases annuitization relative to a situation where annuitization is an "all or nothing" decision. Very few respondents choose declining real payout streams over flat or increasing real payout streams of equivalent expected present value. Highlighting the effects of inflation increases demand for cost of living adjustments. Frames that highlight flexibility, control, and investment significantly reduce annuitization.

Five studies examined the effect of breadth and depth of foreign experiences on generalized trust. Study 1 found that the breadth (number of countries traveled) but not the depth (amount of time spent traveling) of foreign travel experiences predicted trust behavior in a decision-making game. Studies 2 and 3 established a causal effect on generalized trust by experimentally manipulating a focus on the breadth versus depth of foreign experiences. Study 4 used a longitudinal design to establish that broad foreign travel experiences increased generalized trust.

A longitudinal study found that the psychological approach individuals take when immersed in a general multicultural environment can predict subsequent career success. Using a culturally diverse sample, we found that "multicultural engagement" — the extent to which students adapted to and learned about new cultures — during a highly international 10-month master of business administration (MBA) program predicted the number of job offers students received after the program, even when controlling for important personality/demographic variables.

Recent years have seen extensive investigation of the information aggregation properties of markets. However, relatively little is known about conditions under which a market will aggregate the private information of rational risk averse traders who optimize their portfolios over time; in particular, what features of a market encourage traders to ultimately reveal their private information through trades? We consider a market model involving finitely many informed risk-averse traders interacting with a market maker.

In the classic certainty multiperiod, multigood demand problem, suppose preferences for current and past period consumption are separable from consumption in future periods. Then optimal demands can be determined from the standard two stage budgeting process, where optimal current period demands depend only on current and past prices and current period expenditure. Unfortunately this simplification does not significantly reduce the informational requirements for the decision maker since in general the expenditure is a function of future prices.

We introduce three extensions of the Hirshleifer-Skaperdas conflict game to study experimentally the effects of post-conflict behavior and repeated interaction on the allocation of effort between production and appropriation. Without repeated interaction, destruction of resources by defeated players can lead to lower appropriative efforts and higher overall efficiency. With repeated interaction, appropriative efforts are considerably reduced because some groups manage to avoid fighting altogether, often after substantial initial conflict.

This paper investigates the impact of individuals' social ties at organizational entry on the formation of intraorganizational networks. When individuals enter organizations with one or more preentry relationships in place, I argue they form more extensive networks post entry than their untied counterparts. However, it is also suggested that under some conditions—i.e., when quality is more certain—the relationship between pre- and postentry social structure is contingent on individuals' quality attributes.

Advertising supported content sampling is ubiquitous in online markets for digital information goods. Yet, little is known about the profit impact of sampling when it serves the dual purpose of disclosing content quality and generating advertising revenue. This paper proposes an analytical framework to study the optimal content strategy for online publishers and shows how it is determined by characteristics of both the content market and the advertising market.

To date the effectiveness of inducing lower-calorie choices by providing consumers with calorie information has yielded mixed results. Here four controlled experiments show that adding dish-specific calorie information to menus (calorie posting) tends to result in lower-calorie choices. However, additionally grouping low-calorie dishes into a single "low-calorie" category (calorie organizing) ironically diminishes the positive effects of calorie posting. This outcome appears to be caused by the effect that grouping low-calorie options has on consumers' consideration sets.

This research examines how people react to nonconforming behaviors, such as entering a luxury boutique wearing gym clothes rather than an elegant outfit or wearing red sneakers in a professional setting. Nonconforming behaviors, as costly and visible signals, can act as a particular form of conspicuous consumption and lead to positive inferences of status and competence in the eyes of others. A series of studies demonstrates that people confer higher status and competence to nonconforming rather than conforming individuals.

Mobile advertising is one of the fastest-growing advertising formats. In 2013, global spending on mobile advertising was approximately $16.7 billion and it is expected to exceed $62.8 billion by 2017. The most prevalent type of mobile advertising is mobile display advertising (MDA), which takes the form of banners on mobile webpages and in mobile applications. This paper examines which product characteristics are likely to be associated with MDA campaigns that are effective in increasing consumers' favorable attitudes towards products and purchase intentions.

This essay in celebration of Grossman and Hart (1986) (GH) discusses how the introduction of incomplete contracts has fundamentally changed economists' perspectives on corporate finance and control. Before GH, the dominant theory in corporate finance was the tradeoff theory pitting the tax advantages of debt (relative to equity) against bankruptcy costs. After GH, this theory has been enriched by the introduction of control considerations and investor protection issues.

Emotionally pleasant TV commercials are often preferred over merely factual ones. A large-scale study of Belgian TV ads confirms this notion and shows that such commercials also create more positive feelings toward the advertised brand. Interestingly, these effects depend on neither the level of involvement associated with the product category nor the type of product. Independent of the perceived creativity of the commercial or its informational value, emotionality had a significant impact on the evaluation of a brand.

We model the multifaceted impact of pricing decisions in B2B contexts and show how a seller can develop optimal inter-temporal targeted pricing strategies to maximize long-term customer value. We empirically model the B2B customer's purchase decisions in an integrated fashion. In order to facilitate targeting and to capture the short and long-term dynamics of B2B customer purchasing, our modeling framework weaves together in a hierarchical Bayesian manner, multivariate copulas, a non-homogeneous hidden Markov model, and control functions for price endogeneity.

Not only are subjective feelings an integral part of many judgments and decisions, they can even lead to improved decisions and better predictions. Individuals who have learned to trust their feelings performed better in economic-negotiation games than their rational-thinking opponents. But emotions are not just relevant in negotiations and decisions. They also play a decisive role in forecasting future events. Candidates who trusted their feelings made better predictions than people with less emotional confidence.

Numerous studies have found that perspective-taking reduces stereotyping and prejudice, but they have only involved negative stereotypes. Because target negativity has been empirically confounded with reduced stereotyping, the general effects of perspective-taking on stereotyping and prejudice are unclear.

A central decision faced by firms is whether to make intermediate components internally or to buy them from specialized producers. We argue that firms producing products for which rapid technological change is characteristic will benefit from outsourcing to avoid the risk of not recouping their sunk cost investments when new production technologies appear. This risk is exacerbated when firms produce for low volume internal use, and is mitigated for those firms which sell to larger markets.

Using panel data from a large hospital system, this paper presents estimates of the productivity effects of human capital in a team production environment. Proxying nurses' general human capital by education and their unit-specific human capital by experience on the nursing unit, we find that greater amounts of both types of human capital significantly improve patient outcomes.

This paper finds statistically and economically significant out-of-sample portfolio benefits for an investor who uses models of return predictability when forming optimal portfolios. The key is that investors must incorporate an ensemble of important features into their optimal portfolio problem, including time-varying volatility, and time-varying expected returns driven by improved predictors such as measures of yield that include share repurchase and issuance in addition to cash payouts. Moreover, investors need to account for estimation risk when forming optimal portfolios.