Selling More
Digitization and the Market for Physical Works: Evidence from the Google Books Project
Abhishek Nagaraj & Imke Reimers
American Economic Journal: Economic Policy, November 2023, Pages 428-458
Abstract:
The free digital distribution of creative works could cannibalize demand for physical versions, but it could also boost physical sales by enabling consumers to discover the original work. We study the impact of the Google Books digitization project on the market for physical books. We find that digitization significantly boosts the demand for physical versions and provide evidence for the discovery channel. Moreover, digitization allows independent publishers to introduce new editions for existing books, further increasing sales. Our results highlight the potential of free digital distribution to strengthen the demand for and supply of physical products.
Do Lower-Quality Images Lead to Higher Demand on Airbnb?
Shunyuan Zhang et al.
Harvard Working Paper, September 2023
Abstract:
Prior research has shown that high-quality images increase the current demand for Airbnb properties. However, many properties do not adopt high-quality images even when offered for free by Airbnb. Our study provides an answer to this puzzling observation. We develop a structural model of demand and supply of Airbnb properties, where hosts strategically choose image quality for their properties. Using a one-year panel data from 958 properties in Manhattan, we find evidence that a host's decision to use high-quality images entails a trade-off: high-quality images may attract more guests in the current period, but if the property does not live up to the expectations created by the image quality, then they risk disappointing guests. The guests would then leave bad or no reviews at all, which would adversely affect future demand. Counterfactual policy simulations show that Airbnb could significantly increase its profits (up to 18.9%) by offering medium-quality images for free to hosts or providing free access to a choice between high-quality and medium-quality images. These policies help improve Airbnb's profits since they enable the hosts to upgrade their image quality to an extent that aligns with their property quality.
The Honeymoon Fund Effect: Exerting Effort to Choose Increases Generosity in Gift Giving
Siyuan Yin & Marissa Sharif
University of Pennsylvania Working Paper, July 2023
Abstract:
Recently in the wedding industry, websites allow newly married couples to set up a honeymoon fund. Honeymoon funds are cash registries that often break up the trip into smaller expenses, such as travel, lodging, and experiences. Guests can choose which expense to contribute to. This research examines whether the idea behind these websites is effective; do cash registries influence generosity in giving? Across eight studies (N = 7,672), givers respond more generously when they contribute through a cash registry (vs. not). We suggest this is because they exert greater effort to choose an option in a cash registry, and thus give more to reduce cognitive dissonance. Supporting this account, moderation studies reveal that the effect can be attenuated when effort used in choosing is reduced, such as when choice is limited (i.e., when only breakdown expenses are available or when only one option remains unfulfilled), and when a default choice is available. Further, increasing the required effort in unrelated choices (e.g., choosing a party song) also promotes giving. This research offers marketing insights for consumers wishing to increase fundraising and marketers looking into optimizing registry design.
Refund Psychology
Tianjiao Yu, Cynthia Cryder & Robyn LeBoeuf
Journal of Consumer Research, forthcoming
Abstract:
Consumers frequently receive refunds from prior purchases. In this research, we examine if money refunded from previous purchases is more likely to be spent than money that does not go through a refund process. Across nine pre-registered studies, we test how consumers' willingness to spend depends on the transaction history of their money. We find that, when people receive a refund and do not need to replace the originally purchased item, they are more likely to spend the refunded money on a discretionary purchase than they are to spend non-refunded money that is otherwise identical. We suggest that this pattern arises because refunded money is earmarked as "spending money" at the time of the initial purchase and then retains that earmark even after the refund is issued. When refunds arrive, therefore, they seem free from obligations and easy to spend. This research documents the psychology of purchase refunds, a topic largely unaddressed in the mental accounting literature to date.
Mega or Micro? Influencer Selection Using Follower Elasticity
Zijun Tian, Ryan Dew & Raghuram Iyengar
Journal of Marketing Research, forthcoming
Abstract:
Influencer marketing, in which companies sponsor social media personalities to promote their brands, has exploded in popularity in recent years. One common criterion for selecting an influencer partner is popularity. While some firms collaborate with "mega" influencers with millions of followers, other firms partner with "micro" influencers with only several thousand followers, but who also cost less to sponsor. To quantify this trade-off between popularity and cost, we develop a framework for estimating the follower elasticity of impressions, or FEI, which measures a video's percentage gain in impressions (i.e., views) corresponding to a percentage increase in the number of followers of its creator. Computing FEI involves estimating the causal effect of an influencer's popularity on the view counts of their videos, which we achieve through a combination of: (1) a unique dataset collected from TikTok, (2) a representation learning model for quantifying video content, and (3) a machine learning-based causal inference method. We find that FEI is always positive, averaging 0.10, but often nonlinearly related to follower size. We examine the factors that predict variation in these FEI curves and show how firms can use these results to better determine influencer partnerships.
How High Arousal Language Shapes Micro versus Macro Influencers' Impact
Giovanni Luca Cascio Rizzo et al.
Journal of Marketing, forthcoming
Abstract:
Influencer marketing is a popular strategy to connect with consumers. However, influencers' use of overly high arousal language in promoting products (e.g., "it's totally AMAZING!") has raised questions about their true motivations. This article investigates how high arousal language in micro versus macro influencers' sponsored posts might shape engagement. Six studies, combining automated text, image, video, and audio analyses of thousands of Instagram and TikTok posts with preregistered controlled experiments, demonstrate that high arousal language increases engagement with micro influencers, but it decreases engagement with macro influencers, seemingly because it makes micro (macro) influencers appear more (less) trustworthy. Yet the negative effect of arousal for macro influencers can be mitigated if their posts provide counterbalanced valence (e.g., both positive and negative assessments) or if they indicate an informative, rather than commercial, goal. These findings deepen understanding of how language arousal shapes consumer responses, reveal a psychological mechanism through which language arousal affects perceptions, and provide actionable insights for crafting more effective social media content.