Strategic Consumer Cooperation in a Name‐Your‐Own‐Price Channel

Supplier reluctance to openly advertise highly discounted products on the Internet has stimulated development of “opaque” name‐Your‐Own‐Price sales channels. Unfortunately (for suppliers), there is significant potential for online consumers to exploit these channels through collaboration in social networks. In this paper, we study three possible forms of consumer collaboration: exchange of bid result information, coordinated bidding, and coordinated bidding with risk pooling. We propose an egalitarian total utility maximizing mechanism for coordination and risk pooling in a bidding club and describe characteristics of consumers for whom participation in the club makes sense. We show that, in the absence of risk pooling, a plausible bidding club strategy using just information exchange gives almost the same benefits to consumers as coordinated bidding. In contrast, coordinated bidding with risk pooling can lead to significantly increased benefits for consumers. The benefits of risk pooling are highest for consumers with a low tolerance to risk. We also demonstrate that suppliers that actively adjust for such strategic consumer behavior can reduce the impact on their businesses and, under some circumstances, even increase revenues.     

STACKELBERG, COURNOT AND COLLUSIVE MONOPOLY: PERFORMANCE AND WELFARE COMPARISONS

This article compares and evaluates performance and welfare in three classical oligopoly models: Stackelberg leader, Cournot, and collusive monopoly. Hahn's stability conditions render an unambiguous ranking of market price; the monopoly price is highest and the Stackelberg price is lowest. Welfare comparisons are less clear-cut due to additional effects coming from reallocation of outputs among sellers. Conditions under which these reallocation effects will enhance or offset the unambiguous price effects on welfare are discussed and examples are given. Possible implications for antitrust policy, regarding constraints on market share of large producers in noncompetitive markets, are examined.     

Disappointment Aversion in internet Bidding-Decisions

The article presents an Internet experiment where subjects sequentially bid for basic gifts and binary-lotteries on these gifts in incentive compatible Vickrey auctions. Subjects exhibit uniformly pessimistic prize-weighting in spite of precautions to reduce suspicion and prohibit collusion. The bids for lotteries are close to the minimal payable value, even when the probability of obtaining a better prize is larger than 50%. Prize-weighting becomes even more conservative as the distance in value of payable prizes increases. The twofold aversive affect appears for three distinct groups of students; we demonstrate, however, that the same subjects overweight small win-probabilities in standard binary-choice.

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How changes in price and salary affect economic satisfaction: Information integration models and inference processes

Preliminary studies demonstrated the interactive effects of changes in salary and inflation rate on feelings of personal satisfaction, and showed that the effects of price increases in different cost categories could he described by a weighted average model. Participants in the main study were presented with varying hypothetical economic situations which included salary changes (raises) as well as specific price changes. A ratio model was found to describe how raise levels and price increases were combined. The rationality of this model was discussed in terms of how variations in price and income would affect the amount of a given commodity that could he purchased. On some trials only partial information was presented. Low ratings of personal satisfaction were produced when information about raises was missing, and high ratings were produced when information about price increases was missing. These results were discussed in terms of inferences people make when a key source of information is missing.     

Times of transition: elder abuse and neglect in Israel

The present paper addresses the advancement of research, policies, legislation, and practice experiences designed to deal with the phenomenon of elder abuse and neglect in Israel in times of transition. The paper presents a short overview of the demographic scene, reflecting population characteristics and needs that impact care giving as well as elder abuse and neglect. The developments of scientific knowledge and its accumulation, especially the empirical data from the first national survey on elder abuse and neglect are discussed. Further, legislative developments relating to four generational laws and the advancement of policies and innovative practice experiences are described and analyzed. Finally, future challenges in the field are identified.     

Action research,science, and the co-optation of social research

This paper centers on our argument that action research (AR) produces “better” research than orthodox social research but that AR is marginalized in “Northern” universities because it connects social research to social reform. The key viewpoints informing our work are easily stated but elaborate arguments are required to justify them. We argue that AR is the most credible and methodologically coherent way to create and apply reliable knowledge in social research.

Existing power structures prefer orthodox social research, not because it produces better research but because it does not interfere with existing social arrangements. The demand for social distance and objectification separates the researcher from the subject and prevents social research from becoming an instrument of social change. The dominance of these frameworks in university environments reveals that universities, in addition to being centers of learning, play an important role in replicating existing social arrangements (Noam Chomsky et al., 1997). We believe that AR's social change agenda, not its inferiority as social research, causes its marginality.     

Contract Pricing in Consumer Credit Markets

We analyze subprime consumer lending and the role played by down payment requirements in screening high‐risk borrowers and limiting defaults. To do this, we develop an empirical model of the demand for financed purchases that incorporates both adverse selection and repayment incentives. We estimate the model using detailed transaction‐level data on subprime auto loans. We show how different elements of loan contracts affect the quality of the borrower pool and subsequent loan performance. We also evaluate the returns to credit scoring that allows sellers to customize financing terms to individual applicants. Our approach shows how standard econometric tools for analyzing demand and supply under imperfect competition extend to settings in which firms care about the identity of their customers and their postpurchase behavior.     

Ellsberg paradox: Ambiguity and complexity aversions compared

We present a simple model where preferences with complexity aversion, rather than ambiguity aversion, resolve the Ellsberg paradox. We test our theory using laboratory experiments where subjects choose among lotteries that “range” from a simple risky lottery, through risky but more complex lotteries, to one similar to Ellsberg’s ambiguity urn. Our model ranks lotteries according to their complexity and makes different—at times contrasting—predictions than most models of ambiguity in response to manipulations of prizes. The results support that complexity aversion preferences play an important and separate role from beliefs with ambiguity aversion in explaining behavior under uncertainty.     

Ethnic and University Identities across the College Years: A Common In-Group Identity Perspective

The common in-group identity model advocates the creation of a superordinate group identity in order to reduce conflict between members of different ethnic subgroups. This study demonstrates that a university identity can serve as an effective common in-group identity for students from different ethnic groups. Longitudinal data were collected from an ethnically diverse sample of university students at the end of each year of college. Although ethnic identification tended to be correlated with status-legitimizing orientations and ideologies in a way that reinforces ethnic-status differences (i.e., these variables tended to be positively related for Whites but less so for ethnic minorities), the status-legitimizing variables were largely unrelated to university identification during each year in college. The longitudinal data also allowed us to examine these relationships over time. The relationships between ethnic and university identification and status-legitimizing orientations and ideologies did not change. Ethnic and university identities are discussed in terms of the common in-group identity model.