Working papers

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Departments: Marketing, GREGHEC (CNRS)

Engaging in risky consumption behaviors (cigarettes, alcohol, etc.) is an acute societal problem that can have severe consequences for adolescents, and businesses in particular have been accused of making such consumption particularly appealing and accessible. However, the causes of risky behaviors are not well understood and research on the causes has been mixed. In this research, we investigate the effects of loneliness on adolescents’ adoption of risky behaviors. We test the proposition that adolescent loneliness affects the adoption of risky behaviors, but that this effect depends on the strategies that adolescents adopt to cope with their loneliness. In a large-scale study (n = 409) of adolescents (ages 13-18), we show support for a sequential mediation model in which active and passive coping strategies both mediate the effect of loneliness on risky behaviors, but with opposite effects. Active coping strategies reduce the adoption of risky behaviors, whereas passive coping strategies increase the adoption of risky behaviors. In addition, we show that active and passive coping strategies can be executed through consumption practices. Active coping strategies are positively associated with the sharing of possessions, whereas passive coping strategies are positively associated with product acquisition. We shed new light on both the bright and dark sides of materialism and risky behaviors, and provide practical implications for research on loneliness and business ethics.

Keywords: Loneliness, Coping strategies, Risky Behaviors, Adolescent consumers, Materialism, Sharing


Departments: Marketing, GREGHEC (CNRS)

After having made a purchase decision, consumers often revisit their choice and ponder forgone alternatives. This tendency can cause regret and lower satisfaction with the selected alternative, especially when choices are difficult. This paper introduces the concept of choice closure, defined as the psychological process by which consumers come to perceive a decision to be final. Choice closure inhibits consumers’ propensity to reconsider the decision process after a choice has been made and to engage in unfavorable comparisons between the chosen and the forgone options. Four studies show that physical acts that are metaphorically associated with the concept of closure — such as covering or turning a page on the rejected alternatives — trigger choice closure for choices made from large sets and result in greater satisfaction. These findings suggest that subtle cues, which do not alter the actual choice context, can improve consumers’ satisfaction with a difficult decision.


Departments: Marketing, GREGHEC (CNRS)

Thankfully, most product consumption experiences are positive. Unfortunately, however, those positive experiences are not always guaranteed to occur, and defects creep into the consumer experience. Though its assertion runs counter to most prescriptions, the current research proposes that exposing consumers to the mere possibility of these negative experiences, occurring in a consumption sequence increases consumers’ happiness with those experiences overtime. Six studies demonstrate this effect and further show that this effect is driven by hedonic responses as a result of favorable uncertainty resolution. That is, with the mere possibility of a negative experience, a consumer, who actually experiences a positive outcome, is likely to feel relief or pleasantness from not having to experience the negative experience. This research enriches existing literature on hedonic adaptation and uncertainty and has significant implications for consumer behavior.

Keywords: hedonic adaptation, happiness, uncertainty, favorable uncertainty resolution


Departments: Marketing, GREGHEC (CNRS)

Previous research suggests that when social exclusion is communicated in an explicit manner, consumers express preferences for helping, whereas when it is communicated in an implicit manner, they express preferences for conspicuous consumption. However, this may not always hold true. In the present research, we put forward a theoretical framework explaining that exclusion effects depend on the extent to which exclusion is communicated in a culturally normative or counter-normative manner, rather than whether it is communicated in an explicit or implicit manner. We show that exclusion communicated in a cultural norm-congruent manner produces preferences for helping, whereas exclusion communicated in a cultural norm-incongruent manner produces preferences for conspicuous consumption. We further show that the differential needs – self-esteem and power – threatened by normative and counter-normative exclusion explain these distinct preferences.


Departments: Marketing, GREGHEC (CNRS)

Advertising often aims at creating and reinforcing brand differentiation, which should translate into reduced price competition. Currently unknown are the boundary conditions for long-term advertising benefits, the route through which advertising effects materialize, and the role of competitive advertising in the category. The authors develop a Hierarchical Dynamic Linear Model that links own and others’ advertising in the category to brand price elasticity directly and indirectly through their impact on own and competitive mindset metrics. The model accommodates dynamic dependencies in mindset metrics, controls for endogeneity in marketing, captures competitive reactions and performance feedback in marketing, and explains cross-sectional variation as a function of brand and category characteristics. Model estimation on seven years of data for 350 brands in 39 categories shows that both own and all competitive advertising in the category lower price sensitivity for the average brand, both directly and through advertising awareness. The attenuation of price sensitivity is more pronounced for niche brands in complex and more expensive categories, with higher concentration and purchase frequency. A financial simulation based on the estimates shows that while the price elasticity effect is positive and substantial for high-price brands, it hurts the advertising returns for low-price brands.

Keywords: advertising, price elasticity, mindset metrics, long-term effects, dynamic linear models, and empirical generalization


Departments: Marketing, GREGHEC (CNRS)

This research studies the possibility that managers attribute firm performance to price and quality decisions in a self-serving manner: they tend to credit success in the market to the product characteristic that matches the commercial orientation of the business, but blame failure on the other. The problem with this reasoning is that managers then carry out adjustments based on biased information, which is suboptimal. The paper first models the phenomenon to clarify the cost of self-serving attributions to a firm. It then reports experiments that provide empirical support for the theory

Keywords: Causal inference, self-serving bias, managerial decision-making


Departments: Marketing, GREGHEC (CNRS)

Conventional wisdom holds that service failure creates customer misery and reduces firm profitability. This paper challenges this view and shows that occasional service failure can be profitable for the firm when optional protection against the resulting customer misery can be marketed. It also shows that a firm that uses such a protection strategy inflicts a calculated misery on unprotected customers and wastes resources to provide the protection. Despite these inefficiencies, using the protection strategy can lead to market expansion and social welfare gains due to lower prices

Keywords: Service Failure, Customer Damage, Random Versioning


Departments: Marketing, GREGHEC (CNRS)

When developing new brand names, marketers face the dilemma of how similar their new brand name is or should be to familiar brand names in the market. The current research tests the complete range of conditions exploring how the degree of similarity of a new brand name to an existing one may affect attitudes toward the new brand name. The authors first replicate an inverted-U pattern suggested by congruency theories. However, this result holds only in the case of positive pre-existing attitudes toward familiar brand names. Additional tests demonstrate a U-shaped pattern in the case of negative attitudes toward familiar brand names, and a linear relation between similarity and attitudes in the case of no pre-existing attitudes toward familiar brand names. A field study replicates these findings, testing actual choice of products that bear different levels of resemblance to real positive and negative brand names (Oreo and Spam).

Keywords: Brand name, Branding, Brand attitudes, Similarity, Familiarity, Innovation


Departments: Marketing

A perennial problem in choice experiments is that consumers may not behave as they would in real life. Incentive alignment, whereby each decision is realized with some probability, is often seen as a solution to this problem. However, if processing information is costly, incentive-alignment should not be enough to motivate participants to process choice-relevant information as carefully as they would if the decision was to be realized with certainty. Moreover, the probability that a choice will be realized influences its psychological distance, which should have a systematic impact on the type of alternatives chosen by consumers. We empirically investigate how incentives impact attention, information processing, and choice. We vary the probability that the respondent’s choice will be realized from 0 (hypothetical) to 0.01, 0.50, 0.99, and 1 (deterministic). Based on response time and eye tracking data, we find a positive correlation between the probability that the choice will be realized and the level of attention. Respondents for whom choices are more likely to be realized also tend to choose more familiar products, and tend to be more price sensitive. The latter effect is driven by respondents who care more about the product category.

Keywords: incentive alignment, choice experiments, preference measurement, eye tracking


Departments: Marketing, GREGHEC (CNRS)

Customer Relationship Management (CRM) campaigns have traditionally focused on maximizing the profitability of the targeted customers. In this paper we investigate the social effects of CRM campaigns. We demonstrate that, in business settings that are characterized by network externalities, a CRM campaign that is aimed at changing the behavior of specific customers propagates through the social network, thereby also affecting the behavior of non-targeted customers. Using a randomized field experiment involving nearly 6,000 customers of a mobile telecommunications provider, we find that the social connections of targeted customers increase their consumption and are less likely to churn due to a campaign that was neither targeted at them nor offered them any direct incentives. We estimate a social multiplier of 1.28. That is, the effect of the campaign on first-degree connections of targeted customers is 28% of the effect of the campaign on the targeted customers. By further leveraging the randomized experimental design we show that, consistent with a network externality account, the increase in activity among the non-targeted but connected customers is driven by the increase in communication between the targeted customers and their connections, making the local network of the non-targeted customers more valuable. Our findings suggest that in targeting CRM marketing campaigns, firms should consider not only the profitability of the targeted customer, but also the potential spillover of the campaign to non-targeted but connected customers.

Keywords: Customer Relationship Management (CRM), Field experiments, Targeting, Churn, Retention, Mobile


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