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Bestseller Lists and Product Variety
Abstract
This paper uses detailed weekly data on sales of hardcover fiction books to evaluate the impact of the New York Times bestseller list on sales and product variety. In order to circumvent the obvious problem of simultaneity of sales and bestseller status, the analysis exploits time lags and accidental omissions in the construction of the list. The empirical results indicate that appearing on the list leads to a modest increase in sales for the average book, and that the effect is more dramatic for bestsellers by debut authors. The paper discusses how the additional concentration of demand on top-selling books could lead to a reduction in the privately optimal number of books to publish. However, the data suggest the opposite is true: the market expansion effect of bestseller lists appears to dominate any business stealing from non-bestselling titles. Copyright 2007 Blackwell Publishing Ltd..
... In addition to being featured on the trending lists, the accumulated number of views, likes, shares and comments, which is made available for every Mlog, gives a signal about its current on Facebook, on an undisclosed music streaming platform and on Twitter, respectively. These factors act as indicators of the underlying quality of the corresponding content and are viewed as gauges for social acceptance and legitimacy (Salganik et al. 2006, Sorensen 2007. This revealed information is likely to make the users react more favorably towards the content that has stood the test of the network scrutiny and emerged as a popular candidate. ...
... For as much as the individuals and the social network is important in the process of proliferation of creativity, the rules of platform are just as much vital (Csikszentmihalyi 1988). Furthermore, we expect the socially non-elite individuals within the hierarchy of the NetEase network, who are identified to be especially prone to external influence by Granovetter (1978), to be more swayed by the opinion of the crowd than the social elites (Sorensen 2007, Carare 2012, Aaltonen and Seiler 2016. Therefore, we expect the number of followers of the user to moderate the way creativity is perceived by the user. ...
... Hence, it is easier for them to be triggered by the crowd's opinion and follow suit. Additionally, adoption of already existing content rather than having to come up with new ideas on their own requires less investment of resources and is consequently more appealing to a casual user making her more likely to join the crowd (Sorensen 2007, Carare 2012. ...
Problem definition: User-Generated Content on platforms like NetEase and TikTok serve as both means of entertainment and promotion vehicles for the music and the artists featured in them. In this paper, we study the music adoption preferences of NetEase users who actively engage in this content-making process as the function of their click-through activity while they browse the two-sided platform, and their standing in the social hierarchy that organically emerges in the platform's network structure. Methodology: We develop a theory grounded in the propensity of the users to either showcase bandwagon effect by conforming to the crowd opinion or to conspicuously deviate from the trends in their adoption strategies which is driven by their differing positions in the hierarchy. To validate the theory, we carry out our analysis on a detailed log of user activity on NetEase Coud Village registered during the month of November 2019 with a two-stage Heckman selection correction model. We first map the reward structure prevalent on the platform by analyzing the reactions that the users register for the content that they come across in the form of 'like', 'comment' and 'share'. We then analyze their music adoption strategies for the new content that they produce. Results: We find that the users stifle creativity by registering better reactions for the content that features music that conforms to the trends. Despite the reward structure that clearly favors less creative content, we further demonstrate that the socially elite users showcase a higher propensity to deviate from the trends and make the conspicuous choice of adopting music creatively in the content that they produce. Managerial implications: By applying our results to a subsample of 1,000 users to get an out-of-sample validation for user reaction and prediction for their adoption patterns, we illustrate how our framework can be utilized by both the platform and record labels in making user-engagement predictions.
... The returns to this "social validation" marketing strategy can be substantial. For example, appearing in the New York Times bestseller list generates over a 50% increase in sales for new authors (Sorensen 2007). Another approach uses "expert" recommendations from individuals perceived as having superior knowledge about a particular product. ...
... While several scholars have studied the marketing implications of various product recommendations (e.g., Berger, Sorensen and Rasmussen 2010;Chen and Xie 2005;Gergaud et al. 2015;Sorensen 2007), an important but underexplored area is the study of what type of recommendation is most effective in influencing which consumers' choices. For example, if a product is both popular and expertly recommended, what piece of information should a marketing campaign emphasize -and to whom? ...
... Our study also relates to work examining how expert opinion affects consumers' decisions in the face of information asymmetries. Results from this literature show that expert recommendations increase demand for products such as wine (Friberg and Grönqvist 2012;Hilger, Rafert and Villas-Boas 2019), fine dining (Gergaud, Storchmann and Verardi 2015), books (Sorensen 2007;Berger, Sorensen, and Rasmussen 2010), and movies (Ginsburgh 2003;Reinstein and Snyder 2005). Psychologists have also argued that authority figures labeled as "experts" might affect how subjects evaluate recommendations (e.g., Cialdini and Goldstein 2004), with impartial experts being more effective than those with a stake in consumers' choices (Cialdini and Goldstein 2002). ...
We report results from a randomized field experiment conducted at two food festivals. Our primary aim is to assess the impact of two types of recommendations commonly observed in food settings: most popular and chef’s choice. Subjects select a cupcake from a binary menu. The two options, offered by the same bakery, are the best seller in the bakery and the baker’s recommended cupcake. Our treatments manipulate whether the recommendation is disclosed in tandem with the cupcakes in the menu. We find that the most popular is the only recommendation that statistically significantly increased consumers’ demand relative to a baseline without recommendations. Furthermore, we find that this effect only holds for subjects from outside the local region. Our results are consistent with laboratory studies indicating information on peers’ choices is a powerful influence on consumers’ decisions, especially in the absence of prior knowledge.
... That "information effect" is in line with the finding of Sorensen and Rasmussen [2004] and Berger et al. [2010] that even negative reviews increase the sales of works by relatively unknown authors. Sorensen [2007] and Cabral and Natividad [2016] also report evidence that appearing in the list of best-selling books or being the best-selling movie during the opening weekend affects later sales by raising the awareness of consumers. 1 The second condition for consumers to buy a book is that they must expect the utility of reading it to exceed its total cost, which includes the purchase price and the opportunity cost of reading. ...
... In addition, for very popular books, that is, books whose pre-Goncourt sales are higher than 163,191 copies, the marginal effect of the Goncourt becomes statistically insignificant. This finding echoes Sorensen's [2007] observation that appearing on the New York Times bestseller list has a larger effect on sales for debut authors and the finding by Cabral and Natividad [2016] that being the best-selling movie during the opening weekend increases a movie's later demand. Like them, we interpret it as being in line with the existence of an information effect. ...
Exploiting the award process, we implement a regression discontinuity design to estimate the effect of winning France's main literary prize, the Goncourt. It increases sales, especially for books that sold fewer copies before the announcement, the number of reviews on Amazon, and the probability of them being negative. The effect is partly driven by an increase in word of mouth. Those findings are consistent with a model where the prize provides information on the existence of a book and acts as a quality signal and a coordination device but prompts consumers to read books that are far from their tastes.
... For example, individuals may consider the choices of early decision-makers in the market, i.e., accessing the products' popularity information as the criterion for their choices [16]. As a result, individuals may choose the same decision as others, which creates a self-reinforcing path of collective dynamics [17,18]. ...
... The classic Pólya urn model is a simple stochastic process based on a ball-drawing process, at each time, a ball is randomly drawn from the urn and then return along with a ball of the same color. Since balls with the majority color are more likely to be drawn, resulting in the majority color gradually dominating the entire urn, which forms a self-reinforcement path for the dynamics of social influence [18,[24][25][26]. Urn model has been extensively applied to delineate diverse phenomena [27], including the species evolution process [28], game strategy and decision-making [29], the dynamics of novelties and innovations [30], tourism activities and voting forecasting [31,32]. ...
The topological characterization of complex systems has significantly contributed to our understanding of the principles of collective dynamics. However, the representation of general complex networks is not enough for explaining certain problems, such as collective actions. Considering the effectiveness of hypernetworks on modeling real-world complex networks, in this paper, we proposed a hypernetwork-based Pólya urn model that considers the effect of group identity. The mathematical deduction and simulation experiments show that social influence provides a strong imitation environment for individuals, which can prevent the dynamics from being self-correcting. Additionally, the unpredictability of the social system increases with growing social influence, and the effect of group identity can moderate market inequality caused by individual preference and social influence. The present work provides a modeling basis for a better understanding of the logic of collective dynamics.
... 34 Under the impact of conformity, people adopt the strategy that is most common regardless of the expected payoff. 35,36 Conformity not only generates a group norm but also provides a standard reference for people who are making decisions. In this view, people regard references from others as signals of quality and choose the same decisions as others, forming the dynamics of the wisdom of the crowd. ...
... In this view, people regard references from others as signals of quality and choose the same decisions as others, forming the dynamics of the wisdom of the crowd. [36][37][38][39][40] Several studies have already noted the importance of conformity in the evolutionary game. 41,42 The behavioral updating function for the conformity-driven player proposed by Szolnoki and Perc has been a basic model, where conformity forms an effective surface tension among cooperators and thus resolves social dilemmas. ...
Human behaviors are often subject to conformity, but little research attention has been paid to social dilemmas in which players are assumed to only pursue the maximization of their payoffs. The present study proposed a generalized prisoner dilemma model in a signed network considering conformity. Simulation shows that conformity helps promote the imitation of cooperative behavior when positive edges dominate the network, while negative edges may impede conformity from fostering cooperation. The logic of homophily and xenophobia allows for the coexistence of cooperators and defectors and guides the evolution toward the equality of the two strategies. We also find that cooperation prevails when individuals have a higher probability of adjusting their relation signs, but conformity may mediate the effect of network adaptation. From a population-wide view, network adaptation and conformity are capable of forming the structures of attractors or repellers.
... In the management and marketing literature, research on Matthew effect theory finds that the popularity of products has a significant and positive impact on product consumption. For example, with the increase in popularity of fiction books (Sorensen 2007), music (Salganik et al. 2006), crowdfunding projects (Van De Rijt et al. 2014), and YouTube videos (Susarla et al. 2012), such products tend to be able to attract more customers. In addition, television viewers' viewing choices are also observed to be affected by channel popularity (Webster and Ksiazek 2012). ...
... To conceptualize this effect, we leverage the indirect network effect in which viewers derive higher value from having more streamers in a category. The indirect network effect is observed in previous literature on the rich-get-richer scenario in various industry contexts, including fiction books (Sorensen 2007), music (Salganik et al. 2006), crowdfunding projects (Van De Rijt et al. 2014, and YouTube videos (Susarla et al. 2012). In our setting, the entrant streamers' content switching to the incumbent category has two important influences on the incumbent category related to network size. ...
Content providers in online social media platforms, particularly livestreaming, often switch content categories. We propose a theory-based framework to study the direct and indirect spillover effects of content switching for livestreamers—individuals who broadcast content through livestreaming platforms. Contrary to conventional wisdom, we propose two positive spillover effects that are unique to the social media platform setting: (a) the entrant streamers do not just increase competition among streamers, but they also bring their own viewers to the new category (direct spillover), and (b) the entrant streamers influence incumbent streamers’ viewer size by boosting category visibility through indirect network effects (indirect spillover). We also propose that the two spillover effects are contingent on the size of the entrant streamers’ follower base. Our findings show that average content switching is associated with a 1.3% net increase in direct net viewer flow and a 2.6% net increase in indirect net viewer flow. Our results provide managerial implications for livestreaming platforms on how to maintain a healthy and fair community among streamers, such as encouraging popular streamers to switch to a category with many promising small streamers.
... The authors found that popularity information shapes participants' choices even after listening to songs by themselves, and the salience of such information amplifies this effect. Sorensen (2007) found that a book's listing on the New York Times bestseller lists increases its sales by 4.3% on average, and this effect is more substantial for new authors. Cai et al. (2009) conducted a randomized field experiment in a restaurant setting and showed that providing top-selling lists increases dishes presented on the lists, whereas lists of randomly selected dishes have no significant impact on consumer choices. ...
... First, music streamers might add the entire top 100 songs to their private playlists for convenience rather than selecting particular songs among the listed ones. Second, consumers may perceive being listed on top 100 lists as a quality signal, that is, observational learning ( Cai et al., 2009;Carare, 2012;Sorensen, 2007 ). Third, consumers might be more willing to choose the listed songs because being listed on ranking charts makes songs more salient than non-listed songs, i.e., the saliency effect ( Cai et al., 2009 ). ...
Our study analyzes the impact of hourly-updated bestseller lists on music discovery in a digital streaming platform to provide evidence of whether and why bestseller lists affect consumer decisions in the subscription-based market. We circumvent the problem of demand-popularity simultaneity by leveraging high-frequency data and a regression discontinuity design. We find that being added to the top 100 charts increases song discovery by 11–13%. Furthermore, a series of analyses suggest that the saliency effect, instead of observational learning, is more likely to drive this behavioral change among streaming users. Specifically, we find that a song's chart entrance increases repeat consumption, normative rank positions within the top 100 lists do not demonstrate significant discontinuity, and an artist or a song's prior popularity does not moderate this effect.
... Visible in nearly every ad, prominently placed as a sticker on the book cover, and also mentioned verbatim in the TV commercial is Rossmann's status as a 'Spiegel bestselling author'. This leads us to the "star power" of an author which represents an important driver of sales success for hardcover fiction titles ( [14], 90-91, 96, [40], [39][40][41][42]. Star power of an author can be present for two reasons. ...
... Empirical studies provide evidence for this "ranking effect" on book sales (cf. [15,42]). 11 When looking at the effect on the retail level, online sales seem to respond positively to the quality signified by a title appearing on the bestseller lists (while the offline channel shows the opposite effect) [21]. Due to the experience good character of books and the fact that the purchase (not the reading) is a relatively low-cost decision, the fiction book market is seen as a 'social market' where individual consumers are strongly guided by the behavior of others [26]. ...
This paper considers the success of the thriller Der neunte Arm des Oktopus (transl.: The Ninth Arm of the Octopus, Cologne: Bastei Lübbe, November 2020) by German drugstore magnate Dirk Rossmann. Certain elements of brand-name authorship are applicable here, but the market power of Rossmann goes far beyond name recognition. Beyond the typical marketing for a ‘big book’ in the sense of contemporary trade publishing, Rossmann flooded the campaign with his own funds. This contribution approaches an unlikely case study through a trilateral interdisciplinary perspective (book studies, economics, law), underlining the unequal footing on which books enter the market.
... In a separate line of work, Sorensen used mistaken omissions of books from the NY Times bestsellers list to identify the boost in sales that accompany the perceived popularity of a book's appearance on the list [57]. Similarly, when the download counters for different software labels were randomly increased, Hanson and Putler found that users are significantly more likely to download software that had the largest counter increase [27]. ...
At a time when information seekers first turn to digital sources for news and opinion, it is critical that we understand the role that social media plays in human behavior. This is especially true when information consumers also act as information producers and editors through their online activity. In order to better understand the effects that editorial ratings have on online human behavior, we report the results of a two large-scale in-vivo experiments in social media. We find that small, random rating manipulations on social media posts and comments created significant changes in downstream ratings resulting in significantly different final outcomes. We found positive herding effects for positive treatments on posts, increasing the final rating by 11.02% on average, but not for positive treatments on comments. Contrary to the results of related work, we found negative herding effects for negative treatments on posts and comments, decreasing the final ratings on average, of posts by 5.15% and of comments by 37.4%. Compared to the control group, the probability of reaching a high rating (>=2000) for posts is increased by 24.6% when posts receive the positive treatment and for comments is decreased by 46.6% when comments receive the negative treatment.
... Media attention is of consequence. On the one hand, it can greatly aid individuals' success and well-being in various social and occupational domains, from sales to political campaigns to book royalties (Sorensen, 2007;Solomon, Soltes and Sosyura, 2014), while in other domains (e.g. crime), it may be harmful. ...
Is media coverage racially biased? Past studies documenting differences in the quantity of coverage are small scale or anecdotal. In this article, we investigate whether Blacks receive less coverage than Whites who have reached similarly prominent positions and enjoy similar public interest. We analysed 200 million newspaper references in English-language media to about 32,000 prominent Black and White individuals, predominantly US born. The results do not support the bias hypothesis: Blacks overall receive systematically more coverage than Whites in comparable structural positions and their coverage is on par with that of select Whites who attract equal public interest.
... Especially in recent years, driven by technologies and digital tools, the dissemination of cultural content has become even more intense and accelerated [5]. In extreme cases, phenomena have emerged such as best-sellers [6], viralization [7], memes [8,9], and fake news [10,11]. In this way, while cultural content aids in characterizing a society, the dissemination of such cultural content can affect the collective behavior of that same society [12]. ...
In recent years, digital games have become increasingly present in people's lives both as a leisure activity or in gamified activities of everyday life. Despite this growing presence, large-scale, data-driven analyses of video games remain a small fraction of the related literature. In this sense, the present work constitutes an investigation of patterns in popularity series of video games based on monthly popularity series, spanning eleven years, for close to six thousand games listed on the online platform Steam. Utilizing these series, after a preprocessing stage, we perform a clustering task in order to group the series solely based on their shape. Our results indicate the existence of five clusters of shape patterns named decreasing, hilly, increasing, valley, and bursty, with approximately half of the games showing a decreasing popularity pattern, 20.7% being hilly, 11.8% increasing, 11.0% bursty, and 9.1% valley. Finally, we have probed the prevalence and persistence of shape patterns by comparing the shapes of longer popularity series during their early stages and after completion. We have found the majority of games tend to maintain their pattern over time, except for a constant pattern that appears early in popularity series only to later originate hilly and bursty popularity series.
... Multiple world experiments can reveal path dependence by demonstrating varying outcomes under identical talent conditions [7,48,49]. Alternatively, regression discontinuity designs, natural experiments, and matched case control studies can be used to test the success-breeds-success hypothesis by examining effects of random success on subsequent success [50][51][52][53][54][55][56][57]. ...
Inequality in human success may emerge through endogenous success-breeds-success dynamics but may also originate in pre-existing differences in talent. It is widely recognized that the skew in static frequency distributions of success implied by a cumulative advantage model is also consistent with a talent model. Studies have turned to longitudinal records of success, seeking to exploit the time dimension for adjudication. Here we show that success histories suffer from a similar identification problem as static distributional evidence. We prove that for any talent model there exists an analogous path dependent model that generates the same longitudinal predictions, and vice versa. We formally identify such twins for prominent models in the literature, in both directions. These results imply that longitudinal data previously interpreted to support a talent model equally well fits a model of cumulative advantage and vice versa.
... Bestsellerlisten wie die des Nachrichtenmagazins DER SPIEGEL können in der Folge ihres Bekanntheitsgrads und ihrer Herleitung aus tatsächlichen Absatzzahlen des Marktes für Buchkäufer im Kaufentscheidungsprozess eine Information darstellen, die in die Alternativenbewertung einfließt (Keuschnigg, 2012a;Vogel, 2011 (Akerlof;Arrow, 1971;Keuschnigg, 2012a;Sorensen, 2007 (Asch, 1951;1955;1956;Deutsch & Gerard, 1955;Festinger, 1957;Hedström, 1998;Keuschnigg, 2012a;Leibenstein, 1950). ...
Angesichts derzeitiger, gezielter Preissteigerungen im deutschen Buchmarkt, befindet sich die Branche auf direktem Weg in eine Bestseller-Nachfragekonzentration. Publikumsverlage und Handel rechtfertigen höhere Preise durch externe Bedingungen und Kunden, welche ihrerseits finanziell eingeschränkter sind, orientieren sich zunehmend an Faktoren, die Unsicherheiten im Buchkaufentscheidungsprozess reduzieren. Imitative Verhaltensweisen in Form von eigenen oder konsensgeleiteten Referenzpunkten dienen dabei dem Zweck, mangelnde Qualitätsinformationen zu kompensieren. Zentrale Orientierungspunkte sind, gemäß den bisherigen Erkenntnissen der Bestsellerforschung, Autorenmarken und visuelle Stimuli, die eine Imitation z.B. über einen Bandwagon-Effekt auslösen. Solche Stimuli werden auch durch SPIEGEL-Bestseller-Coversiegel repräsentiert. Obwohl Preiselastizitäten einen Aufschluss über das Nachfrageverhalten liefern können, ist dieses Themenfeld für den deutschen Buchmarkt bisher noch wenig erforscht. Durch eine empirische Studie von 334 Top20-SPIEGEL-Print-Bestsellern der Hauptwarengruppe Belletristik, bietet diese Arbeit einen entsprechenden Beitrag auf dem Gebiet der Buch-Preiselastizitäten. Entgegen der weitverbreiteten Hypothese, dass sich die Marktnachfrage im deutschen Buchmarkt preiselastisch verhält, kann, anhand von statistischen Regressionsanalysen, keine nennenswerte Preissensibilität unter Bestseller-Buchkäufern beobachtet werden. Dies deutet auf eine anomale preisunelastische Marktnachfrage mit Preisspielräumen für Publikumsverlage hin. Zudem werden Indikatoren für psychologische Preisfärbungspotenziale von Autorenmarken und SPIEGEL-Bestseller-Coversiegeln aufgezeigt. Wenngleich diese Ergebnisse jegliche Bedenken zur Kundenakzeptanz von Preissteigerungen für die untersuchten Titel ausräumen, bleibt bei der Preisstrategieempfehlung für Publikumsverlage zu bedenken, dass über alle Printformate flächendeckend höhere Preise den Zugang zu Literatur faktisch reduzieren.
... Vgl. Goetz et al. 2020b; Keuschnigg 2012;Sorensen 2007. 121 Vgl. ...
Zusammenfassung
Inwieweit sind Verlage gegenüber ihren Autor*innen verpflichtet, den Verlagsvertrag und die darin enthaltenen Vereinbarungen zu erfüllen, wenn gegen Autor*innen schwere Vorwürfe erhoben werden? Menschen, die im Rampenlicht stehen – und dazu gehören auch Autor*innen – werden genau beobachtet, und Nachrichten (aber auch Gerüchte) verbreiten sich heute schneller denn je. Insbesondere in den USA steigen die Anforderungen an moralisches Handeln der Unternehmen; zudem wird durch das Internet und vor allem die sozialen Netzwerke nahezu jegliches außerberufliche Verhalten „unter das Mikroskop“ gelegt. Damit zusammenhängend werden morality clauses (auch morals clauses, zu Deutsch: Moralklauseln) im Literaturbetrieb, besonders im angloamerikanischen Raum, derzeit virulent diskutiert. Morality clauses in Verlagsverträgen sollen Verlage vor moralischen oder rechtlichen Fehltritten ihrer Autor*innen schützen, die die Verkäuflichkeit eines Werkes beeinträchtigen und/oder die Verlagsmarke beschädigen könnten. Sie geben Verlagen bei unmoralischem oder rechtswidrigem Verhalten der Autor*innen verschiedene Rechte, vor allem das Recht zur Kündigung des Vertrages.
... Vgl. Goetz et al. 2020b; Keuschnigg 2012;Sorensen 2007. 121 Vgl. ...
Zusammenfassung
Der Aufsatz untersucht anhand der beliebten Causes célèbres von Gayot de Pitaval das Verhältnis von juristischen Strafpraktiken und literarischer Aneignung sowie die Effekte eines veränderten Zeit- und Gegenwartsbewusstseins seit dem mittleren 18. Jahrhundert. Hierzu werden erstens die programmatischen Voraussetzungen, die Schreibintention und paratextuelle Legitimation des französischen Herausgebers Gayot und des anonymen deutschen Übersetzers beleuchtet. Zweitens konzentriert sich die Analyse beispielhaft auf den Fall der Madame Tiquet und den versuchten Meuchelmord an ihrem Ehemann sowie auf die intertextuellen Referenzen, die sich dabei ergeben. Drittens wird eine Heuristik vorgeschlagen, um die verschiedenen Dimensionen der Vergegenständlichung von Recht im Pitaval zu klassifizieren.
... Such informational cascades have been used to explain how media content and technologies spread through populations [24,48] and how application use is impacted by the observable use decisions of other users [31,95]. Online consumers are, for example, more likely to attend to songs that have accumulated a large number of downloads [76] while book sales increase significantly when their popularity is revealed through rankings on highly regarded bestseller lists [81]. Hence, given that low popularity calls into question the social legitimacy, value, and relevance of an application [72], there is considerable potential for declining application popularity to be similarly noticed and acted upon by users of hedonic applications. ...
Abandonment of software applications can result in significant loses of organizational resources while also undermining the continued success of application developers, vendors, and software support ecosystems. Relatively little attention, however, has been directed toward understanding application abandonment that occurs after applications have been successfully adopted, despite the potentially far-reaching implications of such abandonment and the growing economic and social importance of software applications. We therefore developed a framework based on the four-drives model of motivation to better understand postadoption abandonment decisions and conducted an archival study to test our proposed framework in a hedonically oriented personal-use context. Results of this study suggest that individual motivations to acquire status and experience, bond with others, comprehend and grow, and defend their efforts all have significant implications for the likelihood of application abandonment. Specifically, application-related use activity, in-application user interaction, application complexity, and application commitments were all found to significantly diminish the likelihood of application abandonment.
... I have used the New York Times list for two key reasons. Firstly, it is widely recognised as the most influential list in the publishing industry, making it a good measure to see how far a text or a genre has penetrated into mainstream literary culture (Bao & Chang 2014;Korda 2001;Sorensen 2007). Secondly, during the period under examination, it separated out its combined print and e-book bestseller lists from its e-book only lists. ...
The term 'new adult' was coined in 2009 by St Martin's Press, when they sought submissions for a contest for 'fiction similar to YA that can be published and marketed as adult – a sort of 'older YA' or 'new adult'.' However, the literary category that later emerged bore less resemblance to young adult fiction and instead became a sub-genre of another major popular genre: romance. This Element uses new adult fiction as a case study to explore how genres develop in the twenty-first-century literary marketplace. It traces new adult's evolution through three key stages in order to demonstrate the fluidity that characterises contemporary genres. It argues for greater consideration of paratextual factors in studies of genre. Using a genre worlds approach, it contends that in order to productively examine genre, we must consider industrial and social factors as well as texts.
... Additionally, intermediaries can use critics' quality assessments as pre-purchase information to avoid having to wait for quality signals to emerge from popular acclaim. As a result, critical acclaim has long been used by intermediaries as pre-purchase information to help identify which creative products to invest in, especially when considering whether to convert a published book into a film or game (Berger et al., 2010;Garthwaite, 2014;Reinstein and Snyder, 2005;Sorenson, 2007). ...
Digitization has provided entrepreneurs direct access to consumers in cultural industries while offering intermediaries an alternative to critics' reviews when deciding whether to invest in creative products. Using data from the Chinese online self-publishing industry, we examine whether and how intermediaries use popular acclaim when deciding to invest in self-published books. We then flip the script and examine whether cultural entrepreneurs generate intermediary investment through popular acclaim and to what extent they do so through a digital serialization strategy. We find that, by encouraging both popular acclaim and intermediary investment, digital serialization emancipates cultural entrepreneurs from the indirect and uncertain reciprocity historically described by cultural entrepreneurship theory. Instead, digital serialization allows cultural entrepreneurs to generate consumer attention directly through economic entrepreneurship and to alter the power and roles of intermediaries and entrepreneurs in the cultural production process.
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... While large library collections help to characterize the shape of the literary marketplace, they offer a relatively weak proxy for readership, which is generally dominated by a small number of bestselling or "important" titles. 18 To assess whether or not mainstream readers have encountered greater or lesser domestic attention in their texts, we can examine the data in American and British bestsellers, as shown in figure 6. The bestseller data are a bit tricky --both to see in figure 6 and to assess --since they are so few: in the Bestsellers US Early corpus, which covers the 100-year period from 1850 to 1949, there are just 188 volumes (fewer than two per year); there are 367 in the Bestsellers US Postwar corpus and 150 in the Bestsellers GB corpus . ...
Are American authors homers? Do they devote too much of their attention to American concerns and settings? Is American literature as a whole different from other national literatures in its degree of self-interest? We attempt to answer these questions, and to address related issues of national literary identity, by examining the distribution of geo-graphic usage in more than 100,000 volumes of American, British, and other English-language fiction published between 1850 and 2009. We offer four principal findings: American literature consistently features greater domestic attention than does British literature; American literature is, nevertheless, significantly concerned with global loca-tions; politics and other international conflicts are meaningful drivers of changing literary attention in American and British fiction alike; and prize-nominated books are the only examined subclass of American fiction that has become significantly more international in the decades after World War II, a fact that may account for readers’ unfounded percep-tion of a similar overall shift in American literature.
... Therefore, a product's sales rank (or more broadly, position in any rankings) may affect the product's subsequent sales. Several empirical studies of online marketplaces and sponsor search advertising have documented this effect, which we call "visibility effect" (Sorensen 2007;Agarwal et al. 2011;Ghose et al. 2012b; several papers also document the existence of the visibility effect in mobile app markets (Ifrach and Johari, 2014;Carare, 2012). However, due to the lack of download volume data, Ifrach and Johari (2014) and Carare (2012) have not been able to quantify the mag-nitude of the visibility effect accurately. ...
Digitization of the world has made available tons of data to operations researchers. In this dissertation, we discuss three projects in the fields of the mobile app market, telemedicine in healthcare, and E-commerce platforms, where real data are utilized to answer operations management questions. In the first project, we propose a two-step data analytic model for mobile apps' promotion planning. We show that estimating the demand function from real data will significantly increase the total revenue. In the second project, we propose a changes-in-changes model to identify the effect of adopting telemedicine on physicians' scheduling of follow-up visits. In the third project, we model consumers' purchasing behavior on E-commerce platforms as a consider-then-choose model. The model is then used to solve for the optimal search page assortment on E-commerce platforms. We close this dissertation by discussing several future research directions of data-driven analysis.
... However, rankings can have countervailing effects. Sorensen (2007) argues that best-seller lists can generate a market-expansion effect that may dominate the businessstealing effect on niche products. Likewise, Tucker and Zhang (2011) show that popularity information can benefit proportionally more narrow-appeal (niche) products than broadappeal (popular) products. ...
Using weekly music charts data in ten countries over the period 1990 to 2015, we analyze whether digitization led to a trend of homogenization of music content or conversely to a greater acoustic disparity within music charts. Acoustic diversity measures the variance of a set of songs calculated across the following acoustic attributes: danceability, speechiness; valence; liveness; acousticness; energy; instrumentalness; loudness; tempo; duration. We consider the pre-digitization period (1990-1999) and split the digitization era in four periods: (1) the period characterized by unsanctioned music distribution via filesharing networks; (2) the period where the iTunes Music Store was the dominant platform of digital music distribution; (3) the emergence of social network services such as YouTube as powerful tastemakers; and (4) the emergence of global music streaming services, such as Spotify, as the dominant model for online music distribution. Our main result is that while acoustic diversity decreased during the iTunes and the YouTube periods, the period that begins with the introduction of audio streaming services, such as Spotify, represents a turning point and is marked by a significant increase in acoustic diversity.
... The literature also includes empirical papers that study how experts affect the market of other experience goods, such as books(Sorensen 2007;Berger, Sorensen, and Rasmussen 2010), wine(Dubois and Nauges 2010;Hilger, Rafert, and Villas-Boas 2011;Friberg and Grönqvist 2012;Chen and McCluskey 2018), restaurant meals(Fogarty 2012;Gergaud, Storchmann, and Verardi 2015), and music(Ginsburgh and Van Ours 2003). ...
We study the effect of expert reviews on consumer choice, focusing on the movie industry. Specifically, we estimate the impact of a popular movie review aggregator – Rotten Tomatoes (RT) – on box office revenue, using a sample of 1,239 movies widely-released in the U.S. between 1999 and 2019. RT’s rating system allows us to use regression discontinuity, thus avoiding problems associated with omitted unobservable characteristics of movies (such as quality and commercial appeal). We do not find evidence that RT ratings affect box office performance.
... It is well recognized in both research and practice that consumers find ordered lists, such as the Billboard's music charts and U.S. News' college ranking, to be informative and influential (e.g., Isaac and Schindler [2014] and Monks and Ehrenberg [1999]). Consumers often make their decisions based on an item's inclusion in an ordered list [Sorensen 2007] or on its direction of movement on the ordered list [Pope 2009]. ...
Prior research has shown a robust effect of personalized product recommendations on user preference judgments for items. Specifically, the display of system-predicted preference ratings as item recommendations has been shown in multiple studies to bias users’ preference ratings after item consumption in the direction of the predicted rating. Top-N lists represent another common approach for presenting item recommendations in recommender systems. Through three controlled laboratory experiments, we show that top-N lists do not induce a discernible bias in user preference judgments. This result is robust, holding for both lists of personalized item recommendations and lists of items that are top-rated based on averages of aggregate user ratings. Adding numerical ratings to the list items does generate a bias, consistent with earlier studies. Thus, in contexts where preference biases are of concern to an online retailer or platform, top-N lists, without numerical predicted ratings, would be a promising format for displaying item recommendations.
Problem definition: Short video format platforms like NetEase and TikTok are attention economies that host user-generated content, in the form of combined video and audio elements, and operate on principles of network virality. This study explores user content creation strategies by focusing on decisions around content release frequency and the incorporation of adopted content in newly generated creations. Methodology/results: We theoretically explore the role of the following three mechanisms influencing these decisions: (a) social hierarchies in the platform’s network structure, (b) virality of content on the platform, and (c) algorithmic interventions through the ranking of content recommendations. To empirically study these relationships, we use a detailed log of user activity on NetEase Cloud Village registered during the month of November 2019 and carry out regression-based analyses. We find that high-status users, measured through their follower count, adapt their content release frequency strategically, slowing down after successful content to avoid dilution of potential virality. We also observe that high-status users generally deviate from prevailing viral trends in their content creation. However, following exceptionally successful releases, they tend to conform more to viral content, suggesting a risk-averse approach. Finally, contrary to algorithm aversion, users prefer content recommended by the platform. However, high-status users disregard algorithms to retain agency in decision making. Managerial implications: Our findings provide a holistic understanding of the content creation process and suggest that platforms could strategically adjust algorithmic ranking policies to foster content creation diversity while catering to the preferences of users with different status levels.
Supplemental Material: The online appendices are available at https://doi.org/10.1287/msom.2021.0332 .
Rank lists vary in the number of items ranked on the list (e.g., Top 5 vs. Top 20 movies on IMDb), that is, the rank length. Across ten studies, including both field and laboratory experiments, we examine the influence of rank length on evaluations, willingness to pay, and choice. We document a novel rank length effect: The same ranked items elicit more positive judgments when the rank length is longer (vs. shorter), although the differences in judgments between the ranked items are smaller. This effect is driven both by consumers’ tendency to narrowly focus on the rank list and by the manner via which they map the rank list onto their mental number line. The rank length effect extends to willingness to pay, and choice. We explore three different kinds of choice contexts, discuss implications, and offer suggestions for future research.
Consumers commonly rely on electronic word‐of‐mouth (eWOM) to inform their purchase decisions. The purpose of this study is to investigate when and why repeat purchase information in eWOM influenced customers' purchase behavior, using the social learning theory as a framework. Three experiments were conducted to test the hypotheses. The results showed that repeat purchase information in eWOM positively affected consumers' purchase intention through perceived diagnosticity of eWOM and perceived value. Additionally, the effect varied from product type. For utilitarian products, the repeat purchase information in eWOM had a significant impact on consumers' perceived diagnosticity and purchase intention, while for hedonic products, the impact was not significant. The current study deepens the understanding of social learning theory in eWOM content by providing a novel look at repeat purchase information in eWOM. These findings offer important implications for both research and practical applications of eWOM, particularly in term of effectively utilizing repeat purchase information of eWOM.
Zusammenfassung
Bücher werden auf Märkten publiziert und entsprechend als Ware zwischen Anbietern und Nachfragern gehandelt, wodurch die Materie ‚Literatur‘ zum Gegenstand komplexer wirtschaftlicher Interaktionen und Prozesse sowie (potenziell) Marktregularien wird. Die Existenz von Buchmärkten bewirkt regelmäßig Prozesse der Vergegenständlichung von Literatur durch die Ökonomie als Wissenschaft, wobei sich die Materialität bei der forschungszweckgebundenen Übersetzung eines (zu erklärenden) sozialen Phänomens in ein mathematisches oder ökonometrisches Modell manifestiert. Während sich die Literatur als Ware sowohl als physisches Buch als auch als E-Book in der theoretischen Ökonomik vorwiegend mit seinen fixen und/oder variablen Kosten auf der Anbieterseite eines Buchmarktes vergegenständlicht, materialisiert sich das Buch in der empirischen Ökonomik auf unterschiedliche Weise mit seinen spezifischen Produkteigenschaften als abhängige oder unabhängige Modellvariable.
This paper discusses how digitization and the associated emergence of distribution platforms have affected product discovery, as well as new opportunities, in the content industries. First, we describe the traditional ways in which content creators reached consumers, as well as how platforms have transformed the product discovery process. Second, we present the promise and challenges of the information aggregation role that platforms perform, with discussions of both the positive effects of platform‐collected product ratings, as well as the prevalence and implications of misleading information. Third, we describe the promise and challenges arising from platform curation and product recommendations, with a focus on the measurements of platform power as well as possible biases in platform product recommendations. Finally, we discuss how platforms may affect which sorts of products are produced in the first place.
The New York Times bestseller list is considerably one of, if not the most distinguished bestseller list. Books that appear on this list have enjoyed significant success, and their subsequent presence on the list is usually followed by a boost in sales. Hence, this paper highlights insights on books that are considered successful and popular among readers (by appearing on the New York Times bestseller list) and observe common characteristics these books have. This paper will focus on demonstrating how underlying information can be unlocked via data exploration and descriptive statistics to understand the factors surrounding books that are considered successful. Data is obtained by scraping the New York Times bestseller list for hardcover fiction titles and subsequent findings were visualised in various ways to showcase patterns that may not be discernible at first glance. This paper found that certain book genres are more popular than others among readers, and the author's prestige is also a contributing factor for a book entering the list. Additionally, when looking closely at the breakdown of author's gender by genre of books, it is found that there is a disparity between the number of books that enter the list authored by male and female authors. These findings highlight that there are external factors that contribute to the success of a book that might not be accounted for initially. These findings can be expanded by extending the data collection period for a more comprehensive outlook of the changing patterns over time. From there, further studies can be conducted, such as to understand the influence of gender on the success of an author or barriers of entries for authors to write on specific books.
In this paper we introduce the concept of a spotlight social media post — a post that receives an unexpected burst of attention — and explore how such posts reveal salient aspects of online collective sensemaking and attention dynamics during a crisis event. Specifically, we examine the online conversation surrounding a false missile alert in Hawaii, USA in January 2018. Through a mixed-methods analysis and visualizations, our research uncovers mechanisms that lead to rapid attention gains, such as spotlighting — when a user with existing influence confers attention by sharing others’ content with their audience. We highlight how spotlight social media posts (specifically spotlight tweets ) are distinct from other heavily-shared content and that they offer insight into previously overlooked patterns in information exchange. We additionally reveal that attention dynamics may alter the social position of spotlight post authors immediately afterwards (and possibly long-term). We argue that spotlight social media posts offer a productive window for understanding online collective sensemaking and we discuss how this can inform social media platform design and serve as a basis of future research.
Social influence has been widely discussed in various disciplines due to its important sociological significance. However, the dynamics of social influence in signed networks have nonetheless received fairly little attention. In this article, we propose a generalized Pólya urn model that considers the effect of negative relationships and is capable of comprehending the specific mechanisms of homophily and xenophobia in the dynamics. Based on the mathematical deduction, we find that the signed network guides social influence in a trend toward equality. Simulation shows that a higher effect or larger proportion of negative relationships may break the self-reinforcement and make the market more equal. The collective dynamics in the signed network are more predictable but generate path dependence. We also find that a balanced structure has no impact on the average market share but is helpful in removing path dependence and promoting system stability.
As platform owners interact with end users and complementors, their demand-side characteristics and performance affect the overall value creation of ecosystems. This research investigated how the emergence of popular complements on a mobile communication platform impacts the usage of other complements by the platform’s end users and how platform owners can benefit from such demand spillovers. Using individual user-level app usage data, we empirically demonstrated how the presence of a popular app alters the demand structure of a platform through changes in the usage of other apps operating within it. The findings reveal that popular app adoption by users increases the app usage, excluding the usage of popular apps, only within the platform offering a popular app, supporting the existence of positive spillovers from popular complement adoption on a platform. Such positive within-platform spillovers occur through the increased usage of both existing and new apps, with stronger positive spillovers for new apps. These findings imply that platform owners can reap benefits by coordinating the launch of new complements and the promotion of less-known counterparts to end users with the emergence of a popular app. All these results shed light on how platform owners can manage their complements and create value from popular complements.
In online dating platforms, users tend to focus their attention on a subset of popular peers, leading to congestion. We consider the potential efficacy of an informational intervention, namely, the disclosure of peers’ recent demand. We evaluate our treatment’s efficacy in mitigating congestion and improving matching efficiency, conducting a randomized field experiment at a large mobile dating platform. Our results show that the intervention is particularly effective at improving matching efficiency when presented in tandem with a textual message-framing cue that highlights the capacity implications of the peer demand information. Heterogeneity analyses further indicate that these effects are driven primarily by those users who most contend with congestion in the form of competition, namely, male users and those who rely more heavily upon outbound messages for matches.
When competing firms embark and explore a new market, two salient features are often observed. On the one hand, the firms need to improve their quality by accumulating more experience and climbing up the learning curve. On the other hand, their quality may jointly expand the brand awareness of all competing products. In this article, we study a two‐period duopoly price competition where firms can improve their quality based on the accumulated demand (learn‐by‐doing effect) and their potential market size is positively affected by both firms' quality levels (quality spillover effect). In addition, we investigate two pricing schemes, namely, committed pricing and dynamic pricing, and their impact on the equilibrium outcomes. Assuming the two firms are symmetric in every aspect, our main findings include the following. First, we establish the existence and uniqueness of the pure Nash equilibrium for the dynamic game under either pricing scheme, and show that firms always set a low price in the first period to leverage quality improvement. As the quality spillover effect gets stronger, firms tend to raise their first‐period price, leading to a lower individual quality improvement and a non‐monotonic impact on firms' profit. Moreover, we find that committed pricing scheme benefits the duopoly when the spillover effect is strong, otherwise dynamic pricing scheme brings more profits. Finally, we examine two asymmetric cases where the firms are different in certain attributes pertaining to their learning speed and the quality spillover strength. Our analysis shows that the findings in the symmetric case still hold qualitatively. Useful managerial insights are derived from these studies.
Many online markets are dominated by a handful of platforms, raising concerns about the exercise of market power in the digital age. Spotify has emerged as the leading interactive music streaming platform, and we assess its power by measuring the impact of its promotion decisions – via platform‐operated playlists – on the success of songs and artists. We employ discontinuity and instrumental variables identification approaches and find large and significant effects of playlist inclusion on success. Our results provide direct evidence of a prominent platform's power and suggest a need for continued scrutiny of how platforms exercise their power.
This paper examines the effect of user’s popularity information on his or her demand in a mobile dating platform.
La consommation musicale est un système mettant en jeu des artistes, des consommateurs, des prescripteurs qui gravitent autour d’un point commun : les classements musicaux. Cette recherche analyse les variations de trois classements : les ventes physiques, numériques et le téléchargement illégal. Une analyse empirique longitudinale basée sur 7 920 observations permet de montrer que les différents classements sont tous aussi stables les uns que les autres, cependant la durée de vie des artistes n’est pas la même en fonction du classement considéré.
Despite clear, finite limits on the availability of human attention, limited effort has been directed toward understanding how user attention is allocated in contexts such as digital application environments where consumers frequently confront an abundance of competing alternatives. This is surprising given the growing significance of application platforms, ecosystems, and other application environments that offer seemingly endless choice. In these types of environments the value delivered to users and the success of application developers is often highly dependent on the attention that users allocate to an application after they have adopted it. There is, therefore, considerable value in efforts to better understand what drives the post-adoption allocation of consumer attention toward specific applications. As such, we draw on attention theory to propose a model of attention allocation and then test this model on a dataset that includes over 2200 hedonic desktop applications and more than 300 users. Analysis using fractional regression indicates that user attention is most likely to be allocated to applications that have been used both recently and persistently as well as by applications that are popular and current. Finally, our results highlight the negative impact that a large application portfolio has on the allocation of user attention to individual applications.
Platforms are growing increasingly powerful, raising questions about whether their power might be exercised with bias. While bias is inherently difficult to measure, we identify a context within the music industry that is amenable to bias testing. Our approach requires ex ante platform assessments of commercial promise – such as the rank order in which products are presented – along with information on eventual product success. A platform is biased against a product type if the type attains greater success, conditional on ex ante assessment. Theoretical considerations and voiced industry concerns suggest the possibility of platform biases in favor of major record labels, and industry participants also point to bias against women. Using data on Spotify curators’ rank of songs on New Music Friday playlists in 2017, we find that Spotify’s New Music Friday rankings favor independent-label music, along with some evidence of bias in favor of music by women. Despite challenges that independent-label artists and women face in the music industry, Spotify’s New Music curation appears to favor them.
Digitization has led to many new creative products, straining the capacity of professional critics and consumers. Yet, the digitization of retailing has also delivered new crowd-based sources of pre-purchase information. We compare the relative impacts of professional critics and crowd-based Amazon star ratings on consumer welfare in book publishing. Using various fixed effects and discontinuity-based empirical strategies, we estimate their causal impacts on sales. We use these causal estimates to calibrate a structural demand model. The aggregate effect of star ratings on consumer surplus is, in our baseline estimates, more than ten times the effect of traditional review outlets. (JEL D83, L15, L81, L82)
Previous research suggested that news media coverage tone tends to become more negative for successful women in politics (but not for successful men) when compared with less successful and well-known women. This study tests this in 17 countries. Specifically, it examines relationships between greater parliamentary representation of women and the coverage tone in articles on women in that country through a computational analysis of millions of persons’ names in more than 1,000 newspapers. Growth in parliamentary representation of women is associated with more negative coverage, lending support for explanations that suggest reactionary responses to perceived breaching of gendered social hierarchies.
This paper uses rich station-level data to examine how common ownership affects the program-ming and listenership of contemporary music radio stations. A common owner of stations playing the same type of music in the same local radio market differentiates their playlists and their audi-ences increase. Their playlists become more similar to those of competitors which lose roughly the same number of listeners. These changes are consistent with theoretical predictions if incentives for strategic differentiation are relatively weak and total listenership is inelastic. Common ownership of stations in different markets is associated with limited playlist homogenization, consistent with economies of scope in offering similar programming in different markets. These stations are also able to play more commercials without losing listeners, suggesting that the economies of scope lead to increases in station quality. Northwestern-Toulouse Industrial Organization conference for many useful comments. I thank Severin Borenstein for allowing me to use the title of an earlier, unpublished paper. I thank Rich Meyer of Mediabase 24/7 for providing access to the airplay data and the National Association of Broadcasters (NAB) for funding the purchase of BIAfn's Media Access Pro database. All views and any errors in this paper are my own.
The relationship between market structure and product variety is critical, since too few or too many products may be produced given a particular market structure. This paper measures empirically the relationship between structure and variety in the music recording industry. Entropy is used to generate a measure of product variety. The results suggest that the relationship is non-monotonic: high and low levels of concentration result in lessened variety, and maximum variety is promoted by a moderately concentrated structure.
An inherent problem in measuring the influence of expert reviews on the demand for experience goods is that a correlation between good reviews and high demand may be spurious, induced by an underlying correlation with unobservable quality signals. Using the timing of the reviews by two popular movie critics, Siskel and Ebert, relative to opening weekend box office revenue, we apply a difference-in-differences approach to circumvent the problem of spurious correlation. After purging the spurious correlation, the measured influence effect is smaller though still detectable. Positive reviews have a particularly large influence on the demand for dramas and narrowly-released movies. Copyright Blackwell Publishing Ltd. 2005.
We present a signalling model, based on ideas of Phillip Nelson, in which both the introductory price and the level of directly "uninformative" advertising or other dissipative marketing expenditures are choice variables and may be used as signals for the initially unobservable quality of a newly introduced experience good. Repeat purchases play a crucial role in our model.
Publishers produce books in hardcover and paperback versions with different prices and time of market introduction. Analysis of detailed book-level data reveals that (i) price-cost differentials cannot be explained by cost differences, making this an example of quality discrimination; (ii) market introduction time strongly affects sales, suggesting that time is the crucial dimension of discrimination; and (iii) there is substantial price rigidity across books and over time: prices depend on cost shifters but not on demand shifters. I discuss an explanation for this last finding in terms of the nature of demand in this market.
This is a republication of a passage from William Vickrey's (1964) book Microstatics, which presents important results in spatial competition and monopolistic competition.
ABSTRACT I use original data on eyewear retailers in a cross-section of U.S. markets to study how firms' product range choices vary with the degree of local competition. Market level regressions show average per firm variety declining in the number of rivals. In regressions at the firm level, taking account of spatial differentiation within each market, a non-monotonic relationship between product ranges and competition is apparent. As the number of nearby rivals increases, per firm variety may first rise before eventually declining. Explanations for this pattern are offered, in terms of a tradeoff between business stealing and clustering effects. Copyright 2009 The Authors. Journal compilation 2009 Blackwell Publishing Ltd. and the Editorial Board of The Journal of Industrial Economics.
The author analyzes a sequential decision model in which each decisionmaker looks at the decisions made by previous decisionmakers in taking her own decision. This is rational for her because these other decisionmakers may have some information that is important for her. The author then shows that the decision rules that are chosen by optimizing individuals will be characterized by herd behavior; i.e., people will be doing what others are doing rather than using their information. The author then shows that the resulting equilibrium is inefficient. Copyright 1992, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
A dynamic incomplete information game is set up to study the introduction of a durable good when consumers can learn its quality from previous buyers. High sales today imply fewer potential buyers tomorrow, but each buyer will have better information about the good. Consumers are fully rational and can update their beliefs, even when they do not directly receive information; in equilibrium, no news is bad news. A low-quality firm follows a 'fly-by-night' strategy, randomizing over the timing of sales. A high-quality firm spreads out its sales more smoothly, solving a stochastic dynamic programming problem. Copyright 1997 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
Did living standards stagnate before the Industrial Revolution? Traditional real-wage indices typically show broadly constant living standards before 1800. In this paper, we show that living standards rose substantially, but surreptitiously because of the growing availability of new goods. Colonial luxuries such as tea, coffee, and sugar transformed European diets after the discovery of America and the rounding of the Cape of Good Hope. These goods became household items in many countries by the end of the 18th century. We use the Greenwood-Kopecky (2009) method to calculate welfare gains based on data about price changes and the rate of adoption of new colonial goods. Our results suggest that by 1850, the average Englishman would have been willing to forego 15% or more of his income in order to maintain access to sugar and tea alone. These findings are robust to a wide range of alternative assumptions, data series, and valuation methods.
Mergers can reduce costs and alter incentives about how to position products, so that theory alone cannot predict whether mergers will increase product variety. We document the effect of mergers on variety by exploiting the natural experiment provided by the1996 Telecommunications Act. We find that consolidation reduced station entry and increased the number of formats available relative to the number of stations. We find some evidence that increased concentration increases variety absolutely. Based on the programming overlap of jointly owned stations, we can infer that the effects operate through product crowding that is consistent with spatial preemption. . * We thank Yun-Sug Baik and Yu Li for assistance in assembling the dataset used in the study. Seminar participants at the 1998 American Economic Assocation meetings in Chicago, the Carnegie Mellon University/ University of Pittsburgh joint applied economics seminar, and the Wharton Applied Economics Seminar at the University of P...
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