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In 2021 Honors Economics Posters

Abstract

Previous studies support the existence of two phenomena: choice overload, where more choices have negative effects for a consumer; and the pictorial superiority effect, where people prefer pictorial stimuli as opposed to written words. Townsend and Kahn (2014) studied these effects by examining different sized choice sets and stimuli types, specifically pictorial (visual) and verbal (word-based). In this study, I extend the work of Townsend and Kahn (2014) by introducing a combination presentation of verbal and visual elements in addition to the pictorial and verbal presentations studied before. This study examines the effect of presentation of options (pictorial, verbal or combination) and choice set size (8 or 27) on choice overload, measured through perceived variety and perceived complexity, and likelihood to opt out of choice. I anticipate to replicate the findings of Townsend and Kahn (2014). I also anticipate that participants will be more likely to opt out of choice for combination presentation of pictorial and word based stimuli when presented with a choice set of 27 options in comparison to 8 options.

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DigitalDocument

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In 2021 Honors Economics Posters

Abstract

Inspired by the phenomenon where people panic buy in the face of the COVID-19 pandemic, this paper studies cooperation in Prisoner's Dilemma games. I explore relatively novel aspects of the Prisoner's Dilemma literature, that is the effect of information signaling cooperative or noncooperative behavior on outcomes. With randomly-matched, one-shot Prisoner's Dilemma games conducted on virtually, the study looks to answer the question of how signaling information affects players' behavior. By studying this effect, the paper hopes to contribute to the existing literature of monitoring on the Prisoner's Dilemma game and provide some insights on possible public communication strategies to prevent panic buying, as well as other socially detrimental behaviors, mimicking the portrayal of panic buying and the pandemic in the media.

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DigitalDocument

Rights Statement

In President's Report

Abstract

2006-2016: A decade in review

Type of Resource

DigitalDocument

In Steinmetz Symposium

Abstract

Supreme is one of today's popular designer streetwear clothing brands. However, one of the largest differences between Supreme and other mainstream designer brands is that Supreme has only been around for just over 25 years. Within the past 10 years, Supreme's unconventional marketing techniques have helped the brand skyrocket to unprecedented success (Huddleston 2020). Part 1 of thispaper presents a case study examining the history and marketing tactics responsible for Supreme's growth. In Part 2, I developed an empirical study to analyze conspicuous consumers and their likelihood to purchase from a fictitious brand that, in one condition, marketed itself as scarce and limited its supply (Real Scarcity), or, in another condition, marketed itself as scarce and did not limit its supply (Fake Scarcity). I predicted that participants higher in conspicuousness would be less likely to purchase from a fictitious brand under the Fake Scarcity condition than the Real Scarcity condition, and that there would be no differences between the conditions for participants lower in conspicuousness. The results showed no differences between the conditions for neither of the conspicuousness level.

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VideoObject

Rights Statement

In Steinmetz Symposium

Abstract

In 2020, the market share of retail investors increased significantly compared to the past 10 years. The increase of inexperienced investors can possibly cause some risk to the financial security of many households in the country. Online trading platforms have become the main form of trading for retail investors. Moreover, news articles and headlines are becoming an integral part of online trading platforms, allowing users to see relevant articles on a particular security when viewing the security information. These articles can affect investors' decisions or prime them to behave in a certain way. Previous studies in economics and psychology show that humans' financial decisions can be affected by priming. The aim of this study is to examine the effect of exposure to positive and negative news articles on individuals' risk preferences. In addition, the study aims to examine if the framing of the news stories has an effect on individuals' behavior. The study will have a 2x2 design. The two independent variables are going to be the sentiment of the news (positive or negative news) and the humanization of the article (whether the story mentions a person's loss or a generic market loss). The positive stories are going to include stories about stock market gains. Conversely, the negative stories are going to include stories about stock market losses. For the humanization variable, the personal stories will include stories about a gain or a loss by a person while generic stories are going to discuss general market underperformance or outperformance. I expect positive news articles to cause participants to be more risk seeking. On the other hand, I expect negative news articles to cause participants to become more risk averse. In addition, I expect the humanized stories to have a significantly different effect compared to the generic stories because of the reliability of humanized stories.

Type of Resource

VideoObject

Rights Statement

In Steinmetz Symposium

Abstract

Previous studies support the existence of two phenomena: choice overload, where more choice options have negative effects for a consumer (Scheibehenne et al. 2010); and the pictorial superiority effect, stating that pictorial stimuli is more easily recognized than written text (Nelson et al. 1976). Townsend and Kahn (2014) studied these effects by examining different sized choice sets and stimuli types, specifically pictorial (visual) and textual (text-based). In this study, I extend the work of Townsend and Kahn (2014) by introducing a combination presentation of image-based and text-based elements in addition to the pictorial and textual presentations studied before. This study examines the effect of presentation of options (pictorial, textual, or combination) and choice set size (8 or 27) on choice overload, measured through opt-out decision, perceived variety, and perceived complexity which contribute to consumer experience of choice overload. I find significantly higher perceived complexity and perceived variety for 27 item choice sets compared to 8 item choice sets and for text-based presentation compared to image-based presentation. Since perceived variety and perceived complexity factor into consumer experience of choice overload, these results support the existence of choice overload. In addition, I find that perceived variety for the combination presentation of image-based and text-based elements is significantly higher than that of image-based presentation, and that perceived complexity for the combination presentation is marginally significantly higher than that of image-based presentation. These results are applicable to online businesses and online shopping platforms in regard to consumer purchasing behavior. By structuring online presentation of options in a way that is not highly complex and does not have high variety, consumers will be less likely to experience choice overload and more likely to buy items, therefore benefiting the online businesses and online shopping platforms.

Type of Resource

DigitalDocument

Rights Statement

In Steinmetz Symposium

Abstract

There are several economic, political, social, and psychological factors that motivate consumers' spending decisions. Whatever the motivations, consumer expenditure makes up one of the most crucial aspects of the economy. While consumers hold power in the economy, they are also vulnerable to shifts in business cycles over time. In the past several decades there have been significant depression, recession, and expansion. The impact of these cycles on consumers is quite nuanced and has been studied on aggregate. In this paper, I contribute to the literature by assessing the heterogeneous effect of business cycles on different sectors of consumer expenditure on both a macroeconomic and microeconomic level. I focus on consumer expenditure on entertainment, while comparing it to a baseline of consumer spending on durables. There is also a persistent question about which, if any, industries are resilient to changes in business cycles. Do "recession-proof" industries exist? Consumption of entertainment and leisure goods have been suspected to either be unaffected by recession or see an increase in consumption in times of economic downturn. This paper makes crucial strides in explaining substitution effects and changes in marginal utility in the face of economic expansion and contraction. By regressing consumer expenditure on entertainment and certain specific entertainment purchases on Gross Domestic Product and unemployment rate, I explore to what extent overall economic health dictates consumption of such leisure goods. I also examine the effect of business cycles over time on consumption of non-entertainment goods, in order to make conclusions about the heterogeneity of consumer spending across business cycles. I find that households increase their consumption of entertainment as a proportion of total expenditure as unemployment rises and GDP falls, even as total expenditure decreases.

Type of Resource

DigitalDocument

Rights Statement

In Steinmetz Symposium

Abstract

Inspired by the phenomenon of panic buying in the face of the COVID-19 pandemic, this paper studies the effect of information cherry-picked to signal cooperation or noncooperation on outcomes of Prisoner's Dilemma games. The study explores the question of how presenting polarized pieces of information before decision making affects subjects' behavior using anonymous, randomly-matched, one-shot Prisoner's Dilemma games conducted virtually on Amazon Mechanical Turk. With a sample size of 243 observations, the study finds that positive information aimed to increase confidence in cooperation does not have any significant relationship with Prisoner's Dilemma games' outcomes. On the other hand, the data suggests that when subjects were presented with a negative piece of information lowering their confidence in cooperative behavior, they were 14.6 percentage points less likely to cooperate, compared to people in the control group who did not receive any information other than the Dilemma's rules. The study also finds that certain income brackets, panic buying experience during COVID-19, and taking care of a dependent have positive relationships with cooperative behavior.

Type of Resource

DigitalDocument

Rights Statement

In Honors Theses

Abstract

Previous studies support the existence of two phenomena: choice overload, where more choice options have negative effects for a consumer (Scheibehenne et al. 2010); and the pictorial superiority effect, stating that pictorial stimuli is more easily recognized than written text (Nelson et al. 1976). Townsend and Kahn (2014) studied these effects by examining different sized choice sets and stimuli types, specifically pictorial (visual) and textual (text-based). In this study, I extend the work of Townsend and Kahn (2014) by introducing a combination presentation of image-based and text-based elements in addition to the pictorial and textual presentations studied before. This study examines the effect of presentation of options (pictorial, textual, or combination) and choice set size (8 or 27) on choice overload, measured through opt-out decision, perceived variety, and perceived complexity which contribute to consumer experience of choice overload. I find significantly higher perceived complexity and perceived variety for 27 item choice sets compared to 8 item choice sets and for text-based presentation compared to image-based presentation. Since perceived variety and perceived complexity factor into consumer experience of choice overload, these results support the existence of choice overload. In addition, I find that perceived variety for the combination presentation of image-based and text-based elements is significantly higher than that of image-based presentation, and that perceived complexity for the combination presentation is marginally significantly higher than that of image-based presentation. These results are applicable to online businesses and online shopping platforms in regard to consumer purchasing behavior. By structuring online presentation of options in a way that is not highly complex and does not have high variety, consumers will be less likely to experience choice overload and more likely to buy items, therefore benefiting the online businesses and online shopping platforms.

Type of Resource

Thesis

Rights Statement

In Honors Theses

Abstract

Obesity rates have been rapidly increasing in recent years. This is a problem especially for low-income families and for households without access to quality food. Consequently fast food restaurants are a solution for those who cannot afford healthy food. The large number and variety of fast food restaurants coupled with their aggressive advertisements cheap prices and large portions may have an effect on consumption and obesity rates. This study explored the relationship between types of advertisements utilized by fast food restaurants and consumers' willingness to pay (WTP) to see if bundled advertisements have a significant impact on WTP. Bundles also referred to as value meals combine two or more products which are sold at a lower price than the individual prices combined. Using a between subjects study a Becker DeGroot Marshak (BDM) bidding auction was conducted to elicit participants WTP for three different items a drink fries and a burger which were advertised individually or in a bundle. I hypothesized that consumers would be willing to spend more on individually advertised items than the same items advertised in a bundle. I found that consumers were indeed willing to pay significantly more for items sold individually than in a bundle. These results suggest that consumers see purchasing bundles as a gain rather than a loss increasing the overall perceived value of the bundle and decreasing the perceived cost.

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Thesis

Rights Statement

In Honors Theses

Abstract

Mergers and acquisitions remain the primary corporate growth strategy for executives around the world. While deals continue to rise in popularity, their success in generating value for participating firms remain uncertain. A vast majority of merger and acquisition research focuses on this disparity and considers whether they create or destroy value for stakeholders. In this thesis, I examine the value generated to shareholders by US acquisitions and mergers announced between 2005 and 2009. Utilizing the event study methodology, I evaluate cumulative abnormal returns (CAR) for acquiring firms to analyze the wealth effects of merger and acquisition announcements. CAR is a direct measure of the change in shareholder wealth resulting from an event because CAR represent the difference between the return conditional on the event and the expected return. I find that acquiring firm shareholders realized average cumulative abnormal returns of - 1.572% during a five-day event window centered around the event announcement, and -3.905% during a two-month event window. Furthermore, when distinguishing the characteristics of deals that impact the returns to shareholders, transaction value has a statistically significant negative correlation with CAR. The results of this thesis support previous literature findings that the returns to shareholders of the acquiring firms are often not significant and sometimes negative.

Type of Resource

Thesis

Rights Statement

In Honors Theses

Abstract

Major League Baseball is one of the most valuable sports leagues valued at $10 billion US dollars. While over 40% of payroll is allocated to pitchers, the wage disparity between starting pitchers alone is $7 million US dollars. The disparity between the max starting pitchers and the minimum relief pitchers is $20.5 million US dollars. Previous studies find that there is much evidence to support that as wage dispersion among a team increases, the overall team performance is negatively affected. In addition, there are some studies which find no correlation, or positive correlation between salary inequality and efficiency. Jewell and Molina (2004) find that salary inequality does not appear to be correlated with efficiency in the MLB. This paper analyzes how wage dispersion and salary inequality affect individual performance among pitchers in Major League Baseball (MLB). To answer this question, we examine the relationship between wage dispersion and individual performance of the rostered pitcher on all 30 MLB teams across 10 seasons using seasonal statistics which include team and player specific metrics. The economic goals of the study is to further the research surrounding two competing salary theories: tournament theory and cohesion theory. The results of this study show that with larger wage dispersions or pay inequality across teams and the pitching specific positional payroll, there is statistically significant negative impact on individual performance.

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Thesis

Rights Statement

In Honors Theses

Abstract

Prior to the introduction of technology and surge of web 2.0 platforms, word-of- mouth (WOM) was the principal way for society to adopt and relay information to others. Given the onset of social media platforms, TikTok for example, information such as feedback on a person, product, or service, has been made accessible worldwide, giving rise to electronic word-of-mouth (eWOM). Popular eWOM comes from social media influencers, with many followers and are favored for their perceived experitise in a certain area (beauty, fashion, gaming, etc.). Generation Z (1997-2012), Gen Z for short, are the main users of the TikTok app and are known to make purchases influenced by others on the app. This study investigates the impact of TikTok user verification status on Gen Z consumers' willingness to pay for or buy a product reviewed on TikTok. Data was collected through a 2x1 between-subject design surveying 576 participants aged 18-2. The study found a positive but insignificant relationship between the verification status of a user and participants' willingness to buy or pay for the good. Additional variables measuring the demographics (race, gender, household income), participant perceptions of the TikTok user (relatability, trustworthiness), and other importance factors that influence TikTok induced purchasing (price and trendiness of product, and follower count of TikTok user) proved to have a greater impact.

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Thesis

Rights Statement