What’s the latest RESEARCH from Kellogg faculty members?
COOKING THE BOOKS
Why do firms issue financial misstatements?
The answer lies in a CEO’s perception of his or her net wealth. Kellogg researchers find that an over-valuation in equity results in large in-the-money options for managers, which creates incentives for them to make risky accounting decisions.
From “Cooking the Books: Why Do Firms Issue Financial Misstatements?,” based on
the research of Anup Srivastava, Jap Efendi and Edward P. Swanson.
PLAYING WITH UNCERTAINTY
Marketers need to attract consumer dollars, but they also need to remain cost-effective — so games and promotions such as the McDonald’s Monopoly game are tools of their trade. But how often do consumers have to win to make a promotion worthwhile? When is the creation of “uncertain incentives” effective as a marketing tool?
From “When Uncertainty is a Sure Thing: Points and Prizes Can Make for Successful Product Promotions,” based on the research of Kelly Goldsmith and On Amir.
ARE YOU UP TO THE TEST?
When ancient Greeks had questions about the future, they consulted the Delphic oracle. Today, individuals who have questions about stock prices or the weather
consult with experts. But how can you tell the difference between a genuine expert and a bogus one? A team of Kellogg researchers has created a test to help you do just that.
From “Expert or Charlatan? A Test to Tell the Difference Between Authentic Experts and Flimflam Artists,” based on the research of Nabil Al-Najjar, Alvaro Sandroni, Jonathan Weinstein and Rann Smorodinsky.
MISSING IN AISLE 5
When your local grocery store runs out of your favorite brand of peanut butter, it can be a nuisance — the first time it happens. But a repeat experience may cause you to change your shopping destination altogether. Kellogg researchers find that, while some stores use inventory reductions as a tool to pay down debt, the move may reduce long-term profits by sending consumers to a competitor.
From “Missing in Aisle 5: When Grocery Stores Borrow, Consumer Experience Drops,” based on the research of David A. Matsa.
WHEN TO COME OUT SWINGING
Should you set a high opening price on your eBay listing? Should you let a seller make the first offer when negotiating the price of a car? Kellogg researchers reveal the psychological processes behind bidding on an auction versus negotiating a deal — and share strategies that can help you get the upper hand in either situation.
From “When to Come Out Swinging: Devise the Right Strategy for Negotiations or Online Auctions,” based on the research of Adam D. Galinsky, Gillian Ku and Thomas Mussweiler.
TALK TO YOUR DOCTOR ABOUT…
Pharmaceutical companies are not the only beneficiaries of ads for consumer drugs. Kellogg researchers find that direct-to-consumer advertising raises awareness of diseases, increases the number of patient visits, and benefits patients, doctors and drug makers alike.
From “Talk to Your Doctor About … How Consumer Drug Ads Affect Prescribing Practices,” based on the research of Lakshman Krishnamurthi and Ying Xie.
THE INTERNET’S ECONOMY
In the 1990s, the commercialization of the Internet was a boon for economies worldwide. But this technological movement also widened the gap between urban and rural areas in terms of wage and employment growth. A new study reveals that this economic growth was more significant for prosperous regions, where residents knew how to take advantage of the new technology.
From “What Has the Internet Done for the Economy?: The Puzzling Spread of the Commercial Internet Could Explain Wage Inequalities,” based on the research of Shane Greenstein, Christopher Forman and Avi Goldfarb.
THE FALL OF GERMAN BIOTECH
In the 1970s, German pharmaceutical companies were leading the movement to commercialize genetic engineering. But by the 1990s, these companies had fallen behind competitors who came late to the field. What happened? A new study by Kellogg researchers uncovers the surprising answer.
From “The Fall of German Biotech: How the Anti-Biotech Movement Tripped Up Once-Pioneering Firms,” based on the research of Klaus Weber, Hayagreeva Rao and L.G. Thomas.