Wilfred Amaldoss | Duke University (original) (raw)
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Papers by Wilfred Amaldoss
Reference groups influence product and brand evaluations, especially when the product is a public... more Reference groups influence product and brand evaluations, especially when the product is a publicly consumed luxury good. Marketers of such luxury goods need to carefully balance two important social forces: (1) the desire of leaders to distinguish themselves from followers and (2) the countervailing desire of followers to assimilate with leaders. In this paper, we examine the theoretical implications of
In collaborating to compete, firms forge different types of strategic alliances: same-function al... more In collaborating to compete, firms forge different types of strategic alliances: same-function alliances, parallel development of new products, and cross-functional alliances. A major challenge in the management of these alliances is how to control the resource commitment of partners to the collaboration. In this research we examine both theoretically and experimentally how the type of an alliance and the prescribed
Marketing Science, 2008
In several marketing contexts, strategic complementarity between the actions of individual player... more In several marketing contexts, strategic complementarity between the actions of individual players demands that players coordinate their decisions to reach efficient outcomes. Yet coordination failure is a common occurrence. We show that the well-established psychological phenomenon of asymmetric dominance can facilitate coordination in two experiments. Thus, we demonstrate a counterintuitive result: A common bias in individual decision making can help
SSRN Electronic Journal, 2000
Marketing Letters
Much of experimental research in marketing has focused on individual choices. Yet in many context... more Much of experimental research in marketing has focused on individual choices. Yet in many contexts, the outcomes of one’s choices depend on the choices of others. Furthermore, the results obtained in individual decision making context may not be applicable to these strategic choices. In this paper, we discuss three avenues for further advancing our understanding of strategic choices. First, there is a need to develop theories about how people learn to play strategic games. Second, there is an opportunity to enrich standard economic models of strategic behavior by allowing for different types of bounded rationality and by relaxing assumptions about utility formulation. These new models can help us to more accurately predict strategic choices. Finally, future research can improve marketing practice by designing better mechanisms and validating them using experiments.
Management Science
Mixed strategies are widely used to model strategic situations in diverse fields such as economic... more Mixed strategies are widely used to model strategic situations in diverse fields such as economics, marketing, political science, and biology. However, some of the implications of asymmetric mixed-strategy solutions are counterintuitive. We develop a stylized model of patent race to examine some of these implications. In our model two firms compete to develop a product and obtain a patent. However, one firm values the patent more because of its market advantages, such as brand reputation and distribution network. Contrary to some intuition, we find that the firm that values the patent less is likely to invest more aggressively in developing the product and will also win the patent more often. We argue that the reason for these counterintuitive results is inherent in the very concept of mixed strategy solution. In a laboratory test, we examine whether subjects' behavior conforms to the equilibrium predictions. We find that the aggregate behavior of our subjects is consistent with...
Journal of Mathematical Psychology
We report the results of an experiment on two-stage contests with budget-constrained agents compe... more We report the results of an experiment on two-stage contests with budget-constrained agents competing to win an exogenously determined prize. In stage 1, agents first compete within their own groups by expending resources, and then in stage 2 the winners of each group compete with one another to win the prize by expending additional resources subject to the budget constraint. Winners in each stage are determined by Tullock's proportional contest success function. We present the subgame perfect equilibrium solution for this model, derive predictions for our experiment, and then test them experimentally. In agreement with previous experimental research on single-stage contests, the equilibrium model is flatly rejected due to over-expenditure in stage 1. A descriptive model that extends the equilibrium solution by allowing for (1) non-pecuniary utility of winning and (2) misperception of the probability of winning better accounts for some, but not all, of the behavioral regularitie...
Journal of Marketing Research
Journal of Marketing Research
In many product categories, consumer tastes are diverse, and firms use finely targeted advertisin... more In many product categories, consumer tastes are diverse, and firms use finely targeted advertising to inform consumers about their products. This article proposes a model of informative advertising that allows for diverse consumer tastes and multiple competing firms. Using this framework, the authors analyze how diversity in consumers' tastes, informative advertising, and improvements in advertising technology may influence prices. First, informative advertising can lead to lower prices if consumer valuations are high. However, if consumer valuations are low, informative advertising can lead to higher prices. Second, when consumer valuations are high, price increases with greater diversity in tastes, though this result reverses if consumer valuations are low. Third, improvements in advertising technology lead to higher levels of advertising when consumer valuation is high, but the opposite effect can occur when consumer valuation is low. The authors relate these theoretical find...
Management Science
Some luxury goods manufacturers ofier limited editions of their products while some others market... more Some luxury goods manufacturers ofier limited editions of their products while some others market multiple product lines. Researchers have found that reference groups shape consumer evaluations of these product categories. Yet little empirical research has examined how reference groups afiect the product line decisions of flrms. Indeed, in a fleld setting it is quite a challenge to isolate reference group efiects from contextual efiects and correlated efiects. In this paper we propose a parsimonious model that allows us to study how reference groups in∞uence flrm behavior and that lends itself to experimental analysis. With the aid of the model, we investigate the behavior of consumers in a laboratory setting where we can focus on the reference group efiects after controlling for the contextual and correlated efiects. The experimental results show that in the presence of strong reference group efiects, limited editions and multiple products can help improve flrm's proflts.
Management Science
Consumers purchase conspicuous goods to satisfy not only material needs but also social needs suc... more Consumers purchase conspicuous goods to satisfy not only material needs but also social needs such as prestige. In an attempt to meet these social needs, producers of conspicuous goods like cars, perfumes, and watches, highlight the exclusivity of their products. In this paper, we propose a monopoly model of conspicuous consumption using the rational expectations framework, and then examine how purchase decisions are affected by the desire for exclusivity and conformity. We show that snobs can have an upward-sloping demand curve but only in the presence of consumers who are (weakly) followers. Laboratory tests lend support for this model prediction and for the rational expectations framework. The experimental results suggest that subjects used some degree of sophisticated thinking to arrive at their first-period decisions. Their behavior in the subsequent trials, however, can be adequately captured by a purely adaptive learning mechanism. We discuss the implications of consumer lear...
Marketing Science
Consumers cannot purchase a prescription drug without a prescription from a physician, yet many p... more Consumers cannot purchase a prescription drug without a prescription from a physician, yet many prescription drugs are promoted to consumers with the help of direct-to-consumer (DTC) advertising. In this paper, we propose and test a competitive model of DTC advertising. We find that the brand specificity of DTC advertising can have an inverted U-shaped relationship with detailing, DTC advertising, and profits. Furthermore, an increase in the cross-price sensitivity between competing prescription drugs is not always detrimental to firm profits. A laboratory test lends qualitative support to some of our model predictions. We also discuss potential implications of DTC advertising for generic drugs and over-the-counter drugs.
Though still influencing practitioners and being mentioned frequently in marketing courses, the s... more Though still influencing practitioners and being mentioned frequently in marketing courses, the strategy of unique selling proposition (USP, hereafter) was not formulated in an analytical model. This study presents a model in which a USP is executed by adding an attribute to the product that is becoming so important to a consumer-segment that these consumers will not consider a product that does not posses this property. Furthermore, we also claim that in recent years self-expressive attributes have become quite effective in executing USP. We use the model to address two questions: (i) what are the market im-plications of USP and (ii) what are the economic incentives to introduce it. The result with respect to the first question shed a new light on the common wisdom that products are so similar functionally that firms have to differenti-ate along symbolic attributes. Our model suggests that the minimal functional differentiation might be the result in this relationship, rather than ...
Marketing Science, 2000
Page 1. Collaborating to Compete Wilfred Amaldoss * Robert J. Meyer * Jagmohan S. Raju * Amnon Ra... more Page 1. Collaborating to Compete Wilfred Amaldoss * Robert J. Meyer * Jagmohan S. Raju * Amnon Rapoport Krannert Graduate School of Management, Purdue University, West Lafayette, Indiana 47907-1310 amaldossw@mgmt ...
Reference groups influence product and brand evaluations, especially when the product is a public... more Reference groups influence product and brand evaluations, especially when the product is a publicly consumed luxury good. Marketers of such luxury goods need to carefully balance two important social forces: (1) the desire of leaders to distinguish themselves from followers and (2) the countervailing desire of followers to assimilate with leaders. In this paper, we examine the theoretical implications of
In collaborating to compete, firms forge different types of strategic alliances: same-function al... more In collaborating to compete, firms forge different types of strategic alliances: same-function alliances, parallel development of new products, and cross-functional alliances. A major challenge in the management of these alliances is how to control the resource commitment of partners to the collaboration. In this research we examine both theoretically and experimentally how the type of an alliance and the prescribed
Marketing Science, 2008
In several marketing contexts, strategic complementarity between the actions of individual player... more In several marketing contexts, strategic complementarity between the actions of individual players demands that players coordinate their decisions to reach efficient outcomes. Yet coordination failure is a common occurrence. We show that the well-established psychological phenomenon of asymmetric dominance can facilitate coordination in two experiments. Thus, we demonstrate a counterintuitive result: A common bias in individual decision making can help
SSRN Electronic Journal, 2000
Marketing Letters
Much of experimental research in marketing has focused on individual choices. Yet in many context... more Much of experimental research in marketing has focused on individual choices. Yet in many contexts, the outcomes of one’s choices depend on the choices of others. Furthermore, the results obtained in individual decision making context may not be applicable to these strategic choices. In this paper, we discuss three avenues for further advancing our understanding of strategic choices. First, there is a need to develop theories about how people learn to play strategic games. Second, there is an opportunity to enrich standard economic models of strategic behavior by allowing for different types of bounded rationality and by relaxing assumptions about utility formulation. These new models can help us to more accurately predict strategic choices. Finally, future research can improve marketing practice by designing better mechanisms and validating them using experiments.
Management Science
Mixed strategies are widely used to model strategic situations in diverse fields such as economic... more Mixed strategies are widely used to model strategic situations in diverse fields such as economics, marketing, political science, and biology. However, some of the implications of asymmetric mixed-strategy solutions are counterintuitive. We develop a stylized model of patent race to examine some of these implications. In our model two firms compete to develop a product and obtain a patent. However, one firm values the patent more because of its market advantages, such as brand reputation and distribution network. Contrary to some intuition, we find that the firm that values the patent less is likely to invest more aggressively in developing the product and will also win the patent more often. We argue that the reason for these counterintuitive results is inherent in the very concept of mixed strategy solution. In a laboratory test, we examine whether subjects' behavior conforms to the equilibrium predictions. We find that the aggregate behavior of our subjects is consistent with...
Journal of Mathematical Psychology
We report the results of an experiment on two-stage contests with budget-constrained agents compe... more We report the results of an experiment on two-stage contests with budget-constrained agents competing to win an exogenously determined prize. In stage 1, agents first compete within their own groups by expending resources, and then in stage 2 the winners of each group compete with one another to win the prize by expending additional resources subject to the budget constraint. Winners in each stage are determined by Tullock's proportional contest success function. We present the subgame perfect equilibrium solution for this model, derive predictions for our experiment, and then test them experimentally. In agreement with previous experimental research on single-stage contests, the equilibrium model is flatly rejected due to over-expenditure in stage 1. A descriptive model that extends the equilibrium solution by allowing for (1) non-pecuniary utility of winning and (2) misperception of the probability of winning better accounts for some, but not all, of the behavioral regularitie...
Journal of Marketing Research
Journal of Marketing Research
In many product categories, consumer tastes are diverse, and firms use finely targeted advertisin... more In many product categories, consumer tastes are diverse, and firms use finely targeted advertising to inform consumers about their products. This article proposes a model of informative advertising that allows for diverse consumer tastes and multiple competing firms. Using this framework, the authors analyze how diversity in consumers' tastes, informative advertising, and improvements in advertising technology may influence prices. First, informative advertising can lead to lower prices if consumer valuations are high. However, if consumer valuations are low, informative advertising can lead to higher prices. Second, when consumer valuations are high, price increases with greater diversity in tastes, though this result reverses if consumer valuations are low. Third, improvements in advertising technology lead to higher levels of advertising when consumer valuation is high, but the opposite effect can occur when consumer valuation is low. The authors relate these theoretical find...
Management Science
Some luxury goods manufacturers ofier limited editions of their products while some others market... more Some luxury goods manufacturers ofier limited editions of their products while some others market multiple product lines. Researchers have found that reference groups shape consumer evaluations of these product categories. Yet little empirical research has examined how reference groups afiect the product line decisions of flrms. Indeed, in a fleld setting it is quite a challenge to isolate reference group efiects from contextual efiects and correlated efiects. In this paper we propose a parsimonious model that allows us to study how reference groups in∞uence flrm behavior and that lends itself to experimental analysis. With the aid of the model, we investigate the behavior of consumers in a laboratory setting where we can focus on the reference group efiects after controlling for the contextual and correlated efiects. The experimental results show that in the presence of strong reference group efiects, limited editions and multiple products can help improve flrm's proflts.
Management Science
Consumers purchase conspicuous goods to satisfy not only material needs but also social needs suc... more Consumers purchase conspicuous goods to satisfy not only material needs but also social needs such as prestige. In an attempt to meet these social needs, producers of conspicuous goods like cars, perfumes, and watches, highlight the exclusivity of their products. In this paper, we propose a monopoly model of conspicuous consumption using the rational expectations framework, and then examine how purchase decisions are affected by the desire for exclusivity and conformity. We show that snobs can have an upward-sloping demand curve but only in the presence of consumers who are (weakly) followers. Laboratory tests lend support for this model prediction and for the rational expectations framework. The experimental results suggest that subjects used some degree of sophisticated thinking to arrive at their first-period decisions. Their behavior in the subsequent trials, however, can be adequately captured by a purely adaptive learning mechanism. We discuss the implications of consumer lear...
Marketing Science
Consumers cannot purchase a prescription drug without a prescription from a physician, yet many p... more Consumers cannot purchase a prescription drug without a prescription from a physician, yet many prescription drugs are promoted to consumers with the help of direct-to-consumer (DTC) advertising. In this paper, we propose and test a competitive model of DTC advertising. We find that the brand specificity of DTC advertising can have an inverted U-shaped relationship with detailing, DTC advertising, and profits. Furthermore, an increase in the cross-price sensitivity between competing prescription drugs is not always detrimental to firm profits. A laboratory test lends qualitative support to some of our model predictions. We also discuss potential implications of DTC advertising for generic drugs and over-the-counter drugs.
Though still influencing practitioners and being mentioned frequently in marketing courses, the s... more Though still influencing practitioners and being mentioned frequently in marketing courses, the strategy of unique selling proposition (USP, hereafter) was not formulated in an analytical model. This study presents a model in which a USP is executed by adding an attribute to the product that is becoming so important to a consumer-segment that these consumers will not consider a product that does not posses this property. Furthermore, we also claim that in recent years self-expressive attributes have become quite effective in executing USP. We use the model to address two questions: (i) what are the market im-plications of USP and (ii) what are the economic incentives to introduce it. The result with respect to the first question shed a new light on the common wisdom that products are so similar functionally that firms have to differenti-ate along symbolic attributes. Our model suggests that the minimal functional differentiation might be the result in this relationship, rather than ...
Marketing Science, 2000
Page 1. Collaborating to Compete Wilfred Amaldoss * Robert J. Meyer * Jagmohan S. Raju * Amnon Ra... more Page 1. Collaborating to Compete Wilfred Amaldoss * Robert J. Meyer * Jagmohan S. Raju * Amnon Rapoport Krannert Graduate School of Management, Purdue University, West Lafayette, Indiana 47907-1310 amaldossw@mgmt ...