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We consider a principal repeatedly allocating a single resource in each period to one of multiple agents, whose values are private, without relying on monetary payments over an infinite horizon with discounting. We design a dynamic mechanism without monetary transfers, which induces agents to report their values truthfully in each period via promises/threats of future favorable/unfavorable allocations. We show that our mechanism asymptotically achieves the first-best efficient allocation (the welfare-maximizing allocation as if values are public) as agents become more patient and provide sharp characterizations of convergence rates to first best as a function of the discount factor. In particular, in the case of two agents we prove that the convergence rate of our mechanism is optimal, i.e., no other mechanism can converge faster to first best.

Copyright © 2019, INFORMS

Advertising is central to creating brand meaning by endowing brands with symbolic values and embedding them within their broader sociocultural context. This study analyzes how the symbolic meaning of luxury brands is constructed in print advertisements. In particular, the study shows how brand communications of luxury brands systematically differ from those of premium and mass-market brands. Through a comparative analysis of thematic and formal characteristics of 208 print advertising campaigns consisting of about 1,700 individual ads from the primary advertising campaigns of four luxury brands, four premium brands, and four mass-market brands, this study identifies three distinguishing factors of luxury brand communication: enrichment, distancing, and abstraction. First, luxury brand advertising enriches the communication content by using more complex campaign templates that make more frequent use of symbolism, rhetorical structures, and storytelling. Second, luxury brand advertising systematically uses distancing techniques, such as temporal, spatial, social, and hypothetical distancing. Third, luxury brand ads use higher-level discourses that allow for different interpretations of brand advertisements. Therefore, this study provides insights into the construction of brand identity in the luxury field, as well as the broader sociocultural construction of luxury and the evolution of its core symbolic constituencies.

Prior research has argued that family firms are reluctant to consider external equity as a source of financing because they fear a loss of control, which would limit their socioemotional wealth. However, prior empirical research has neglected potential contingencies that determine whether family firms’ need for control affects their equity financing decisions. The purpose of this paper is to provide first insight into this research void.

The paper builds on rational choice theory and a logit regression using secondary data.

The study shows that the effect of family firm owners’ need for control on their consideration of external equity depends on the extent to which owners expect investors to interfere with management and the extent to which decision making is affected by emotions. Hereby, the present study provides evidence that family firm owners’ decisions to use external equity are more complex than previously presumed.

This study has several limitations that provide fruitful avenues for further research. Overall, the authors list and detail seven different limitations in the paper, e.g. the narrow focus on equity financing, the use of a partial model, the fact that the authors did not conceptualize differences between different types of investors (such as high net worth individuals, private equity firms and venture capital firms) in the model and further more.

The study shows that investors need to understand the complex interplay among family firms’ need for control, expected investor interference and emotional decision making, to correctly assess their chances of success when approaching family firms for equity.

Prior empirical research has neglected potential contingencies that determine whether family firms’ need for control affects their equity financing decisions. The present paper provides first insight into this research void.

With permission of Emerald

We study the transmission channels from central banks’ quantitative easing programs via the banking sector when central banks start purchasing corporate bonds. We find evidence consistent with a “capital structure channel” of monetary policy. The announcement of central bank purchases reduces the bond yields of firms whose bonds are eligible for central bank purchases. These firms substitute bank term loans with bond debt, thereby relaxing banks’ lending constraints: banks with low Tier-1 ratios and high non-performing loans increase lending to private (and profitable) firms, which experience a growth in capital expenditures and sales. The credit reallocation increases banks’ risk-taking in corporate credit.

With permission of Elsevier

Consumers often do not have complete information about the choices they face and therefore have to spend time and effort in acquiring information. Since information acquisition is costly, consumers trade-off the value of better information against its cost, and make their final product choices based on imperfect information. We model this decision using the rational inattention approach and describe the rationally inattentive consumer’s choice behavior when she faces alternatives with different information costs. To this end, we introduce an information cost function that distinguishes between direct and implied information. We then analytically characterize the optimal choice probabilities. We find that non-uniform information costs can have a strong impact on product choice, which gets particularly conspicuous when the product alternatives are otherwise very similar. There are significant implications on how a seller should provide information about its products and how changes to the product set impacts consumer choice. For example, non-uniform information costs can lead to situations where it is disadvantageous for the seller to provide easier access to information for a particular product, and to situations where the addition of an inferior (never chosen) product increases the market share of another existing product (i.e., failure of regularity). We also provide an algorithm to compute the optimal choice probabilities and discuss how our framework can be empirically estimated from suitable choice data.

© 2019, INFORMS

We study the optimal inventory policy of a firm selling an item whose price is affected by an exogenous stochastic price process which consequently affects customer arrivals. This case is typical for retailers that operate in different currencies, or trade products consisting of commodities or components whose prices are subject to market fluctuations. We assume that there is a stochastic input price process for the inventory item which determines purchase and selling prices according to a general selling price function. We also assume that unit demands arrive according to a doubly-stochastic Poisson process which is modulated by the stochastic input price process. We analyze optimal ordering decisions for both backorder and lost-sale cases. We show that under certain conditions a price-dependent base stock policy is optimal. The models are then extended to a price-modulated compound Poisson demand case. We present a numerical study on the sensitivity of the optimal profits to various parameters of the operational setting and stochastic price process such as price volatility, customer sensitivity to price changes etc. In another numerical setup, we compare the model with a corresponding discrete-time benchmark model that ignores within period price fluctuations and present the optimality gap when using the benchmark model as an approximation.

With permission of Elsevier