Sales Force and Competition in Financial Product Markets: The Case of Mexico's Social Security Privatization

Hastings, Justine S.; Hortaçsu, Ali; Syverson, Chad

doi:10.3982/ecta12302

Cited by 89 publications

(44 citation statements)

References 68 publications

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“…Making salient the existence of a 50% discount on overdraft fees reduces overdraft usage, consistent with customers overlooking the fact that overdrafts have a positive price, whereas making salient the availability of overdrafts without mentioning their cost increases usage (Alan et al, 2016). In general, marketing raises demand for 47 financial products and lowers their price elasticity of demand; Hastings et al (2017) demonstrate these effects in the Mexican mutual fund market.In classical models, consumers should infer that information shrouded by the seller is likely to be bad news for the consumer about price or quality. But the evidence suggests that consumers frequently fail to make this inference.…”

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confidence: 63%

Behavioral Household Finance

Beshears

Choi

Laibson

et al. 2018

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This chapter provides an overview of household finance. The first part summarizes key facts regarding household financial behavior, emphasizing empirical regularities that are inconsistent with the standard classical economic model and discussing extensions of the classical model and explanations grounded in behavioral economics that can account for the observed patterns. This part covers five topics: consumption and savings, borrowing, payments, asset allocation, and insurance. The second part addresses interventions that firms, governments, and other parties deploy to shape household financial outcomes: education and information, peer effects and social influence, product design, advice and disclosure, choice architecture, and interventions that directly target prices or quantities. This chapter is divided into two parts, each of which is further divided into several sections. The first part summarizes key facts regarding household financial behavior, emphasizing empirical regularities that are inconsistent with the standard classical economic model and discussing both extensions of the classical model and explanations grounded in behavioral economics that can account for the observed patterns. This part covers five topics: (I) consumption and savings, (II) borrowing, (III) payments, (IV) asset allocation, and (V) insurance. The second part addresses interventions that firms, governments, and other parties deploy to shape household financial outcomes: (VI) education and information, (VII) peer effects and social influence, (VIII) product design, (IX) advice and disclosure, (X) choice architecture, and (XI) interventions that directly target prices or quantities. The final section of the paper (XII) concludes. John BeshearsWe offer broad coverage of the household finance literature, but we limit the scope of our discussion along some dimensions. We focus on the U.S. institutional context and on empirical work based on U.S. data, although we do bring evidence from other wealthy countries to bear when germane and occasionally reference evidence from developing countries. We address household asset allocation but do not draw out its implications for asset pricing, which are covered by the asset pricing chapter in this handbook. Although household decisions regarding health care are relevant to household finance, we largely omit this literature from our chapter because it is covered in depth in the chapter on behavioral health economics. Finally, there is some overlap between our section on financial product design and the chapter on behavioral industrial organization; we refer readers to that chapter for related material on that topic. Part 1: Facts I. Consumption and SavingsBeginning with the seminal work of Modigliani and Brumberg (1954) and Friedman (1957), economists have embraced the view that households choose to save and borrow to smooth consumption over the lifecycle. Intuitively, if agents have concave utility functions over consumption, then they should spread consumption across time to optimally...

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confidence: 63%

Behavioral Household Finance

Beshears

Choi

Laibson

et al. 2018

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“…6 Our deposit demand estimates relate most closely to Dick (2008) and Egan, Hortaçsu, and Matvos (2016). Similar tools have been used to estimate demand by Hortaçsu and Syverson (2004) for index mutual funds, Koijen and Yogo (2015) for investment assets, Koijen and Yogo (2016) for life insurance, and Hastings, Hortaçsu and Syverson (2016) for privatized social security. Our estimation of bank asset production functions uses techniques similar to those used by Maksimovic and Phillips (2001) and Schoar (2002) to study nonnancial rms.…”

Section: Consumersmentioning

confidence: 93%

The Cross Section of Bank Value

Egan¹,

Lewellen

Sunderam³

2017

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We study the determinants of value creation within U.S. commercial banks. We focus on three theoretically-motivated drivers of bank value: screening and monitoring, "safe" deposit production, and synergies between deposit-taking and lending. To assess the relative contributions of each, we develop novel measures of banks' deposit productivity and asset productivity and use these measures to evaluate the cross-section of bank value. We find that variation in deposit productivity explains the majority of variation in bank value, consistent with theories emphasizing safe-asset production. We also find evidence of meaningful value creation from synergies between deposit-taking and lending. Overall, our findings suggest that banks are primarily "special" due to their unique liability structure rather than their ability to screen and monitor borrowers.

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“…Prior research shows that consumers are willing to pay for environmental stewardship as a product attribute (Nimon and Beghin, 1999;Forsyth, Haley and Kozak, 1999;Goett, Hudson and Train, 2000;Loureiro, McCluskey and Mittelhammer, 2001;Roe et al, 2001;Teisl, Roe and Hicks, 2002;Pelsmacker et al, 2006;Kahn, 2007;Kahn and Vaughn, 2009;Kiesel and Villas-Boas, 2013). In addition, the literature has found that advertising increases demand for advertised products (Ackerberg, 2001; Dube and Manchanda, 2005;Bagwell, 2007;Sorensen, 2007;Bertrand et al, 2010;Clark, Doraszelski and Draganska, 2009;Simester et al, 2009;Friberg and Grnqvist, 2012;Hastings, Hortasu and Syverson, 2017;Gurun, Matvos and Seru, 2016;Lewis and Reiley, 2014;Garthwaite, 2014).…”

Section: Introductionmentioning

confidence: 99%

Advertising and Environmental Stewardship: Evidence from the BP Oil Spill

Barrage

Chyn

Hastings

2020

American Economic Journal: Economic Policy

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This paper explores whether private markets can incentivize environmental stewardship. We examine the consumer response to the 2010 BP oil spill and test how BP’s investment in the 2000–2008 “Beyond Petroleum” green advertising campaign affected this response. We find evidence consistent with consumer punishment: BP station margins and volumes declined by 2.9 cents per gallon and 4.2 percent, respectively, in the month after the spill. However, pre-spill advertising significantly dampened the price response, and may have reduced brand switching by BP stations. These results indicate that firms may have incentives to engage in green advertising without investments in environmental stewardship. (JEL D12, D83, G31, L71, M37, Q53, Q56)

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Sales Force and Competition in Financial Product Markets: The Case of Mexico's Social Security Privatization

Cited by 89 publications

References 68 publications

Behavioral Household Finance

Behavioral Household Finance

The Cross Section of Bank Value

Advertising and Environmental Stewardship: Evidence from the BP Oil Spill

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