A reference price is an internal price that consumers are believed to use to compare actual prices. Reference effects for price have been demonstrated in many settings. Reference effects for quality also have been demonstrated using scanner data. Here we present experimental evidence. Firstly, it is shown that high quality goods will be valued more by… (More)
Garrity for help with data collection. This paper greatly benefitted from the comments of three anonymous referees.
Film studios occasionally withhold movies from critics before their release. Since the unreviewed movies tend to be below average in quality, this practice provides a useful setting in which to test models of limited strategic thinking: Do moviegoers seem to realize that no review is a sign of low quality? A companion paper showed that in a set of all… (More)
Film distributors occasionally withhold movies from critics before their release. Cold openings provide a natural field setting to test models of limited strategic thinking. In a set of 856 widely released movies, cold opening produces a significant 15% increase in domestic box office revenue (though not in foreign markets and DVD sales), consistent with… (More)
Previous research on capital investment has identified a tendency in multibusiness firms toward cross-subsidization from well-performing to poorly performing divisions, a phenomenon that has previously been attributed to principal-agent conflicts between headquarters and divisions (Stein, 2003). In this paper, we argue that cross-subsidization reflects a… (More)
Building on previous studies of corporate capital allocations (cf., Stein, 2003), we investigate the effect of the relative size of a business unit with respect to the size of the rest of the corporation on internal investment behavior. We find that business unit capital expenditures normalized by assets are higher when a business unit is smaller relative… (More)
Behavioral strategy merges cognitive and social psychology with strategic management theory and practice. Despite much progress, the aims and boundaries of behavioral strategy remain unclear. In this paper we define behavioral strategy and identify the main unsolved problems. We propose a unifying conceptual framework for behavioral strategy and conclude by… (More)
Many meaningful decision problems are choices among gambles with delayed resolution of uncertainty (DRU). Notably, students of decision making have concentrated their attention largely on gambles with instantaneously resolved uncertainty. A descriptive theory is proposed for evaluating gambles with DRU such that period gambles (i.e., gambles resolved at the… (More)