Markdown or Everyday Low Price? The Role of Behavioral Motives

References

• Abdellaoui M (2000) Parameter-free elicitation of utility and probability weighting functions. Management Sci. 46(11):1497–1512.Link, Google Scholar
• Abendroth L, Diehl K (2006) Now or never: Effects of limited purchase opportunities on patterns of regret over time. J. Consumer Res. 33(3):342–351.Crossref, Google Scholar
• Associated Press (2012) J.C. Penney gets rid of hundreds of sales. Wall Street Journal (January 26), http://online.wsj.com/article/AP0f0f6e40c96f46189bba67af966bcc0d.html.Google Scholar
• Aviv Y, Pazgal A (2008) Optimal pricing of seasonal products in the presence of forward-looking consumers. Manufacturing Service Oper. Management 10(3):339–359.Link, Google Scholar
• Aviv Y, Vulcano G (2012) Dynamic list pricing. Özer Ö, Phillips R, eds. The Oxford Handbook of Pricing Management, Chap. 23 (Oxford University Press, Oxford, UK), 522–584.Crossref, Google Scholar
• Baron O, Hu M, Najafi-Asadolahi S, Qian Q (2015) Newsvendor selling to loss-averse consumers with stochastic reference points. Manufacturing Service Oper. Management 17(4):456–469.Link, Google Scholar
• Barron G, Yechiam E (2009) The coexistence of overestimation and underweighting of rare events and the contingent recency effect. Judgment Decision Making 4(6):447–460.Google Scholar
• Baucells M, Osadchiy N, Ovchinnikov A (2014) Behavior anomalies in consumer wait-or-buy decisions and their implications for markdown management. Working paper, Universitat Pompeu Fabra, Barcelona, Spain.Google Scholar
• Baucells M, Weber M, Welfens F (2011) Reference-point formation and updating. Management Sci. 57(3):506–519.Link, Google Scholar
• Bell D (1982) Regret in decision making under uncertainty. Oper. Res. 30(5):961–981.Link, Google Scholar
• Besanko D, Winston W (1990) Optimal price skimming by a monopolist facing rational consumers. Management Sci. 36(5):555–567.Link, Google Scholar
• Cachon GP, Feldman P (2015) Price commitments with strategic consumers: Why it can be optimal to discount more frequently…than optimal. Manufacturing Service Oper. Management 17(3):399–410.Link, Google Scholar
• Cachon G, Swinney R (2009) Purchasing, pricing, and quick response in the presence of strategic consumers. Management Sci. 55(3):497–511.Link, Google Scholar
• Camerer C, Ho T (1994) Violations of the betweenness axiom and nonlinearity in probability. J. Risk Uncertainty 8(2):167–196.Crossref, Google Scholar
• Camerer C, Ho T (1999) Experienced-weighted attraction learning in normal form games. Econometrica 67(4):827–874.Crossref, Google Scholar
• Camerer C, Weber M (1992) Recent developments in modeling preferences: Uncertainty and ambiguity. J. Risk Uncertainty 5(4):325–370.Crossref, Google Scholar
• Caro F, Gallien J (2012) Clearance pricing optimization for a fast-fashion retailer. Oper. Res. 60(6):1404–1422.Link, Google Scholar
• Chevalier J, Goolsbee A (2009) Are durable goods consumers forward-looking? Evidence from college textbooks. Quart. J. Econom. 124(4):1853–1884.Crossref, Google Scholar
• Coase R (1972) Durability and monopoly. J. Law Econom. 15(1):143–149.Crossref, Google Scholar
• Cui T, Raju J, Zhang Z (2007) Fairness and channel coordination. Management Sci. 53(8):1303–1314.Link, Google Scholar
• Davis A, Katok E, Kwasnica A (2011) Do auctioneers pick optimal reserve prices? Management Sci. 57(1):177–192.Link, Google Scholar
• Diecidue E, Rudi N, Tang W (2012) Dynamic purchase decisions under regret: Price and availability. Decision Anal. 9(1):22–30.Link, Google Scholar
• Diecidue E, Schmidt U, Zank H (2009) Parametric weighting functions. J. Econom. Theory 144(3):1102–1118.Crossref, Google Scholar
• Elmaghraby W, Gulcu A, Keskinocak P (2008) Designing optimal preannounced markdowns in the presence of rational customers with multiunit demands. Manufacturing Service Oper. Management 10(1):126–148.Link, Google Scholar
• Engelbrecht-Wiggans R, Katok E (2007) Regret in auctions: Theory and evidence. Econom. Theory 33(1):81–101.Crossref, Google Scholar
• Erdem T, Keane M (1996) Decision-making under uncertainty: Capturing dynamic brand choice processes in turbulent consumer goods markets. Marketing Sci. 15(1):1–20.Link, Google Scholar
• Fickes M (2001) Hot topic: Doom to boom? Retail Traffic (April 1), http://retailtrafficmag.com/mag/retail_hot_topic_doom/.Google Scholar
• Gallego G, Phillips R, Şahin Ö (2008) Strategic management of distressed inventory. Production Oper. Management 17(4):402–415.Crossref, Google Scholar
• Gonzalez R, Wu G (1999) On the shape of the probability weighting function. Cognitive Psych. 38(1):129–166.Crossref, Google Scholar
• Heidhues P, Kőszegi B (2008) Competition and price variation when consumers are loss averse. Amer. Econom. Rev. 98(4):1245–1268.Crossref, Google Scholar
• Hertwig R, Barron G, Weber E, Erev I (2004) Decisions from experience and the effect of rare events in risky choice. Psych. Sci. 15(8):534–539.Crossref, Google Scholar
• Hey J, Orme C (1994) Investigating generalizations of expected utility theory using experimental data. Econometrica 62(6):1291–1326.Crossref, Google Scholar
• Ho T, Zhang J (2008) Designing price contracts for boundedly rational customers: Does the framing of the fixed fee matter? Management Sci. 54(4):686–700.Link, Google Scholar
• Ho T, Lim N, Camerer C (2006) Modeling the psychology of consumer and firm behavior with behavioral economics. J. Marketing Res. 43(3):307–331.Crossref, Google Scholar
• Inman J, Zeelenberg M (2002) Regret in repeat purchase versus switching decisions: The attenuating role of decision justifiability. J. Consumer Res. 29(1):116–128.Crossref, Google Scholar
• Johnson W (2015) The industry standard for gross margin in groceries. Houston Chronicle, accessed April 18, 2015, http://smallbusiness.chron.com/industry-standard-gross-margin-groceries-38121.html.Google Scholar
• Kahneman D, Miller D (1986) Norm theory: Comparing reality to its alternatives. Psych. Rev. 93(2):136–153.Crossref, Google Scholar
• Kahneman D, Tversky A (1979) Prospect theory: An analysis of decision under risk. Econometrica 47(2):263–291.Crossref, Google Scholar
• Klibanoff P, Marinacci M, Mukerji S (2005) A smooth model of decision making under ambiguity. Econometrica 73(6):1849–1892.Crossref, Google Scholar
• Levin Y, McGill J, Nediak M (2009) Dynamic pricing in the presence of strategic consumers and oligopolistic competition. Management Sci. 55(1):32–46.Link, Google Scholar
• Lim N, Ho T (2007) Designing price contracts for boundedly rational customers: Does the number of blocks matter? Marketing Sci. 26(3):312–326.Link, Google Scholar
• Liu Q, van Ryzin G (2008) Strategic capacity rationing to induce early purchases. Management Sci. 54(6):1115–1131.Link, Google Scholar
• Liu Q, van Ryzin G (2011) Strategic capacity rationing when customers learn. Manufacturing Service Oper. Management 13(1):89–107.Link, Google Scholar
• Loomes G, Sugden R (1982) Regret theory: An alternative theory of rational choice under uncertainty. Econom. J. 92(368):805–824.Google Scholar
• Medvec V, Madey S, Gilovich T (1995) When less is more: Counterfactual thinking and satisfaction among Olympic medalists. J. Personality Soc. Psych. 69(4):603–610.Crossref, Google Scholar
• Mourdoukoutas P (2013) A strategic mistake that haunts JC Penney. Forbes (September 27), http://www.forbes.com/sites/panosmourdoukoutas/2013/09/27/a-strategic-mistake-that-haunts-j-c-penney/.Google Scholar
• Nair H (2007) Intertemporal price discrimination with forward-looking consumers: Application to the U.S. market for console video-games. Quant. Marketing Econom. 5(3):239–292.Crossref, Google Scholar
• Narasimhan C, He C, Anderson E, Brenner L, Desai P, Kuksov D, Messinger P, Moorthy S, Nunes J, Rottenstreich Y, Staelin R, Wu G, Zhang Z (2005) Incorporating behavioral anomalies in strategic models. Marketing Lett. 16(3/4):361–373.Crossref, Google Scholar
• Nasiry J, Popescu I (2011) Dynamic pricing with loss averse consumers and peak-end anchoring. Oper. Res. 59(6):1361–1368.Link, Google Scholar
• Nasiry J, Popescu I (2012) Advance selling when consumers regret. Management Sci. 58(6):1160–1177.Link, Google Scholar
• Özer Ö, Zheng Y (2012) Behavioral issues in pricing management. Özer Ö, Phillips R, eds. The Oxford Handbook of Pricing Management, Chap. 20 (Oxford University Press, Oxford, UK), 415–461.Crossref, Google Scholar
• Parlakturk A (2012) The value of product variety when selling to strategic consumers. Manufacturing Service Oper. Management 14(3):371–385.Link, Google Scholar
• Phillips R (2005) Pricing and Revenue Optimization (Stanford University Press, Stanford, CA).Crossref, Google Scholar
• Popescu I, Wu Y (2007) Dynamic pricing strategies with reference effects. Oper. Res. 55(3):413–429.Link, Google Scholar
• Prelec D (1998) The probability weighting function. Econometrica 66(3):497–527.Crossref, Google Scholar
• Qiu J, Steiger E (2011) Understanding the two components of risk attitudes: An experimental analysis. Management Sci. 57(1):193–199.Link, Google Scholar
• Roese N (1994) The functional basis of counterfactual thinking. J. Personality Soc. Psych. 66(5):805–818.Crossref, Google Scholar
• Roese N (1997) Counterfactual thinking. Psych. Bull. 121(1):133–148.Crossref, Google Scholar
• Sable J (2015) What is the profit margin for retail clothes? Houston Chronicle, accessed April 18, 2015, http://smallbusiness.chron.com/profit-margin-retail-clothes-25123.html.Google Scholar
• Simonson I (1992) The influence of anticipating regret and responsibility on purchase decisions. J. Consumer Res. 19(1):105–118.Crossref, Google Scholar
• Soysal G, Krishnamurthi L (2012) Demand dynamics in the seasonal goods industry: An empirical analysis. Marketing Sci. 31(2):293–316.Link, Google Scholar
• Stokey N (1979) Intertemporal price discrimination. Quart. J. Econom. 93(3):355–371.Crossref, Google Scholar
• Stott H (2006) Cumulative prospect theory’s functional menagerie. J. Risk Uncertainty 32(2):101–130.Crossref, Google Scholar
• Su X (2007) Intertemporal pricing with strategic customer behavior. Management Sci. 53(5):726–741.Link, Google Scholar
• Su X (2009) A model of consumer inertia with applications to dynamic pricing. Production Oper. Management 18(4):365–380.Crossref, Google Scholar
• Swinney R (2011) Selling to strategic consumers when product value is uncertain: The value of matching supply and demand. Management Sci. 57(10):1737–1751.Link, Google Scholar
• Talluri K, van Ryzin G (2005) The Theory and Practice of Revenue Management (Springer, New York).Crossref, Google Scholar
• Tsiros M, Mittal V (2000) Regret: A model of its antecedents and consequences in consumer decision making. J. Consumer Res. 26(4):401–417.Crossref, Google Scholar
• Tversky A, Fox C (1995) Weighing risk and uncertainty. Psych. Rev. 102(2):269–283.Crossref, Google Scholar
• Tversky A, Kahneman D (1992) Advances in prospect theory: Cumulative representation of uncertainty. J. Risk Uncertainty 5(4):297–323.Crossref, Google Scholar
• Tversky A, Wakker P (1995) Risk attitudes and decision weights. Econometrica 63(6):1255–1280.Crossref, Google Scholar
• van de Kuilen G, Wakker P (2011) The midweight method to measure attitudes toward risk and ambiguity. Management Sci. 57(3):582–598.Link, Google Scholar
• Wahba P (2011) Penney gross margin slips on price-cutting. Reuters (August 12), http://www.reuters.com/article/2011/08/12/us-jcpenney-idUKTRE77B26S20110812.Google Scholar
• Wilson C (1988) On the optimal pricing policy of a monopolist. J. Political Econom. 96(1):164–176.Crossref, Google Scholar
• Wu G, Gonzalez R (1996) Curvature of the probability weighting function. Management Sci. 42(12):1676–1690.Link, Google Scholar
• Yaari M (1987) The dual theory of choice under risk. Econometrica 55(1):95–115.Crossref, Google Scholar
• Zeelenberg M (1999) Anticipated regret, expected feedback and behavioral decision making. J. Behav. Decision Making 12(2):93–106.Crossref, Google Scholar
• Zeelenberg M, Beattie J, van der Pligt J, de Vries N (1996) Consequences of regret aversion: Effects of expected feedback on risky decision making. Organ. Behav. Human Decision Processes 65(2):148–158.Crossref, Google Scholar
• Zeelenberg M, van Dijk W, Manstead A, van der Pligt J (2000) On bad decisions and disconfirmed expectancies: The psychology of regret and disappointment. Cognition and Emotion 14(4):521–541.Crossref, Google Scholar
• Zhang D, Cooper W (2008) Managing clearance sales in the presence of strategic customers. Production Oper. Management 17(4):416–431.Crossref, Google Scholar