Sticky Rebates: Target Rebates Induce Non-Rational Loyalty in Consumers

Morell, Alexander; Glöckner, Andreas; Towfigh, Emanuel V.

doi:10.2139/ssrn.1443783

Cited by 4 publications

(3 citation statements)

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“…In particular, self-chosen goals that are attached to a dedicated incentive contract might be a promising means to shape behavior not only in the workplace, but also in many other economically relevant domains (e.g., Beckenkamp & Maier-Rigaud, 2006;Morell et al, 2009 …”

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confidence: 99%

Goals (Th)at Work – Goals, Monetary Incentives, and Workers’ Performance

Goerg

Kube

2012

SSRN Journal

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In a randomized field experiment, we investigate the interplay between work goals, monetary incentives, and work performance. Employees are observed in a natural work environment where they have to do a simple, effort-intense task. Output is perfectly observable and workers are paid for performance. While a regular piece-rate contract serves as a benchmark, in some treatments workers are paid a bonus conditional on reaching a pre-specified goal. We observe that the use of personal work goals leads to a significant output increase. This is found if goals are self-chosen by the workers, as well as if goals are set exogenously by the principal -although in the latter case, the exact size of the goal plays a crucial role. Strikingly, the positive effect of self-chosen goals persists even if the goal is not backed up by monetary incentives. Our results suggest that work contracts where -through the choice of a personal work goal -workers themselves determine the risk and the size of their bonus payment at the same time can be a powerful incentive device.JEL classification: A12, C93, D01, D03, D24, J24, J33, M52

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confidence: 99%

Goals (Th)at Work – Goals, Monetary Incentives, and Workers’ Performance

Goerg

Kube

2012

SSRN Journal

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“…Currently, high fines have also been imposed on Michelin again, 5 on British Airways, 6 and on Tomra. 7 The suction effect is also discussed in other legally or politically oriented papers (see e.g., Kallaugher and Sher (2004) or Faella (2008); or Morell et al (2009) for experimental evidence), but we are not aware of any other paper that analyzes the foreclosure opportunities of AUD in a multi-period model where the profit maximizing quantity threshold is explicitly derived. 8 Our paper is confined to the similarities and differences of AUD to exclusive dealing and to identifying the impact of competition between entrants on quantity distortions.…”

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confidence: 99%

All-Unit Discounts and the Problem of Surplus Division

Feess

Wohlschlegel

2010

Rev Ind Organ

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“…Second, there may be the rational buyer who himself is too small or who by himself is not influential enough (maybe there are network effects and/or a minimum viable scale of entry) to guarantee entry by his own rational action. So, because the large majority of his fellow buyers exhibit nonrational switching behavior leading to foreclosure, the rational buyer may have to pay higher prices too (MORELL, GLÖCKNER, AND TOWFIGH [2009]). …”

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Behavioral Antitrust and Merger Control

Morell

2011

JITE

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present a lucid paper (WERDEN, FROEB, AND SHOR [2011]) in which they reject ideas of reforming antitrust based on behavioral economics. The paper by Werden et al. serves the important purpose of enriching the still rather limited literature on behavioral antitrust by identifying some points where being serious about behavioral antitrust could cause the most trouble. If the authors' sole goal had indeed been to hold back behavioral economics at the gate of antitrust, they probably would have been best advised not to write this paper. It is one of the first pieces of literature showing that authors like TOR [2002] and STUCKE [2007] are not talking to bricks anymore when writing about behavioral antitrust. 1 Indeed, it is difficult to disagree with the authors' main points. They are right to remind the reader that the test of a model is how well it predicts outcomes. Therefore the claim that the assumptions of a model remain unproven cannot discredit the rational-choice model. It is also true that many experiments have confirmed predictions based on rational choice, especially when they dealt with market settings. Certainly the authors are right to say that competition policy does not serve to protect efficiency as such, but it protects efficiency generated by competition. Therefore they rightly condemn any attempt to correct inefficient business decisions by means of competition policy if they do not harm competition.But there remain a couple of points where the authors' arguments seem to understate how fundamentally behavioral economics challenges the neoclassical view of antitrust policy. I would like to present three points where I believe this is the case: First, with regard to the authors' opinion that results from the lab do not transfer well to firm behavior, looking at the arguments more closely may lead to a slightly more nuanced conclusion. Second, the authors' argument on paternalism is probably mostly true, but could be wrong in particular cases. Third, the doubts behavioral economics raises with respect to the concept of consumer welfare analysis -a core

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Sticky Rebates: Target Rebates Induce Non-Rational Loyalty in Consumers

Cited by 4 publications

References 74 publications

Goals (Th)at Work – Goals, Monetary Incentives, and Workers’ Performance

Goals (Th)at Work – Goals, Monetary Incentives, and Workers’ Performance

All-Unit Discounts and the Problem of Surplus Division

Behavioral Antitrust and Merger Control

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