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Consumers search before making virtually any purchase. The notion that consumers engage in costly search is well-understood to have deep implications for market performance. However to date, no theoretical model allows for the observation that consumers often purchase more than a single product in an individual shopping occasion. Clothing, food, books, and music are but four important examples of goods that are purchased many items at a time. I develop a modeling approach that accounts for multi-purchase occasions in a structural way. My model shows that as preference for variety increases, so does the size of the consideration set. Search models that ignore preference for variety are, therefore, likely to under-predict the number of products searched. It is generally thought that lower search costs increase retail competition which pushes prices and assortments down. However, I show that there is an optimal number of products to offer depending on the intensity of consumer search costs. Consumers with high search costs prefer to shop at a store with a large assortment of goods and purchase multiple products, even if the prices that firm charges is higher than competing firms' prices. On the other hand, consumers with low search costs tend to purchase fewer goods and shop at the stores that have lower prices, as long as the store has a reasonable assortment offering. The implications for market performance are dramatic and pervasive. In particular, the misspecification of demand model in which search is important and/or multiple discreteness is observed will produce biased parameter estimates leading to erroneous managerial conclusions.
ContributorsAllender, William Jacob (Author) / Richards, Timothy J. (Thesis advisor) / Park, Sungho (Committee member) / Hamilton, Stephen (Committee member) / Arizona State University (Publisher)
Created2013
Description
I compare the effect of anonymous social network ratings (Yelp.com) and peer group recommendations on restaurant demand. I conduct a two-stage choice experiment in which restaurant visits in the first stage are informed by online social network reviews from Yelp.com, and visits in the second stage by peer network reviews. I find that anonymous reviewers have a stronger effect on restaurant preference than peers. I also compare the power of negative reviews with that of positive reviews. I found that negative reviews are more powerful compared to the positive reviews on restaurant preference. More generally, I find that in an environment of high attribute uncertainty, information gained from anonymous experts through social media is likely to be more influential than information obtained from peers.
ContributorsTiwari, Ashutosh (Author) / Richards, Timothy J. (Thesis advisor) / Qiu, Yueming (Committee member) / Grebitus, Carola (Committee member) / Arizona State University (Publisher)
Created2013
Description
The lack of food safety in a grower's produce presents the grower with two risks; (1) that an item will need to be recalled from the market, incurring substantial costs and damaging brand equity and (2) that the entire market for the commodity becomes impaired as consumers associate all produce as being risky to eat. Nowhere is this more prevalent than in the leafy green industry, where recalls are relatively frequent and there has been one massive E. coli outbreak that rocked the industry in 2006. The purpose of this thesis is to examine insurance policies that protect growers from these risks. In doing this, a discussion of current recall insurance policies is presented. Further, actuarially fair premiums for catastrophic revenue insurance policies are priced through a contingent claims framework. The results suggest that spinach industry revenue can be insured for $0.02 per carton. Given the current costs of leafy green industry food safety initiatives, growers may be willing to pay for such an insurance policy.
ContributorsPagaran, Jeremy (Author) / Manfredo, Mark R. (Thesis advisor) / Richards, Timothy J. (Thesis advisor) / Nganje, William (Committee member) / Arizona State University (Publisher)
Created2013
Description
Unrestricted Mexican exports of sugar into the U.S. is considered the most pressing issue facing the U.S. sugar industry. The goal of this dissertation is to analyze the trade of sugar between Mexico and the U.S. as well as analyze additional primary issues confronting the U.S. sugar industry. Chapters 1 and 2 provide an introduction to the U.S. sugar industry. Chapters 3 through 6 develop trade models which analyze sugar trade between Mexico and the U.S. The trade models estimate how NAFTA, USDA sugar forecast errors and Mexican ownership of twenty percent of the Mexican sugar industry each impact U.S. producer surplus and Mexican welfare. Results validate that U.S. producer surplus and in some instances Mexican welfare were decreased by full implementation of NAFTA. U.S. producer surplus and Mexican welfare were decreased due to USDA sugar production forecasting errors. U.S. producer surplus would be increased if the Mexican government did not own twenty percent of Mexican sugar production. Using an online choice experiment, Chapter 7 assesses U.S. consumers' preferences and willingness to pay (WTP) for imported and genetically modified (GM) labeled sugar and sugar in soft drinks. Results indicate that consumers prefer bags of sugar and soft drinks labeled as "Not GM". Furthermore, consumers prefer sugar from Canada and the U.S. over sugar from Mexico, Brazil and the Philippines. Evidence is also provided that participants are more likely to choose actual products in the choice set rather than the "none of these" options when controlling for hypothetical bias by using consequentiality techniques. A non-hypothetical experimental auction was used in Chapter 8 to determine consumers' WTP for soft drinks labeled with sweetener and calorie information and analyzed the role of taste panels in an experimental auction. Results indicate that sugar is consumers' most preferred sweetener and calorie labeling is ineffective at influencing consumers to choose healthier soft drinks. Including taste in an experimental auction caused significant reductions in consumers' WTP for all soft drinks. Chapter 9 concludes by summarizing the results of this dissertation and discussing the future challenges facing the U.S. sugar industry.
ContributorsLewis, Karen Elizabeth (Author) / Schmitz, Troy (Thesis advisor) / Grebitus, Carola (Committee member) / Manfredo, Mark (Committee member) / Ketcham, Andrea (Committee member) / Arizona State University (Publisher)
Created2014
Description
It is well understood that decisions made under uncertainty differ from those made without risk in important and significant ways. Yet, there is very little research into how uncertainty manifests itself in the most ubiquitous of decision-making environments: Consumers' day-to-day decisions over where to shop, and what to buy for their daily grocery needs. Facing a choice between stores that either offer relatively stable "everyday low prices" (EDLP) or variable prices that reflect aggressive promotion strategies (HILO), consumers have to choose stores under price-uncertainty. I find that consumers' attitudes toward risk are critically important in determining store-choice, and that heterogeneity in risk attitudes explains the co-existence of EDLP and HILO stores - an equilibrium that was previously explained in somewhat unsatisfying ways. After choosing a store, consumers face another source of risk. While knowing the quality or taste of established brands, consumers have very little information about new products. Consequently, consumers tend to choose smaller package sizes for new products, which limits their exposure to the risk that the product does not meet their prior expectations. While the observation that consumers purchase small amounts of new products is not new, I show how this practice is fully consistent with optimal purchase decision-making by utility-maximizing consumers. I then use this insight to explain how manufacturers of consumer packaged goods (CPGs) respond to higher production costs. Because consumers base their purchase decisions in part on package size, manufacturers can use package size as a competitive tool in order to raise margins in the face of higher production costs. While others have argued that manufacturers reduce package sizes as a means of raising unit-prices (prices per unit of volume) in a hidden way, I show that the more important effect is a competitive one: Changes in package size can soften price competition, so manufacturers need not rely on fooling consumers in order to pass-through cost increases through changes in package size. The broader implications of consumer behavior under risk are dramatic. First, risk perceptions affect consumers' store choice and product choice patterns in ways that can be exploited by both retailers and manufacturers. Second, strategic considerations prevent manufacturers from manipulating package size in ways that seem designed to trick consumers. Third, many services are also offered as packages, and also involve uncertainty, so the effects identified here are likely to be pervasive throughout the consumer economy.
ContributorsYonezawa, Koichi (Author) / Richards, Timothy J. (Thesis advisor) / Grebitus, Carola (Committee member) / Park, Sungho (Committee member) / Arizona State University (Publisher)
Created2014
Descriptionyour words
ContributorsWang, Dan, M.S (Author) / Grebitus, Carola (Thesis advisor) / Schroeter, Christiane (Committee member) / Manfredo, Mark (Committee member) / Hughner, Renee (Committee member) / Arizona State University (Publisher)
Created2014
Description
Private labels command a growing share of food retailers' shelf space. In this dissertation, I explain this phenomenon as resulting from "umbrella branding," or the ability of a single brand to reach across categories. Conceptually, I define umbrella branding as a behavioral attribute that describes a shopper's tendency to ascribe a performance bond to a brand, or to associate certain performance characteristics to a private label brand, across multiple categories. In the second chapter, I describe the performance bond theory in detail, and then test this theory using scanner data in the chapter that follows. Because secondary data has limitations for testing behavioral theories, however, I test the performance bond theory of umbrella branding using a laboratory experiment in the fourth chapter. In this chapter, I find that households tend to transfer their perception of private label performance across categories, or that a manifestation of umbrella branding behavior can indeed explain private labels' success. In the fifth chapter, I extend this theory to compare umbrella branding in international markets, and find that performance transference takes its roots in consumers' cultural backgrounds. Taken together, my results suggest that umbrella branding is an important behavioral mechanism, and one that can be further exploited by retailers across any consumer good category with strong credence attributes.
ContributorsTheron, Sophie (Author) / Richards, Timothy J. (Thesis advisor) / Grebitus, Carola (Committee member) / Hughner, Renee (Committee member) / Arizona State University (Publisher)
Created2014
Description
This is a study of the plight of smallholder agriculture in Northwest Costa Rica. More specifically, this is the story of 689 rice farms, of an average size of 7.2 hectares and totaling just less than 5,300 hectares within the largest agricultural irrigation system in Central America. I was able to define the physical bounds of this study quite clearly, but one would be mistaken to think that this simplicity transfers to a search for rural development solutions in this case. Those solutions lie in the national and international politics that appear to have allowed a select few to pick winners and losers in Costa Rican agriculture in the face of global changes. In this research, I found that water scarcity among smallholder farms between 2006 and 2013 was the product of the adaptations of other, more powerful actors in 2002 to threats of Costa Rica's ratification of the Central American Free Trade Agreement. I demonstrate how the adaptations of these more powerful actors produced new risks for others, and how this ultimately prevented the rural development program from meeting its development goals. I reflect on my case study to draw conclusions about the different ways risks may emerge in rural development programs of this type. Then, I focus on the household level and show that determinants of successful adaptation to one type of global change risk may make farmers more vulnerable to other types, creating a "catch-22" among vulnerable farmers adapting to multiple global change risks. Finally, I define adaptation limits in smallholder rice farming in Northwest Costa Rica. I show that the abandonment of livelihood security and well-being, and of the unique "parcelaro" identities of rice farmers in this region define adaptation limits in this context.
ContributorsWarner, Benjamin (Author) / Childers, Daniel (Thesis advisor) / Eakin, Hallie (Committee member) / Abbott, Joshua (Committee member) / Wiek, Arnim (Committee member) / Arizona State University (Publisher)
Created2014
Description
The main purpose of this dissertation is to examine the effects of migration and household capitals on agricultural and energy transitions in the setting of rapidly changing socioeconomic and environmental conditions of Chitwan, Nepal. The environmental aspects of agricultural and energy transitions are also discussed to weave the changes in the livelihoods of rural households into the discourse of sustainable development, especially in the context of underdeveloped countries. The data used for the analysis is the Chitwan Valley Family Study which has been collected since 1996 at the individual and household level with the focuses on agriculture and family. The results from first difference model and multilevel logistic regression model using discrete-time event history approach deliver a couple of important messages for the future plans for local and national development. Most of all, migration plays an important role in the livelihoods of rural households in Chitwan. It might not have a direct impact, but the findings indicate that social and financial remittances from migration interact with how a household utilizes their current capitals under a given context for the future. Particularly, available labor in a household, prior investment in agriculture, exposure to modern life style, and what other people do, all these factors moderate the association between migration and the transitions. The implications of these results on sustainable development for the future of Chitwan and Nepal in the coming years are discussed afterwards.
ContributorsHan, Seung Yong (Author) / Yabiku, Scott T. (Thesis advisor) / Glick, Jennifer E. (Committee member) / Agadjanian, Victor (Committee member) / Arizona State University (Publisher)
Created2014
Description
The global demand and trade for fruits and vegetables is increasing at national and international levels. The fresh fruits and vegetables supply chain are highly vulnerable to contamination and can be easily spoiled due to their perishable nature. Due to increases in fresh fruit and vegetable trade shipment volume between countries, the fresh food supply chain area is the highly susceptible and frequently prone to food contamination. The inability of firms in the fresh food business to have a good supply chain visibility and tracking system is one of the prominent reasons for food safety failure. Therefore, in order to avoid food safety risk and to supply safe food to consumers, the firms need to have an efficient traceability system in their supply chain. Most of the research in the food supply chain area suggests the implementation of a highly efficient tracking system called RFID (Radio frequency identification) technology to firms in the food industry. The medium scale firms in the fresh food supply chain business are skeptical about implementing the RFID technology equipped traceability system due to its high cost of investment and low margins on fresh food sales. This research developed two methods to measure the probability of food safety risk in food supply chain. These methods use the information gain from RFID traceability systems as a tool to measure the amount of risk in the fresh food supply chain. The stochastic optimization model is applied in this study to determine the risk premium by investing in RFID technology over the electronic barcode traceability system. The results show that there is a reduction in buyer (Type II error) and seller risk (Type I error) for RFID technology employed traceability system compared to electronic barcode system. It is found from stochastic optimization results that there is a positive risk premium by investing in RFID traceability system over the current systems and suggests the implementation of RFID traceability system for complex medium scale fresh produce imports to reduce the food safety risks. This research encourages the food industries and government agencies to evaluate alternatives to update supply chain system with RFID technology.
ContributorsJanke, Deepak Kumar (Author) / Nganje, William (Thesis advisor) / Schmitz, Troy (Committee member) / Thor, Eric (Committee member) / Arizona State University (Publisher)
Created2011