Matching Items (4)
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
Description
In the first chapter, I develop a representative agent model in which the purchase of consumption goods must be planned in advance. Volatility in the agent's portfolio increases the risk that a purchase cannot be implemented. This implementation risk causes the agent to make conservative consumption plans. In the model, this leads to persistent and negatively skewed consumption growth and a slow reaction of consumption to wealth shocks. The model proposes a novel explanation for the negative relation between volatility and expected utility. In equilibrium, prices of risky assets must compensate for the utility loss. Hence, the model suggests a new mechanism for generating the equity risk premium. Importantly, because implementation risk does not rely on the co-movement of asset prices with marginal utility, the resulting equity premium does not require concavity of the intratemporal utility function.
In the second chapter, I challenge the view that equity market timing always benefits
shareholders. By distinguishing the effect of a firm's equity decisions from the effect of mispricing itself, I show that market timing can decrease shareholder value. Additionally, the timing of equity sales has a more negative effect on existing shareholders than the timing of share repurchases. My theory can be used to infer firms' maximization objectives from their observed market timing strategies. I argue that the popularity of stock buybacks, the low frequency of seasoned equity offerings, and the observed post-event stock returns are consistent with managers maximizing current shareholder value.
In the second chapter, I challenge the view that equity market timing always benefits
shareholders. By distinguishing the effect of a firm's equity decisions from the effect of mispricing itself, I show that market timing can decrease shareholder value. Additionally, the timing of equity sales has a more negative effect on existing shareholders than the timing of share repurchases. My theory can be used to infer firms' maximization objectives from their observed market timing strategies. I argue that the popularity of stock buybacks, the low frequency of seasoned equity offerings, and the observed post-event stock returns are consistent with managers maximizing current shareholder value.
ContributorsWan, Pengcheng (Author) / Boguth, Oliver (Thesis advisor) / Tserlukevich, Yuri (Thesis advisor) / Babenka, Ilona (Committee member) / Arizona State University (Publisher)
Created2015
Description
This project examines different modes of cultural production from the postcolonial Anglophone world to identify how marginal populations have either been subjugated or empowered by various forms of consumerism. Four case studies specifically follow the flow of products, resources, and labor either in the colonies or London. In doing so, these investigations reveal how neocolonial systems both radiate from old imperial centers and occupy postcolonial countries. Using this method corroborates contemporary postcolonial theory positing that modern “Empire” is now amorphous and stateless rather than constrained to the metropole and colony. The temporal progression of each chapter traces how commodification and resource exploitation has evolved from colonial to contemporary periods. Each section of this study consequently considers geography and time to show how consumer culture grew via imperialism, yet also supported and challenged the progression of colonial conquest. Accordingly, as empire and consumerism have transformed alongside each other, so too have the tools that marginal groups use to fight against economic and cultural subjugation. Novels remain as one traditional format – and consumer product – that can resist the effects of colonization. Other contemporary postcolonial artists, however, use different forms of media to subvert or challenge modes of neocolonial oppression. Texts such as screenplays, low-budget films, memoirs, fashion subcultures, music videos, and advertisements illuminate how postcolonial groups represent themselves. Altogether, these various cultural productions illuminate how marginalized populations have used consumer products and practices to disrupt global economies that continue to profit from the commodification, appropriation, or subjugation of minority populations.
ContributorsTerneus, José Sebastián (Author) / Mallot, Dr. J. Edward (Thesis advisor) / Bebout, Dr. Lee (Committee member) / Castle, Dr. Gregory (Committee member) / Arizona State University (Publisher)
Created2018
Description
"Navigation, Trade, and Consumption in Seventeenth Century Oxfordshire" investigates how the inhabitants of Oxfordshire transitioned from an agricultural to a consumer community during the Jacobean and post-Restoration eras. In agrarian England, this reconfigured landscape was most clearly embodied in the struggle over the access to available land. Focusing on the gentleman farmer's understanding of the fiscal benefits of enclosure and land acquisition, I argue that the growth in agricultural markets within Oxfordshire led to a growing prosperity, which was most clearly articulated in the community's rise as viable luxury goods consumers. By juxtaposing probate documents, inventories, pamphlets, and diaries from the market towns of Burford, Chipping Norton, and Henley-on-Thames in Oxfordshire, this study examines the process by which these late sixteenth and early seventeenth century agricultural communities began to embrace the consumption of luxury goods, and, most importantly, purely market-based understanding of agrarian life.
ContributorsO'Connell, Joseph (Author) / Warnicke, Retha (Thesis advisor) / Arizona State University (Publisher)
Created2013