Browsing by Subject "prospect theory"
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Item A Tale of Two Brands: The Joint Effect of Manufacturer Brand and Retailer Brand on Consumers? Evaluation of Products(2012-10-19) Zhu, YingConsumers? purchase decisions typically involve two brands: the manufacturer brand (the ?what brand to buy? decision) and the retailer brand (the ?where to buy? decision). While extant research suggests that consumers? product evaluation is affected by both, much less is known about how the two brands jointly affect consumers? preferences. Building upon prospect theory and mental accounting principles, I hypothesize that the joint effect of the two brands on consumers? evaluation of different products depends on the reference point evoked, and whether each of the two brands is perceived as a gain or loss relative to the reference point. Five lab experiments provide empirical support for the hypothesized effects. Study 1 reveals that the joint effect of manufacturer and retailer brands depends on the reference product in a manner consistent with prospect theory and mental accounting principles. The results of Study 2 and 3 show that the majority of participants use a reputable brand sold at a reputable retailer as their reference product. For this group, there is a positive interaction effect of the manufacturer and retailer brands on consumers? willingness to pay. Study 4 extends the results of Study 3 by testing the theoretical framework using a non-price measure of consumers? product evaluation (i.e., attitude toward the offer). The results provide converging support for H1 and H2 and demonstrate the mediating role of gain and loss feelings, thus providing preliminary evidence for the proposed cognitive process. Finally, Study 5 provides supporting evidence for the predictions through the use of a priming method. This research contributes to the literature on behavioral decision theory and branding by extending the study of mental accounting from quantitative information (e.g., money, time) to qualitative information such as that derived from brand reputation. The findings have prescriptive implications as they can help managers understand how their brands can be leveraged, how consumers react to reference products available in the marketplace, and how to best price products across different outlets depending on the reputation of their brands and the reputation of the outlets.Item Gains and losses in the eyes of the beholder: a comparative study of foreign policy decision making under risk(Texas A&M University, 2006-04-12) Yang, YiProspect theory is a descriptive model of individual decision-making under risk (Kahneman and Tversky 1979). The central tenet of prospect theory posits that the risk orientation of decision-makers is affected by the gains vs. losses domains in which they are situated. Individuals are predicted to be risk-averse in the domain of gains and risk seeking in the domain of losses. Although prospect theory made significant contributions to decision theory, it has important limitations. Foremost, as noted by Levy (1997a), prospect theory is not a complete theory of decision-making. Like rational choice theory, prospect theory attempts to explain choices or outcomes, not the processes through which those choices come about (Abelson and Levi 1985, 235). In response to this limitation of prospect theory, this dissertation intends to address the following set of puzzles: Do gains vs. losses domains affect the decision processes in foreign policy decision making? If so, in what way will decision strategies change? That is, what strategies are most likely to be employed when the decision maker is in the domain of gains? And, in contrast, what strategies are the most likely to be utilized when the decision maker is in the domain of losses? To address these questions, I develop and extend prospect theory to account for the impact of gains vs. losses domains on decision strategy selections by decision makers under risk. A set of testable hypotheses are then derived. To render a robust test of these hypotheses, I employ a cross-national experimental research design, utilizing American subjects first and then replicating the same experiment with subjects in mainland China. In terms of research instrument, I utilize the computerized decision process tracer ?? the Decision Board Platform. Specifically, the ??moves?? of decision makers are recorded by the Decision Board and then used to identify choices and to infer specific decision strategies. Statistical analysis of the experimental results demonstrates support for the major hypotheses. A decision maker in the domain of gains is more likely to employ a holistic, alternative-based, compensatory, and maximizing decision strategy than is a decision maker in the domain of losses.Item Politically rational foreign policy decision-making(Texas A&M University, 2006-10-30) Kent, Charles ToddThis dissertation is an analysis of how presidents make foreign policy decisions. Rather than explaining foreign policy decisions by focusing on individuals or institutions, I stress the role of political pressures and context faced by presidents. It shows that foreign policy decisions are not merely a reaction to stimulus from the international or domestic arenas but involve political considerations that affect policy choice. The dynamic elements in the argument are political resources and risk. The relationship between the risk propensity of the president and presidential political resources provides an important link to understanding foreign policy decisions. Within the realm of good public policy, a politically rational president can choose to act or respond to foreign policy disputes in various ways, including diplomacy, political coercion, economic coercion, covert action, or military intervention, based on his assessment of the political context and his willingness to accept the associated risks. The level of presidential political resources determines the risk propensity of the president. Presidential foreign policy decisions will vary depending on the quantity of available political resources. Thus, understanding the risk propensity of the president increases our ability to explain foreign policy decisions. The contribution of this research is the identification of a mechanism for understanding how the interaction between the domestic and international political environments, and individual decision-makers influence foreign policy decisions. My research bridges the gap between structural theories, ??????theories that make predictions about foreign policy outcomes without reference to the cognition and actions of the actors themselves,?????? and decision-making theories that stress the role of the actors (Ikenberry 2002, 5). Although the component parts of the foreign policy decisionmaking system are widely known, we lack theories that tie the pieces together.Item When Do Their Casualties Count? Exploring Wartime Decisions that Pit Security Against Harm(2011-02-22) Roblyer, Dwight AndrewThis dissertation offers a new understanding about wartime decision making in the face of likely, but unintended, harm to foreign civilians. It empirically identifies conditions under which leaders in democratic nations are more or less likely to choose to attack a target when confronted with a dilemma between pursuing national security objectives and avoiding civilian casualties. An innovative targeting decision model was constructed that described both the theorized structure of the decisions inputs and the process by which these inputs are assembled into a choice. The model went beyond the normal target benefit and civilian casualty cost considerations of proportionality to also include the contextual input of prospect frame. Decision makers were expected to address the same benefit and cost differently depending on whether they were winning or losing the conflict. This was because the prospect frame would influence their risk attitudes, as predicted by prospect theory. This model was then tested via two decision-making experiments that used military officers and defense civilians as participants. Additionally, a statistical analysis of data collected from an extended period of the second Intifada was done to seek evidence that the model also applied in actual wartime decision making. All three tests supported portions of the targeting decision model. Higher target benefit and lower civilian casualty estimates increased support for the planned attack. Prospect frame influenced decisions in the cases where both target value and the civilian casualty estimates were high and the resulting dilemma was very difficult. In these situations, those told that their forces were losing the conflict were less sensitive to humanitarian harm and more likely to support the attack than when they were told their side was winning. Furthermore, the Intifada data analysis of attacks approved by Israeli officials against Palestinians found this same effect of prospect frame held generally across all six years of observations.