Asset pricing in created markets

We investigate the applicability of the present-value asset pricing model to fishing quota markets by applying instrumental variable panel data estimation techniques to 15 years of market transactions from New Zealand's individual transferable quota (ITQ) market. In addition to the influence of current fishing rents, we explore the effect of market interest rates, risk, and expected changes in future rents on quota asset prices. The results indicate that quota asset prices are positively related to declines in interest rates, lower levels of risk, expected increases in future fish prices, and expected cost reductions from rationalization under the quota system. © 2007 American Agricultural Economics Association.

Essays in Empirical Operations Management: Bayesian Learning of Service Quality and Structural Estimation of Complementary Product Pricing and Inventory Management

This dissertation contributes to the rapidly growing empirical research area in the field of operations management. It contains two essays, tackling two different sets of operations management questions which are motivated by and built on field data sets from two very different industries --- air cargo logistics and retailing.

The first essay, based on the data set obtained from a world leading third-party logistics company, develops a novel and general Bayesian hierarchical learning framework for estimating customers' spillover learning, that is, customers' learning about the quality of a service (or product) from their previous experiences with similar yet not identical services. We then apply our model to the data set to study how customers' experiences from shipping on a particular route affect their future decisions about shipping not only on that route, but also on other routes serviced by the same logistics company. We find that customers indeed borrow experiences from similar but different services to update their quality beliefs that determine future purchase decisions. Also, service quality beliefs have a significant impact on their future purchasing decisions. Moreover, customers are risk averse; they are averse to not only experience variability but also belief uncertainty (i.e., customer's uncertainty about their beliefs). Finally, belief uncertainty affects customers' utilities more compared to experience variability.

The second essay is based on a data set obtained from a large Chinese supermarket chain, which contains sales as well as both wholesale and retail prices of un-packaged perishable vegetables. Recognizing the special characteristics of this particularly product category, we develop a structural estimation model in a discrete-continuous choice model framework. Building on this framework, we then study an optimization model for joint pricing and inventory management strategies of multiple products, which aims at improving the company's profit from direct sales and at the same time reducing food waste and thus improving social welfare.

Collectively, the studies in this dissertation provide useful modeling ideas, decision tools, insights, and guidance for firms to utilize vast sales and operations data to devise more effective business strategies.

Effective Dose Estimation in Fast-kV Switch Dual Energy Computed Tomography

Purpose

The objective of our study was to test a new approach to approximating organ dose by using the effective energy of the combined 80kV/140kV beam used in fast kV switch dual-energy (DE) computed tomography (CT). The two primary focuses of the study were to first validate experimentally the dose equivalency between MOSFET and ion chamber (as a gold standard) in a fast kV switch DE environment, and secondly to estimate effective dose (ED) of DECT scans using MOSFET detectors and an anthropomorphic phantom.

Materials and Methods

A GE Discovery 750 CT scanner was employed using a fast-kV switch abdomen/pelvis protocol alternating between 80 kV and 140 kV. The specific aims of our study were to (1) Characterize the effective energy of the dual energy environment; (2) Estimate the f-factor for soft tissue; (3) Calibrate the MOSFET detectors using a beam with effective energy equal to the combined DE environment; (4) Validate our calibration by using MOSFET detectors and ion chamber to measure dose at the center of a CTDI body phantom; (5) Measure ED for an abdomen/pelvis scan using an anthropomorphic phantom and applying ICRP 103 tissue weighting factors; and (6) Estimate ED using AAPM Dose Length Product (DLP) method. The effective energy of the combined beam was calculated by measuring dose with an ion chamber under varying thicknesses of aluminum to determine half-value layer (HVL).

Results

The effective energy of the combined dual-energy beams was found to be 42.8 kV. After calibration, tissue dose in the center of the CTDI body phantom was measured at 1.71 ± 0.01 cGy using an ion chamber, and 1.73±0.04 and 1.69±0.09 using two separate MOSFET detectors. This result showed a -0.93% and 1.40 % difference, respectively, between ion chamber and MOSFET. ED from the dual-energy scan was calculated as 16.49 ± 0.04 mSv by the MOSFET method and 14.62 mSv by the DLP method.

Consumer Behavior and Firm Competition

Understanding consumer behavior is critical for firms' decision making. How consumers make decisions about what they want and buy directly affect the profits of firms. Therefore, it is important to consider consumer behaviors and incorporate them into the model when studying the optimal strategy of firms and competition between firms. In this dissertation, I study rich and interesting consumer behaviors and their impact on firms' strategy in two essays. The first essay considers consumers' shopping cost which leads to their preference for one-stop shopping. I examine how store visit costs and consumer knowledge about a product affect the strategic store choice of consumers and, in turn, the pricing, customer service and advertising decisions of competing retailers. My analysis offers insights on how specialty stores can compete with big-box retailers. In the second essay, I focus on a well-established psychology phenomenon, cognitive dissonance. I incorporate the idea of cognitive dissonance into a model of spatial competition and examine its implications for selling strategy. I provide new insight on the profitability of advance selling and spot selling as well as the pricing of bundle and its components. Collectively, two essays in this dissertation introduce novel ways to model consumer behaviors and help to understand the impact of consumer behaviors on firm profitability and strategy.

When Consumption Embraces Faith: How Religious Beliefs and Practices Influence Consumption

Marketers have long looked for observables that could explain differences in consumer behavior. Initial attempts have centered on demographic factors, such as age, gender, and race. Although such variables are able to provide some useful information for segmentation (Bass, Tigert, and Longdale 1968), more recent studies have shown that variables that tap into consumers’ social classes and personal values have more predictive accuracy and also provide deeper insights into consumer behavior. I argue that one demographic construct, religion, merits further consideration as a factor that has a profound impact on consumer behavior. In this dissertation, I focus on two types of religious guidance that may influence consumer behaviors: religious teachings (being content with one’s belongings), and religious problem-solving styles (reliance on God).

Essay 1 focuses on the well-established endowment effect and introduces a new moderator (religious teachings on contentment) that influences both owner and buyers’ pricing behaviors. Through fifteen experiments, I demonstrate that when people are primed with religion or characterized by stronger religious beliefs, they tend to value their belongings more than people who are not primed with religion or who have weaker religious beliefs. These effects are caused by religious teachings on being content with one’s belongings, which lead to the overvaluation of one’s own possessions.

Essay 2 focuses on self-control behaviors, specifically healthy eating, and introduces a new moderator (God’s role in the decision-making process) that determines the relationship between religiosity and the healthiness of food choices. My findings demonstrate that consumers who indicate that they defer to God in their decision-making make unhealthier food choices as their religiosity increases. The opposite is true for consumers who rely entirely on themselves. Importantly, this relationship is mediated by the consumer’s consideration of future consequences. This essay provides an explanation to the existing mixed findings on the relationship between religiosity and obesity.