Fred M. Feinberg

Do We Care What Others Get? A Behaviorist Approach to Targeted Promotions

Increased access to individual customers and their purchase histories has led to a growth in targeted promotions, including the practice of offering different pricing policies to prospective, as opposed to current, customers. Prior research on targeted promotions has adopted a tenet of the standard economic theory of choice, whereby what a consumer chooses depends exclusively on the prices available to that consumer. In this article, the authors propose that consumer preference for firms is affected not just by prices the consumers themselves are offered but also by prices available to others. This departure from the conventional strong-rationality approach to targeted promotion results in a decidedly different optimal policy. Through a laboratory experiment, calibration of a stochastic model, and game-theoretic analysis, the authors demonstrate that ignoring behaviorist effects exaggerates the importance of targeting switchers as opposed to loyals. This occurs, though with intriguing differences, even when only part of the market is aware of firms’ differing promotional policies. The authors show that both the deal percentage and the proportion of aware consumers affect the optimal strategy of the firm. Furthermore, the authors find that offering lower prices to switchers may not be a sustainable practice in the long run, as information spreads and the proportion of aware consumers grows. The model cautions practitioners against overpromoting and/or promoting to the wrong segment and suggests avenues for improving the effectiveness of targeted promotional policies.

A Functional Magnetic Resonance Imaging Study of Neural Dissociations between Brand and Person Judgments

Functional magnetic resonance imaging (fMRI) was used to investigate whether semantic judgments about products and persons are processed similarly. Our results suggest they are not: comparisons of neural correlates of product versus human descriptor judgments indicated greater activation in the medial prefrontal cortex regions for persons; for products, activation was greater in the left inferior prefrontal cortex, an area known to be involved in object processing. These findings serve to challenge the view that processing of products and brands is akin to that of humans and set a precedent for the use of fMRI techniques in consumer neuroscience studies.

Category Norms as a Function of Culture and Age: Comparisons of Item Responses to 105 Categories by American and Chinese Adults

Understanding how aging influences cognition across different cultures has been hindered by a lack of standardized, cross-referenced verbal stimuli. This study introduces a database of such item-level stimuli for both younger and older adults, in China and the United States, and makes 3 distinct contributions. First, the authors specify which item categories generalize across age and/or cultural groups, rigorously quantifying differences among them. Second, they introduce novel, powerful methods to measure between-group differences in freely generated ranked data, the rank-ordered logit model and Hellinger Affinity. Finally, a broad archive of tested, cross-linguistic stimuli is now freely available to researchers: data, similarity measures, and all stimulus materials for 105 categories and 4 culture-by-age groups, comprising over 10,000 fully translated unique item responses.

Alleviating the Constant Stochastic Variance Assumption in Decision Research: Theory, Measurement, and Experimental Test

Analysts often rely on methods that presume constant stochastic variance, even though its degree can differ markedly across experimental and field settings. This reliance can lead to misestimation of effect sizes or unjustified theoretical or behavioral inferences. Classic utility-based discrete-choice theory makes sharp, testable predictions about how observed choice patterns should change when stochastic variance differs across items, brands, or conditions. We derive and examine the implications of assuming constant stochastic variance for choices made under different conditions or at different times, in particular, whether substantive effects can arise purely as artifacts. These implications are tested via an experiment designed to isolate the effects of stochastic variation in choice behavior. Results strongly suggest that the stochastic component should be carefully modeled to differ across both available brands and temporal conditions, and that its variance may be relatively greater for choices made for the future. The experimental design controls for several alternative mechanisms (e.g., flexibility seeking), and a series of related models suggest that several econometrically detectable explanations like correlated error, state dependence, and variety seeking add no explanatory power. A series of simulations argues for appropriate flexibility in discrete-choice specification when attempting to detect temporal stochastic inflation effects.

Cross-Cultural Differences in Memory: The Role of Culture-Based Stereotypes About Aging

The extent to which cultural stereotypes about aging contribute to age differences in memory performance is investigated by comparing younger and older Anglophone Canadians to demographically matched Chinese Canadians, who tend to hold more positive views of aging. Four memory tests were administered. In contrast to B. Levy and E. Langers (1994) findings, younger adults in both cultural groups outperformed their older comparison group on all memory tests. For 2 tests, which made use of visual stimuli resembling ideographic characters in written Chinese, the older Chinese Canadians approached, but did not reach, the performance achieved by their younger counterparts, as well as outperformed the older Anglophone Canadians. However, on the other two tests, which assess memory for complex figures and abstract designs, no differences were observed between the older Chinese and Anglophone Canadians. Path analysis results suggest that this pattern of findings is not easily attributed to a wholly culturally based account of age differences in memory performance.

On Continuous-Time Optimal Advertising Under S-Shaped Response

Continuous-time monopolistic models of advertising expenditure that rely on strict response concavity have been shown to prescribe eventual spending at a constant rate. However, analyses of discrete analogs have suggested thatS-shaped response (convexity for low expenditure levels) may allow for the periodic optima encountered in actual practice. Casting the dynamic between advertising and sales in a common format (an autonomous, first-order relationship), the present paper explores extensions along three dimensions: an S-shaped response function, the value of the discount rate, and the possibility of diffusion-like response. Supplementing the treatment by Mahajan and Muller (1986), a flexible class of S-shaped response models is formulated for which it is demonstrated that, in contrast to findings in the literature on discretized advertising models, continuous periodic optima cannot be supported. Further, a set of conditions on the advertising response function are derived, that contains and extends that suggested by Sasieni (1971). Collectively, these results both suggest a set of baseline properties that reasonable models should possess and cast doubt on the ability of first-order models to capture effects of known managerial relevance.

A cross-culturally standardized set of pictures for younger and older adults: American and Chinese norms for name agreement, concept agreement, and familiarity

The present study presents normative measures for 260 line drawings of everyday objects, found in Snodgrass and Vanderwart (1980), viewed by individuals in China and the United States. Within each cultural group, name agreement, concept agreement, and familiarity measures were obtained separately for younger adults and older adults. For a subset of 57 pictures (22%), there was equivalence in both name agreement and concept agreement, and for an additional subset of 29 pictures (11%), there was nonequivalent name agreement but equivalent concept agreement, across all culture-by-age groups. The data indicate substantial differences across culture-by-age groups in name agreement percentages and number of distinct name responses provided. We discovered significant differences between older and younger American adults in both name agreement percentages (67 pictures, or 26%) and concept agreement percentages (44 pictures, or 17%). Written naming responses collected for the entire set of Snodgrass and Vanderwart pictures showed shifts in both naming and concept agreement percentages over the intervening decades: Although correlations in name agreement were strong (r= .71,p < .001) between our younger American samples and those of Snodgrass and Vanderwart, name agreement percentages have changed for a substantial proportion (33%) of the 260 pictures; moreover, 63% of the stimuli for which Snodgrass and Vanderwart reported concept agreement now appear to differ. We provide comprehensive comparison statistics and tests for both the present study and prior ones, finding differences across numerous item-level measures. The corpus of data suggests that substantial differences in all measures can be found across age as well as culture, so that unequivocal conclusions with respect to cross-cultural or age-related differences in cognition can be made only when appropriate stimuli are selected for studies. Data for all 260 pictures, for each of the four groups, and all supporting materials and tests are freely archived athttp://agingmind.cns.uiuc.edu/Pict Norms. The full set of these norms may be downloaded fromwwwpsychonomic.org/archive/.

Categorical organization in free recall across culture and age

Background: Cross-cultural differences in cognition suggest that Westerners use categories more than Easterners, but these differences have only been investigated in young adults. Objective: The contributions of cognitive resource and the extent of cultural exposure are explored for free recall by investigating cross-cultural differences in categorical organization in younger and older adults. Cultural differences in the use of categories should be larger for elderly than young because categorization is a well-practiced strategy for Westerners, but age-related cognitive resource limitations may make the strategy difficult for elderly Easterners to implement. Therefore, we expect that cultural differences in categorization will be magnified in elderly adults relative to younger adults, with Americans categorizing more than Chinese. Methods: Across two studies, 112 young and 112 elderly drawn from two cultures (American and Chinese) encoded words presented in their native language. One word list contained categorically-unrelated words and the other, categorically-related words; both lists were presented in the participants’ native language. In experiment 1, the words were strong category associates, and in experiment 2, the words were weak category associates. Participants recalled all the words they could remember, and the number of words recalled and degree of clustering by category were analyzed. Results: As predicted, cultural differences emerged for the elderly, with East-Asians using categories less than Americans during recall of highly-associated category exemplars (experiment 1). For recall of low-associate exemplars, East-Asians overall categorized less than Americans (experiment 2). Surprisingly, these differences in the use of categories did not lead to cultural differences in the number of words recalled. The expected effects of age were apparent with elderly recalling less than young, but in contrast to previous studies, elderly also categorized less than young. Conclusion: These studies provide support for the notion that cultural differences in categorical organization are larger for elderly adults than young, although culture did not impact the amount recalled. These data suggest that culture and age interact to influence cognition.

Cumulative Timed Intent: A New Predictive Tool for Technology Adoption

Despite multiple calls for the integration of time into behavioral intent measurement, surprisingly little academic research has examined timed intent measures directly. In two empirical studies, the authors estimate individual-level cumulative adoption likelihood curves—curves calibrated on self-reported adoption likelihoods for cumulative time intervals across a fixed horizon—of 478 managerial decision makers, self-predicting whether and when they will adopt a relevant technology. A hierarchical Bayes formulation allows for a heterogeneous account of the individual-level adoption likelihood curves as a function of time and common antecedents of technology adoption. A third study generalizes these results among 354 consumer decision makers and, using behavioral data collected during a two-year longitudinal study involving a subsample of 143 consumer decision makers, provides empirical evidence for the accuracy of cumulative adoption likelihood curves for predicting whether and when a technology is adopted. Cumulative adoption likelihood curves outperform two single-intent measures as well as two widely validated intent models in predicting individual-level adoption for a fixed period of two years. The results hold great promise for further research on using and optimizing cumulative timed intent measures across a variety of application domains.

Capturing Flexible Heterogeneous Utility Curves: A Bayesian Spline Approach

Empirical evidence suggests that decision makers often weight successive additional units of a valued attribute or monetary endowment unequally, so that their utility functions are intrinsically nonlinear or irregularly shaped. Although the analyst may impose various functional specifications exogenously, this approach is ad hoc, tedious, and reliant on various metrics to decide which specification is “best.” In this paper, we develop a method that yields individual-level, flexibly shaped utility functions for use in choice models. This flexibility at the individual level is accomplished through splines of the truncated power basis type in a general additive regression framework for latent utility. Because the number and location of spline knots are unknown, we use the birth-death process of Denison et al. (1998) and Greens (1995) reversible jump method. We further show how exogenous constraints suggested by theory, such as monotonicity of price response, can be accommodated. Our formulation is particularly suited to estimating reaction to pricing, where individual-level monotonicity is justified theoretically and empirically, but linearity is typically not. The method is illustrated in a conjoint application in which all covariates are splined simultaneously and in three panel data sets, each of which has a single price spline. Empirical results indicate that piecewise linear splines with a modest number of knots fit these data well, substantially better than heterogeneous linear and log-linear a priori specifications. In terms of price response specifically, we find that although aggregate market-level curves can be nearly linear or log-linear, individuals often deviate widely from either. Using splines, hold-out prediction improvement over the standard heterogeneous probit model ranges from 6% to 14% in the scanner applications and exceeds 20% in the conjoint study. Moreover, “optimal” profiles in conjoint and aggregate price response curves in the scanner applications can differ markedly under the standard and the spline-based models.