Does product complexity matter for competition in experimental retail markets?

We describe a first experiment on whether product complexity affects competition and consumers in retail markets. We are unable to detect a significant effect of product complexity on prices, except insofar as the demand elasticity for complex products is higher. However, there is qualified evidence that complex products have the potential to induce consumers to buy more than they would otherwise. In this sense, consumer exploitability in quantities cannot be ruled out. We also find evidence for shaping effects: consumers’ preferences are shaped by past experience with prices, and firms may in principle exploit this to sell more.     

Comment on “Constrained Optimization Approaches to Estimation of Structural Models”

We revisit the comparison of mathematical programming with equilibrium constraints (MPEC) and nested fixed point (NFXP) algorithms for estimating structural dynamic models by Su and Judd (2012). Their implementation of the nested fixed point algorithm used successive approximations to solve the inner fixed point problem (NFXP‐SA). We redo their comparison using the more efficient version of NFXP proposed by Rust (1987), which combines successive approximations and Newton–Kantorovich iterations to solve the fixed point problem (NFXP‐NK). We show that MPEC and NFXP are similar in speed and numerical performance when the more efficient NFXP‐NK variant is used.     

Impatience versus Incentives

This paper studies the dynamics of long‐term contracts in repeated principal–agent relationships with an impatient agent. Despite the absence of exogenous uncertainty, Pareto‐optimal dynamic contracts generically oscillate between favoring the principal and favoring the agent.     

Signaling to Partially Informed Investors in the Newsvendor Model

We analyze a signaling game between the manager of a firm and an investor in the firm. The manager has private information about the firm's demand and cares about the short‐term stock price assigned by the investor. Previous research has shown that under continuous decision choices and the Intuitive Criterion refinement, the least‐cost separating equilibrium will result, in which a low‐quality firm chooses its optimal capacity and a high‐quality firm over‐invests in order to signal its quality to investors. We build on this research by showing the existence of pooling outcomes in which low‐quality firms over‐invest and high‐quality firms under‐invest so as to provide identical signals to investors. The pooling equilibrium is practically appealing because it yields a Pareto improvement compared to the least‐cost separating equilibrium. Distinguishing features of our analysis are that: (i) we allow the capacity decision to have either discrete or continuous support, and (ii) we allow beliefs to be refined based on either the Undefeated refinement or the Intuitive Criterion refinement. We find that the newsvendor model parameters impact the likelihood of a pooling outcome, and this impact changes in both sign and magnitude depending on which refinement is used.     

Managing Quality in a Heterogeneous Contract Manufacturing Environment

The outsourcing of production is a prominent strategy across industries. While the strategy can have many benefits, the popular press reports numerous examples of quality issues originating with contract manufacturers (CMs). Observing these quality issues, multiple scholars call for the quality management (QM) literature to be extended to explicitly address the challenges of managing quality in an inter‐organizational context. Additionally, QM researchers recognize the need to consider contextual contingencies for the effectiveness of specific QM practices. Responding to these calls, we focus on the potential contingent factor of CM heterogeneity (i.e. the degree of product and process diversity at the CM plant). We first test the direct relationship between CM manufacturing heterogeneity and CM quality conformance performance, as reported by the CM's customers, brand‐owning firms. Next, we evaluate the effectiveness of multiple practices that these brand‐owning firms can employ to mitigate the anticipated negative effect of heterogeneity on their CM's conformance quality. We utilize paired dyadic data on 106 contract manufacturing relationships in the food, drug, and medical device industries to test our hypothesized model. The results of our analysis reveal a negative association between heterogeneity at CM facilities and their conformance quality performance. Our results also identify cooperative relationships, contractual coordination provisions, and formal performance assessment programs as practices that brand‐owning firms can employ to largely eliminate the negative impact of heterogeneity on CMs’ conformance quality performance.     

Coherence principles in interval‐based dose finding

This paper studies the notion of coherence in interval‐based dose‐finding methods. An incoherent decision is either (a) a recommendation to escalate the dose following an observed dose‐limiting toxicity or (b) a recommendation to deescalate the dose following a non–dose‐limiting toxicity. In a simulated example, we illustrate that the Bayesian optimal interval method and the Keyboard method are not coherent. We generated dose‐limiting toxicity outcomes under an assumed set of true probabilities for a trial of n=36 patients in cohorts of size 1, and we counted the number of incoherent dosing decisions that were made throughout this simulated trial. Each of the methods studied resulted in 13/36 (36%) incoherent decisions in the simulated trial. Additionally, for two different target dose‐limiting toxicity rates, 20% and 30%, and a sample size of n=30 patients, we randomly generated 100 dose‐toxicity curves and tabulated the number of incoherent decisions made by each method in 1000 simulated trials under each curve. For each method studied, the probability of incurring at least one incoherent decision during the conduct of a single trial is greater than 75%. Coherency is an important principle in the conduct of dose‐finding trials. Interval‐based methods violate this principle for cohorts of size 1 and require additional modifications to overcome this shortcoming. Researchers need to take a closer look at the dose assignment behavior of interval‐based methods when using them to plan dose‐finding studies.     

Factor screening in nonregular two-level designs based on projection-based variable selection

In this paper, we focus on the problem of factor screening in nonregular two-level designs through gradually reducing the number of possible sets of active factors. We are particularly concerned with situations when three or four factors are active. Our proposed method works through examining fits of projection models, where variable selection techniques are used to reduce the number of terms. To examine the reliability of the methods in combination with such techniques, a panel of models consisting of three or four active factors with data generated from the 12-run and the 20-run Plackett–Burman (PB) design is used. The dependence of the procedure on the amount of noise, the number of active factors and the number of experimental factors is also investigated. For designs with few runs such as the 12-run PB design, variable selection should be done with care and default procedures in computer software may not be reliable to which we suggest improvements. A real example is included to show how we propose factor screening can be done in practice.     

Male bisexuality and condom use at last sexual encounter: results from a national survey

Relatively little is known about condom use among bisexual men as separate and distinct from exclusively homosexual and heterosexual men. Most previous research on bisexual men has relied on non-probabilistic, high risk samples with limited generalizability. We examined the relationship between male behavioral bisexuality and condom use in the 2002 cycle of the National Survey of Family Growth (NSFG). Bisexually-active men positively differed from heterosexually- and homosexually-active men on every indicator of confounding risk. However, bisexually-active men did not report using condoms less often than other men during their last sexual encounters with males and females. Indeed, with female partners, bisexually-active men reported higher rates of condom use than other men. These relationships remained when all sociodemographic and confounding risk factors were held constant. Our results suggest that caution must be used when making assumptions about condom use in the general population of bisexual men from non-probabilistic samples.     

Intergenerational class mobility in contemporary Britain: political concerns and empirical findings

In Britain in recent years social mobility has become a topic of central political concern, primarily as a result of the effort made by New Labour to make equality of opportunity rather than equality of condition a focus of policy. Questions of the level, pattern and trend of mobility thus bear directly on the relevance of New Labour's policy analysis, and in turn are likely be crucial to the evaluation of its performance in government. However, politically motivated discussion of social mobility often reveals an inadequate grasp of both empirical and analytical issues. We provide new evidence relevant to the assessment of social mobility - in particular, intergenerational class mobility - in contemporary Britain through cross-cohort analyses based on the NCDS and BCS datasets which we can relate to earlier cross-sectional analyses based on the GHS. We find that, contrary to what seems now widely supposed, there is no evidence that absolute mobility rates are falling; but, for men, the balance of upward and downward movement is becoming less favourable. This is overwhelmingly the result of class structural change. Relative mobility rates, for both men and women, remain essentially constant, although there are possible indications of a declining propensity for long-range mobility. We conclude that under present day structural conditions there can be no return to the generally rising rates of upward mobility that characterized the middle decades of the twentieth century - unless this is achieved through changing relative rates in the direction of greater equality or, that is, of greater fluidity. But this would then produce rising rates of downward mobility to exactly the same extent - an outcome apparently unappreciated by, and unlikely to be congenial to, politicians preoccupied with winning the electoral 'middle ground'.     

Self-perception of Gambling Problems among Adolescents Identified as At-risk or Problem Gamblers

The relative influence of perceived familial addictive behaviors and personal gambling behaviors on adolescents' self-perceptions of gambling problems was examined. Students from five high schools in Connecticut (N = 3,886) were surveyed. Of those between the ages of 14 and 17 who scored two or more on the South Oaks Gambling Screen--Revised for Adolescents (n = 532; 72% male; 43% Caucasian), 14.3% reported having a current or past problem with gambling. Wagering larger amounts in a single day, gambling on a daily basis, and perceived presence of a family member with a gambling problem were associated with increased odds of self-perception of a gambling problem. Thus, adolescents who may be less likely to be identified for prevention efforts (due to lack of engagement in high stakes gambling or the real/perceived absence of a problematic gambler in the home) appear less likely to perceive a gambling problem. To advance prevention and treatment strategies, the apparent discrepancy between adolescents' self-perceptions and objective reports of problem gambling behaviors warrants further investigation.