MI10: Marketing in Israel X - winter 2010
Conference Program
Monday, December 27 – Tel Aviv University, Recanati Building,
Room 405
9:00 - 9:30 Morning Coffee
9:30 - 10:20 Pay-as-You-Wish Pricing: Yuxin Chen, Oded Koenigsberg , Z. John
Zhang
10:40 - 11:30
Pay-What-You-Want as a Profitable Pricing Strategy: Theory
and experimental evidence: Vincent Mak, Rami Zwick , Akshay Rao
11:50 - 12:40
On Product Detachment and Consumers’ Purchase Behavior:
Yaniv Shani, Ron Shachar
12:40 - 14:00
lunch
14:00 - 14:50
Estimation of Individual Level Multi-Attribute Utility from
Ordered Paired Preference Comparisons: Dan Horsky , Paul Nelson,
Sangwoo Shin
15:10 - 16:00
The Consumption of Altruism: Take-aversion & how giving
to charity is like eating ice cream: Michal Strahilevitz
17:30
Get together for Kubbeh and beer at the Mullers’ house
Nilli 22nd street, Herzlia Pituach
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Tuesday, December 28 – Hebrew University
8:30 - 9:30 Breakfast at the Business School Gallery
After breakfast, we move to the Senate Hall
9:30 - 9:50 Ten years of Marketing in Israel – Roni Shachar
9:50 - 10:40 Product Self-Categorization: When product ownership can
negatively affect product judgment: Liad Weiss , Gita V. Johar
11:00 - 11:50
Network Traces on Penetration: Uncovering degree
distribution based on diffusion data to improve forecasting: Yaniv
Dover, Jacob Goldenberg, Daniel Shapira
12:00 - 13:30
lunch
13:30 - 14:20
Anticipatory Time Perception and Intertemporal Preferences:
Gal Zauberman
14:40 - 15:30
Exerting control through variety: Yonathan Levav
15:30-16:00
Farewell coffee
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Abstracts:
Pay-as-You-Wish Pricing
Yuxin Chen, Oded Koenigsberg, Z. John Zhang
Oded Koenigsberg
Barbara and Meyer Feldberg Associate Professor of Business
Marketing Division
Columbia Business School
Firms frequently use a curious pricing mechanism called ``pay as you wish'' pricing (PAYW).
When PAYW is used, a firm let consumers decide what a product is worth to them and how
much they want to pay to get the product. This practice has been observed in a number of
industries. In this paper, we theoretically investigate why and where PAYW can be a profitable
pricing strategy relative to the conventional ``pay as asked'' pricing strategy (PAAP). We show
that PAYW has a number of advantages over PAAP such that it is well suited for some industries
but not for others. These advantages are: 1) PAYW helps a firm to maximally penetrate a
market; 2) it allows a firm to price discriminate among heterogenous consumers; 3) it helps to
moderate price competition. We derive conditions under which PAYW dominates PAAP and
discuss ways to improve the profitability of PAYW.
“Pay what you want” as a profitable pricing strategy:
Theory and experimental evidence
Vincent Mak, Rami Zwick, Akshay Rao
Rami Zwick
Professor of Management
Anderson Graduate School of Management
University of California
Prevailing wisdom in the literature suggests that the success of a “pay what you want” (PWYW)
pricing strategy depends on consumers’ altruistic inclinations, sense of fair play, or consumers’
willingness to reciprocate the firm’s generous offer. In this article, we consider whether PWYW
can be profitable when the consumer’s only motive is self-interest. Through analyzing an
infinitely repeated pricing game between a firm and a fixed consumer population, we find that
PWYW could be as profitable as a fixed price regime, if the firm’s strategy is to threaten to
switch to the fixed price regime over a length of time in the future, should PWYW not yield
enough profits. If consumers are forward looking and there exist a sufficient number of
consumers who find the firm’s fixed price regime to be more costly than other alternatives, then
such a threat could lead to a sustainable PWYW regime. We also examine coordination
mechanisms that may enhance the sustainability of this regime in practice, and present a
laboratory study that provides support for some of our conclusions.
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On Product Detachment and Consumers’ Purchase Behavior
Yaniv Shani, Ron Shachar
Yaniv Shani
Recanati Graduate School of Business
Tel Aviv University
Past research offered to demonstrate how in order to avoid the appearance of wastefulness,
people made choices that compromise their own self-interest (e.g., unwilling to buy a third
theater ticket if failed to purchase it as a package, more likely to purchase an item in trade-in,
less likely to fall in to sunk cost when another person benefits; Arkes, 1996). These examples
demonstrate how an “added value” (e.g., enjoying a discounted theater ticket, upgrade to a better
product, enjoy subjective utility when another person benefits) serves the individual, who does
not want to appear wasteful. In this project we illuminate how the mere feeling of wastefulness
associated with pre-owned products, might hold consumers “prisoners”; unable to get rid of old
products, consequently unwilling to purchase or upgrade to new ones. Specifically we
demonstrate how the opportunity to get rid of products, even in the absence of an added value
(e.g., upgrading a product, enhanced personal utility); can “release” the individual, allowing
further spending.
Estimation of Individual Level Multi-Attribute Utility from
Ordered Paired Preference Comparisons
Dan Horsky, Paul Nelson, Sangwoo Shin
Dan Horsky
Benjamin L. Forman Professor of Marketing and Area Coordinator, Marketing
William E. Simon Graduate School of Business Administration
University of Rochester
Ordinal preference measures have a number of advantages relative to cardinal measures in the
estimation of individual level multi-attribute utility functions. This paper: (a) outlines a
theoretical foundation for estimating a cardinal scaled utility function from ordinal preference
data, in particular, pairs of pairs or ordered categorical comparisons; (b) forwards two linear
programming procedures designed to estimate individual level attribute weights from such data;
(c) evaluates the statistical properties of these estimators; (d) develops statistical significance
tests for the proposed estimates; and (e) evaluates the ability of these estimators to predict hold
out sample preferences for two real world datasets. Simulations show that our ordinal preferencebased weight estimates more closely approximate the true weights and are more robust to data
quality than either regression or logit. Our real world results also show superior predictive
performance. Furthermore, in most cases, these findings are true even when the latter
methodologies are augmented using Hierarchical Bayes techniques. Clearly, the higher potential
for measurement error and scale usage heterogeneity that resides in cardinal scaled data is an
issue. Correspondingly, ordinal preferences in conjunction with our linear programming
estimation methodology provides individual level attribute weight estimates that are worthy of
academic and managerial attention.
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The Consumption of Altruism:
Take-Aversion & How Giving to Charity is Like Eating Ice
Cream
Michal Strahilevitz
Michal Strahilevitz
Professor of Marketing
Golden Gate University
Both contributing money to a good cause and acquiring more for oneself offer benefits to
consumers. Indeed, in pursuit of the positive emotions that helping others and having more for
oneself each create, people are often willing to sacrifice valuable resources such as money, time,
safety and comfort. The research I will present will demonstrate ways in which giving behavior
is similar to other forms of consumer behavior, particularly hedonic consumption. I will also
present several studies showing ways in which giving behavior is different from ordinary
consumption behavior.
Product self-categorization: When product ownership can
negatively affect product judgment
Liad Weiss, Gita v. Johar
Liad Weiss
PhD Candidate
Marketing Division
Columbia Business School
Previous research suggests that ownership directly boosts product evaluation and explains this
effect through motivational accounts such as self enhancement and maintenance. We propose
instead that ownership merely moderates product evaluation. In particular, we put forth a
cognitive framework that accounts for previous findings of positive effect of ownership on
evaluation in some cases, but also predicts a negative effect of ownership on evaluation in others.
In support of our framework, four studies demonstrate that consumers sometimes act as if owned
products are part of themselves. Consequently, their perceptions of their own traits directly affect
their views of owned products. However, the very same perceptions inversely affect their views
of non-owned products. Therefore, ownership can lead to both positive and negative evaluations.
For example, consumers who perceive themselves as more (less) innovative, evaluate products
they own as more (less) innovative, but products that they don’t own as less (more) innovative.
Importantly, we show that these effects can be induced by a mere sense of ownership (i.e., do not
require actual ownership), and show that they affect subsequent product recommendation
likelihood.
__________________________________________________________________________
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Network Traces on Penetration: Uncovering Degree
Distribution based on Diffusion Data to Improve
Forecasting
Yaniv Dover, Jacob Goldenberg, Daniel Shapira
Yaniv Dover
Postgraduate Associate
Yale School of Management
Yale University
We show how networks can morph the diffusion curve and create deformations by distorting its
symmetry. We propose a method for uncovering the degree distribution of the adopters' network
underlying the diffusion process, based exclusively on limited early-stage penetration data, and
demonstrate that a network's degree distribution has significant impact on the contagion
properties of the subsequent adoption process. We find that under heavy-tailed degree
distribution conditions (such as scale-free networks), the major share of the adopters' market
(which may account for as much as 75% of the entire potential market) lies beyond the sales
peak. This strong asymmetry is a result of the unique interaction of the network's degree
distribution and the diffusion process.
In three studies, we validate the proposed method using data for known (mapped)
networks and related adoption processes, as well as wide-range simulations. In a fourth study we
show that applying the model early in the penetration process (around 15% penetration) to
simultaneously estimate degree distribution and diffusion parameters generates superior
forecasts, compared to three bench mark models.
Anticipatory Time Perception and Intertemporal Preferences
Gal Zauberman
Gal Zauberman
Associate Professor of Marketing
The Wharton School of Business
University of Pennsylvania
There has been a great deal of research on how people trade off costs and benefits that occur at
different points in time. The current work looks at the psychological mechanisms affecting how
individuals form preferences for outcomes in the near versus more distant future. Whereas much
of the work on intertemporal choice attributes extreme discounting and present-biased
preferences to the emotionality of immediate outcomes, my work shows that many of the classic
findings in the literature can be explained by purely cognitive mechanisms having to do with
how people perceive future time durations. More specifically, the current work focuses on the
role of people’s perceptions anticipatory time perception in intertemporal preferences, including
hyperbolic discounting. The current work demonstrates that people do not perceive time
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accurately and that this perception is susceptible to contextual influences; and as a result, so do
intertemporal preferences.
Exerting Control Through Variety
Jonathan Levav
Jonathan Levav
Associate Professor of Marketing
Columbia Business School
With the growing popularity of online social networks and wireless technologies, personal social
communication has decreased leading Americans to feel increasing social isolation. We study
how social isolation affects decision-making and hypothesize that people who are made to feel
socially isolated attempt to assert mastery over their environment through their choices.
Previous research demonstrates that in Western cultures people seek variety as a form of selfexpression and to assert themselves in their environment. Thus, we examine how social isolation
leads to variety seeking choices, and how these are moderated and mediated by desire for control
and locus of control.
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