Praveen K. Kopalle and Robert Hansen
There has been much interest in pricing strategies and tactics both in the research and practice domains. This chapter examines the recent literature on pricing with a focus on blending an economics approach with that of marketing. It begins with a brief discussion of the fundamental principles of optimal pricing, which serves as the foundation for the more advanced pricing methods. The chapter provides an in-depth discussion in the areas of second degree price discrimination, bundling strategies, revenue management, pricing using conjoint analysis, dynamic pricing, price psychology, personalized pricing, competitive considerations in pricing (Nash and Stackelberg games), dynamic structural models in pricing, and pricing in two-sided markets. The end of the chapter provides brief concluding remarks.
Massimo Garbuio, Dan Lovallo, and Elif Ketenciouglu
Modern strategic decision theory focuses on those actions taken by senior executives (on behalf of the owners) that commit substantial resources, set precedents, and create waves of less important decisions. This chapter explores key behavioral assumptions that dispute the notion that strategic decisions are wholly rational in a neoclassical economics sense. It classifies deviations from rationality as non-standard preferences, non-standard beliefs, and non-standard decisions. Insights are provided on how behavioral economics can be applied to strategic decisions in organizational settings, and moreover on how behavioral economics can be enriched by asking questions that are unique to the role of executives making strategic decisions within firms.
David R. Just
Behavioral theory suggests a myriad other policy options that can have substantial impacts without restricting choices in any real sense. This article focuses on three general areas of research: food choice, food consumption volume, and the evaluation of foods. It discusses two primary literatures of behavioral economics and food consumption. One of these literatures seeks to apply general behavioral economic models to food consumption, while the other seeks to identify and incorporate known food psychological phenomena into models of economic behavior. It introduces many new concepts to the field of behavioral economics, and provides some promising areas for future research. Finally, it mentions that much remains to be done in terms of incorporating the important elements of food behavior, and creating and using suitable individual data to calibrate these models for policy purposes.
Alain Verbeke and Liena Kano
This chapter analyzes internalization theory’s impact on international business (IB) research. It reviews internalization theory’s origins as well as its intellectual foundations, and discusses key applications of the theory in the IB sphere, inter alia, analysis of the multinational enterprise’s (MNE’s) entry mode choice, its international expansion strategies and internal governance, and the regionalizaton phenomenon. The analysis suggests that the contemporary version of internalization theory can enrich scholars’ understanding of a wide range of empirical phenomena, both in IB and in the broader field of strategic management. The chapter concludes with a prediction of internalization theory’s future contributions to management research.
William S. Neilson
Research in managerial economics has long relied on the discounted subjective expected utility model as its workhorse decision framework, and this article identifies some challenges to that model. Experimental evidence suggests that subjects have preferences biased more toward the present than the standard model predicts, and these biases can lead to time inconsistent behavior. Risk attitudes tend to be very context specific, and capturing them requires not just nonlinear transformations of the payoffs, as in the standard model, but also nonlinear transformations of the probabilities. Individuals tend to be more averse to uncertainty or ambiguity, situations in which the probabilities are unknown, than to risk, situations in which the probabilities are known, and the standard framework cannot distinguish between the two. The article identifies implications for all of these departures from the workhorse model.
Shainaz Firfiray, Martin Larraza-Kintana, and Luis R. Gómez-Mejía
This chapter analyzes the relationship between family control of the firm and its labor productivity. It builds upon the socioemotional wealth (SEW) perspective of family firms to develop a set of propositions that connect SEW priorities, trust, leadership style, nonfamily managers, and the implementation of high performance work practices with labor productivity. The authors argue that SEW priorities warrant adoption of a set of policies and behaviors among the controlling family managers that shape the behaviors and attitudes of the workforce, and these in turn affect labor productivity. This model helps explain observed differences in labor productivity between family and nonfamily firms across different firm sizes, as well as differences in labor productivity among family firms.
Rodney J. Paul, Andrew P. Weinbach, and Brad R. Humphreys
This study explores the impact of elite starting pitchers on the Major League Baseball betting market. Starting pitchers are the key defensive element of a baseball game, and their value is generally reflected in the market odds on baseball games. This study uses highly detailed and previously unavailable data to examine the role of elite starting pitchers on game betting volume, percentage bet on the favorite and the underdog, and percentage bet on the “over” and the “under” in the baseball totals market. Not surprisingly, games involving an elite pitcher see significant differences in betting percentages and play a key role in the determination of betting volume. In addition, the star-player nature of elite pitchers being of a defensive, rather than offensive, nature leads to bettors wagering significantly more on the under in games involving elite starting pitchers.