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Existing evidence suggests that preferences are affected by whether a price is presented as one all-inclusive expense or partitioned into a set of mandatory charges. To explain this phenomenon, we introduce a new mechanism whereby price partitioning affects a consumer's perception of the secondary (i.e., nonfocal) benefits derived from a transaction. Four experiments support the hypothesis that a partitioned price increases the amount of attention paid to secondary attributes tagged with distinct price components. Characteristics of the offered secondary attributes such as their perceived value, relative importance, and evaluability can therefore determine whether price partitioning stimulates or hinders demand. Beyond its descriptive and prescriptive implications, this theory contributes to the emerging notion that pricing can transform, as well as capture, the utility of an offer.

© 2008 INFORMS

This paper considers a call center outsourcing contract analysis and choice problem faced by a contractor and a service provider. The service provider receives an uncertain call volume over multiple periods and is considering outsourcing all or part of these calls to a contractor. Each call brings in a fixed revenue to the service provider. Answering calls requires having service capacity; thus implicit in the outsourcing decision is a capacity decision. Insufficient capacity implies that calls cannot be answered, which in turn means there will be a revenue loss. Faced with a choice between a volume-based and a capacity-based contract offered by a contractor that has pricing power, the service provider determines optimal capacity levels. The optimal price and capacity of the contractor together with the optimal capacity of the service provider determine optimal profits of each party under the two contracts being considered. This paper characterizes optimal capacity levels and partially characterizes optimal pricing decisions under each contract. The impact of demand variability and the economic parameters on contract choice are explored through numerical examples. It is shown that no contract type is universally preferred and that operating environments as well as cost-revenue structures have an important effect.

© 2008 INFORMS

Motivated by workforce planning problems in health care, professional, warranty, and repair services, we propose modeling service centers that are exclusively dedicated to fixed client constituencies as closed multiserver queueing systems, a framework we refer to as membership services. We provide fluid and diffusion approximations of the number of users within the membership who are requesting service. The approximations are obtained via many-server limit theorems, where the limiting regime assumptions of each theorem correspond to a particular staffing strategy a manager might employ. Accordingly, we propose staffing rules designed to meet a certain desired performance criterion. In particular, when the objective is to minimize the staffing size subject to a constraint on the probability of delay for a service-requesting customer, we suggest staffing rules inspired by the so-called quality- and efficiency-driven (QED), or Halfin-Whitt, limiting regime. Numerical evaluations of our proposed QED scheme indicate that, although justified for large systems, the staffing rule performs well for memberships of all sizes.

© 2008 INFORMS

We document a general pattern in the euro area overnight interbank rate (EONIA) and analyze how German banks compared to other EMU banks respond to these predictable changes in the price for reserve holdings. At the beginning of the maintenance period, when the EONIA is typically above average, we observe that German banks hold substantially less reserves than their daily average required reserves. Thus in contrast to other EMU banks, German banks back load the fulfillment of their reserve requirements over the reserve maintenance period and thereby benefit from the general pattern in the EONIA. Looking at the disaggregate data we find than this is particularly the case for the Landesbanks.We argue that the end of the calender month effect in the EONIA may be driven by a temporary shortage of liquidity, relative to reserve requirements, at the beginning of the maintenance period (which coincides with the end of the calendar month).

With permission of Elsevier

The purpose of this paper is to explore the opportunities and challenges of serving low-income consumers in developing markets with mobile telecommunications.

With permission of Emerald

This essay concerns the design of transformational executive programs. A transformational program presupposes a change in behavior of the attending executive so that the latter becomes more effective in personal or organizational change. To understand what influences the transformational process three triangular conceptual frameworks (building on the short-term dynamic psychotherapy tradition) are presented: the mental life triangle, the conflict triangle, and the relationships triangle. The first shows that cognitive and emotional processes need to be taken into consideration to create changes in behavior. The second describes the sources of thoughts and feelings that may prompt anxiety and cause defensive reactions prohibiting change and productive use of talents. The third relationships triangle explains how an individual's previous experiences create patterns of response that are repeated throughout life and can become dysfunctional. Five major challenges in program design are also examined: selecting participants; identifying the focal issue on which participants need to work; the creation of a safe transitional space that enables the change process; using the group dynamic to foster transformation and to arrive at internalization of the change process; and the educational implications for faculty, facilitators, and coaches.

With permission of the Academy of Management

This paper is concerned with understanding and identifying factors that affect the willingness of business executives to rely on trust as a governance mechanism in the context of partnerships. An instrument was designed (a short business case study followed by a questionnaire) to collect data on how different executives react to the objective conditions of a business deal. Through the questionnaire, individual willingness to rely on trust, individual reaction to traditional types of trust, and sensitivity to other situations that evolve during the deal were measured. It is shown that willingness to rely on trust varies amongst executives and is not fully determined by the conditions of a deal. Furthermore, consistent with a psycho-sociological approach to trust, it is also shown that demographic factors are related to propensity to rely on trust, and that across nationalities, the sensitivity to factors affecting trust such as partner interaction and external information differ.

© 2007 The Authors. Journal compilation © 2007 Blackwell Publishing Ltd

© 2007 The Author Journal compilation © 2007 London Business School