http://repub.eur.nl/res/concept/jel-D11/ Recent publications classified by JEL Code D11 en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/25720/ 2011-08-01T00:00:00Z This research examines the effect of experiencing messiness, induced by a messy environment or by priming the concept of messiness, on consumers. We propose that messiness is an aversive state and consumers are motivated to attenuate this state by seeking simplicity in their cognitions, preferences, and choices. Six experiments support our theorizing. Experiments 1a-1c (conducted in the laboratory) and experiment 2 (conducted in the field) demonstrate that when messiness is salient, consumers form simpler product categorizations, are willing to pay more for a t-shirt with a simple picture, and seek less variety in their choices. Experiment 3 brings additional evidence for the underlying role of the need for simplicity by showing that when the need for simplicity is satiated, the effects of messiness disappear. A final experiment shows a boundary condition of the messiness effect: political conservatives are more susceptible to messiness primes compared to liberals. Liu, J. Smeesters, D.H.R.V. Trampe, D. http://repub.eur.nl/res/pub/37669/ 2011-04-01T00:00:00Z This paper extends the analytical and empirical application of the basic indirect utility function of Houthakker-Hanoch-called the CDES specification (constant differences of elasticities of substitution). The non-homothetic CDES preferences are the natural parametric extension on the global domain of the homothetic CES preferences with many commodities, and CDES can conveniently be used in specifying CGE multisector models with a demand side satisfying observable Engel curve patterns. Moreover, all Marshallian own-price elasticities are no longer restricted to exceed one, and positive and negative cross-price effects are allowed for in empirical demand analyses. Explicit calculations of the Allen elasticities of substitution are instrumental in demonstrating the economic implications of the parameters of indirect utility functions with global regularity properties and flexibility of the derived demand systems. Jensen, B.S. Boer, P. de Daal, J. van http://repub.eur.nl/res/pub/25989/ 2011-03-01T00:00:00Z Experimental and survey-based research suggests that consumers often rely on their intuition and cognitive shortcuts to make decisions. Intuition and cognitive shortcuts can lead to suboptimal decisions and, especially in high-stakes decisions, to legitimate welfare concerns. In this paper, we propose an extension of a Bayesian learning model that allows us to quantify the impact of salience-the fact that some pieces of information are easier to retrieve from memory than others-on physician learning. We show, using data on actual prescriptions for real patients, that physicians' belief formation is strongly influenced by salience effects. Feedback from switching patients-the ones the physician decided to switch to a clinically equivalent treatment-receives considerably more weight than feedback from other patients. In the category we study, salience effects slowed down physicians' speed of learning and the adoption of a new treatment, which raises welfare concerns. For managers, our findings suggest that firms that are able to eliminate, or at least reduce, salience effects to a greater extent than their competitors can speed up the adoption of new treatments. We explore the implications of these results and suggest alternative applications of our model that are relevant for policy makers and managers. Camacho, N.M.A. Donkers, A.C.D. Stremersch, S. http://repub.eur.nl/res/pub/10896/ 2008-01-11T00:00:00Z This paper builds a consumer search model where the cost of going back to stores already searched is explicitly taken into account. We show that the optimal search rule under costly recall is very different from the optimal search rule under perfect recall. Under costly recall, the optimal search behaviour is nonstationary and, moreover, the reservation price is not independent of previously sampled prices. We fully characterize the optimal search rule under costly recall when a finite number of firms draws price quotes from a given distribution. Janssen, M.C.W. Parakhonyak, A. http://repub.eur.nl/res/pub/7757/ 2006-05-11T00:00:00Z The correct parameter restrictions- less restrictive than commonly thought-of the indirect addilog system (IAS) are derived. Under correct restrictions, the IAS is superior to the linear expenditure system in computable general equilibrium models with data scarcity. Boer, P.M.C. de Brocker, J. Jensen, B.S. Daal, J. van http://repub.eur.nl/res/pub/10992/ 2005-02-01T00:00:00Z In this note we use the rank-dependent utility (RDU) model to analyze saving decisions. The RDU model enables us to separate the effects of pessimism and optimism on saving from that of concavity of the utility function. While pessimism induces more saving, the importance of this effect is shown to depend upon properties of the utility function such as prudence and temperance. Bleichrodt, H. Eeckhoudt, L. http://repub.eur.nl/res/pub/6791/ 2002-12-18T00:00:00Z We propose a consistent utility-based framework to jointly explain a household's decisions on purchase incidence, brand choice and purchase quantity. The approach differs from other approaches, currently available in the literature, as it is able to take into account consumption dynamics. In the model, households derive utility from consumption, and they relate their purchase behavior to consumption planning. We illustrate our model for yogurt purchases, and show that our model yields important additional insights. One such insight is that the reservation price of households is not fixed, but depends on the available inventory stock. Furthermore, we find that promotional activities increase sales through more purchases in the product category and brand switching, but the effect through larger purchase quantities is limited. Oest, R.D. van Paap, R. Franses, Ph.H.B.F. http://repub.eur.nl/res/pub/6794/ 2002-10-07T00:00:00Z It is conceivable that the "whether to buy" and "how much to buy" decisions in the purchasing process of households are influenced by the inventory process. In this paper we therefore put forward a model for consumption, where we rely on established economic theory. We incorporate this model in a model for purchase behavior. Our consumption specification, which is derived from utility maximization principles, is more flexible than an ad hoc approach, which has recently been proposed in the literature. We illustrate our model for yogurt purchases, and show that our model yields important additional and useful insights. One such insight is that promotion anticipation behavior turns out not only to occur in the purchasing process, but also in the consumption process. Oest, R.D. van Franses, Ph.H.B.F. Paap, R. http://repub.eur.nl/res/pub/23101/ 1996-12-01T00:00:00Z A method is given to extend demand functions to new commodities under preservation of the cycle number, i.e. the minimal length of a preference cycle revealed by the demand function. Thus, Gale's (Economica, N.S., 1960, 27, 348–354) demand function that shows that the weak axiom of revealed preference does not imply the strong axiom of revealed preference for three commodities can be extended to more than three commodities. Also Shafer's (Journal of Economic Theory, 1977, 16, 293–309) result, that arbitrarily high cycle numbers exist for three commodities, can now be extended to any number of commodities larger than three. This completely settles a question raised by Samuelson (Economica, N.S., 1953, 20, 1–9). Peters, H.J.M. Wakker, P.P. http://repub.eur.nl/res/pub/23129/ 1994-02-01T00:00:00Z The only examples available in the literature to show that the Weak Axiom of Revealed Preference does not imply the Strong Axiom of Revealed Preference, the examples of Gale and Shafer, apply only to the case of three commodities. This paper constructs examples for four or more commodities. Peters, H.J.M.