Karsten T. Hansen’s Web Page
Contents
· Research
Contact Information
Karsten T. Hansen
Associate Professor
Department of Marketing
847-491-7098
karsten-hansen@northwestern.edu
Publications
1. “The Option Value of Returns -- Theory
and Empirical Evidence”, conditionally accepted, Marketing Science
(joint
with Eric Anderson and Duncan Simester)
2. “Are Store Brand Buyers Store Loyal?
-- An Empirical Investigation”,
forthcoming, Management Science
(joint with Vishal Singh).
3. “Market Structure across Retail
Formats”, (joint with Vishal Singh), forthcoming, Marketing Science.
4. “Market
Entry and Consumer Behavior: An Investigation of a
Marketing
Science , 2006, Vol.25, No.5
(joint with Vishal Singh and Robert C. Blattberg).
5. “Understanding Store-brand Purchase Behavior Across Categories”, Marketing Science , Vol.25, No.1, 2006 (joint with Vishal Singh and Pradeep Chintagunta).
6. “Modeling Preferences for Common Attributes in Multi-Category Brand Choice”, joint with Sachin Gupta and Vishal Singh, Journal of Marketing Research, May 2005. (finalist for the Paul E. Green Award)
7. “The Effect of Schooling and Ability on
Achievement Test Scores”, joint with James J. Heckman and Kathleen
Mullen, Journal of Econometrics, Volume 121, July-August 2004. (Winner
of the Aigner Award for best applied paper in the Journal of Econometrics,
2003--2004)
8. “Estimating Distributions of Treatment
Effects with an Application to the Returns to Schooling and Effects of
Uncertainty on College Choice”, joint with Pedro Carneiro and James J.
Heckman, International Economic Review, May 2003.
9. “Removing the Veil of Ignorance in Assessing The Distributional Impact of Social Policies”, joint with Pedro Carneiro and James J. Heckman, Swedish Economic Policy Review, Vol.8, 2001.
Papers
under Review
10. “Managing Cannibalization With
Promotion Mechanisms”,
Under revision for 2nd round, Marketing
Science (joint Dipak Jain and Romana Khan).
11. “Measuring the Mere Measurement
Effect",
Under revision for 2nd round, Journal
of Marketing Research (joint Eric Anderson and Manish Tripathi).
12. “Channel Pass-through of Trade
Promotions",
1st round, Marketing Science (joint
Vincent Nijs, Eric Anderson, Kanishka Misra and Lakshman Krishnamurthi).
13. “Modeling Key Drivers of Physician's
Choice of Prescription Drugs”,
1st round, IJRM (joint Tulikaa Bhatia
and Lakshman Krishnamurthi).
Working
Papers
I. “How
are Demand and Returns Related? -- Theory and Empirical Evidence”, 2006,
(joint with Eric Anderson, Lei Wang and Duncan Simester)
Abstract: The relationship
between demand and customer returns represents an important input to inventory
planning models. While poor
estimates of this relationship can dramatically increase inventory management
costs (de Brito and van der Laan, 2002), there is surprisingly little research on the
topic. In this paper we investigate
the relationship between demand and returns by comparing how customers’
returns behavior for apparel items varies both across items and within an
item. To guide our empirical
analysis, we develop an economic model of customer purchase and returns
behavior that yields testable predictions.
We reject the model that customer return rates are independent of price
paid. Instead, we find support for
the perceived value hypothesis, which predicts that customer return rates
increase with the price paid. This
finding has important implications for the coordination of marketing and
operations decisions. Our analysis
also yields a number of additional empirical insights into customer returns
behavior that are expected to generalize to other contexts.
II. “Do Credit Cards Create Loyalty?”, 2007, (joint with Kanishka Misra and Eric Anderson).
Abstract: Many retailers offer private label or co-branded credit cards to consumers. Unlike general purpose credit cards, these cards offer consumers additional benefits such as installment billing, deferred billing, reward points and discounts that are specific to a retailer. In 2003, the U.S. market for these credit cards topped $300 billion and represented 20\% of the U.S. credit card market Fedres (2005). Managers typically argue that these credit cards create consumer loyalty and lead to more purchases with the retailer. However, there is little empirical evidence to support this assertion. In this paper, we utilize a unique dataset from a home shopping firm to answer the question of whether retail credit cards create consumer loyalty. After two years of operation, the firm introduced a private label credit card. This provides an experiment which allows us to measure the change in customer loyalty after credit card activation. In our data, consumers are aggregated into cohorts and we observe aggregate monthly purchasing behavior for each cohort, before and after they activate retail credit cards. We formulate a structural econometric model to study two aspects of loyalty, a consumer's perceived value (utility) for the store and a stickiness of consumer purchases (state-dependence) with the store. We extend the random coefficient aggregate logit model to include individual level state dependence. Our results do support the assertion that retail credit cards create loyalty and suggest that the size of the affect depends on when consumers first start purchasing with the firm. Early adopters do not have an increase in inherent value, while late adopters have a large increase in inherent value. Additionally we find that all consumers increase their state-dependence after activating their credit cards. Therefore retail credit cards does create a stickiness in consumers purchase patterns. This could be due to increased memorability or creating switching costs.
III. “An Empirical Vertical Channel Model with Upstream and Downstream Competition”, 2006, (joint with Kanishka Misra, Vincent Nijs and Eric Anderson).