{"title":"Designing Loot Boxes: Implications for Profits and Welfare","authors":"Jin Miao, Sanjay Jain","doi":"10.1287/mksc.2023.0007","DOIUrl":"https://doi.org/10.1287/mksc.2023.0007","url":null,"abstract":"<p>A loot box is a probabilistic allocation of virtual products, the exact outcome of which is known to consumers only after purchase. Consumers sometimes purchase these goods multiple times until their preferred products are obtained. As loot boxes have been gaining enormous popularity in recent years, they are often criticized as exploitative and socially wasteful. In this study, we develop a stylized model to study the optimal design of loot boxes and its impact on profits and social welfare. We find that firms may assign asymmetric probabilities to ex ante symmetric products. Firms could use loot boxes to offer products at low prices to users who would not buy these products under the traditional pricing strategy. Loot boxes enable firms to earn higher profits because of better price discrimination and market expansion. Contrary to the widespread criticism of loot boxes as socially harmful, our analysis reveals that the loot box strategy can improve social welfare. Some platforms promise that consumers can obtain their preferred products with no more than a certain number of purchases. Contrary to conventional wisdom, our analysis reveals that such a strategy can increase firm’s profits while reducing consumer welfare.</p><p><b>History:</b> Anthony Dukes served as the senior editor.</p><p><b>Supplemental Material:</b> The online appendix is available at https://doi.org/10.1287/mksc.2023.0007.</p>","PeriodicalId":48382,"journal":{"name":"Marketing Science","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-05-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140881680","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Multiattribute Search: Empirical Evidence and Information Design","authors":"Pedro M. Gardete, Megan Hunter","doi":"10.1287/mksc.2022.0177","DOIUrl":"https://doi.org/10.1287/mksc.2022.0177","url":null,"abstract":"Marketing Science, Ahead of Print. <br/>","PeriodicalId":48382,"journal":{"name":"Marketing Science","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-04-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140841281","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Don’t Hurry, Be Happy! The Bright Side of Late Product Release","authors":"Mushegh Harutyunyan, Chakravarthi Narasimhan","doi":"10.1287/mksc.2023.0393","DOIUrl":"https://doi.org/10.1287/mksc.2023.0393","url":null,"abstract":"Marketing Science, Ahead of Print. <br/>","PeriodicalId":48382,"journal":{"name":"Marketing Science","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-04-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140841259","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Where Does Advertising Content Lead You? We Created a Bookstore to Find Out","authors":"Ilya Morozov, Anna Tuchman","doi":"10.1287/mksc.2023.0138","DOIUrl":"https://doi.org/10.1287/mksc.2023.0138","url":null,"abstract":"<p>We study how advertising content influences consumers’ decisions. To this end, we create a simulated online bookstore that imitates a real online shopping experience. We then conduct a preregistered and incentive-compatible experiment in which we randomly expose store visitors to display ads, randomizing both advertising exposures and content. We find that ad content plays a major role in shaping advertising effects. Ads that reveal a book’s low price consistently increase demand for the advertised book relative to ads that do not reveal price. By contrast, ads that reveal the book’s genre induce some consumers to search and buy the book but lead others to reject it without search. We show these polarized responses can increase or decrease the total number of searches and purchases of the advertised book depending on the share of consumers who favor the revealed genre. Our findings suggest that advertisers should carefully choose which product attributes to reveal in their ad copies. We also show that revealing product attributes in ads does not change the total amount of search. Taken together, our results suggest the primary role of ad content is to affect consumers’ beliefs about the advertised book rather than to alter the perceived benefits from search.</p><p><b>History:</b> Catherine Tucker served as the senior editor for this article.</p><p><b>Funding:</b> This work was supported by Amazon Research Award. All authors certify that they have no affiliations with or involvement in an any organization or entity with any financial or non-financial interest in the subject matter or materials discussed in this manuscript.</p><p><b>Supplemental Material:</b> The online appendix and data files are available at https://doi.org/10.1287/mksc.2023.0138. The preregistration document is available at https://aspredicted.org/m3jm2.pdf. Our public data repository at https://github.com/ilyamorozov/adContent contains data, codes, and a written tutorial with instructions on how to create a simulated online store.</p>","PeriodicalId":48382,"journal":{"name":"Marketing Science","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-04-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140798841","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Frontiers: Can Large Language Models Capture Human Preferences?","authors":"Ali Goli, Amandeep Singh","doi":"10.1287/mksc.2023.0306","DOIUrl":"https://doi.org/10.1287/mksc.2023.0306","url":null,"abstract":"This paper examines the potential of large language models to mimic human survey respondents and to derive their preferences.","PeriodicalId":48382,"journal":{"name":"Marketing Science","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-04-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140659079","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Using Text Analysis in Parallel Mediation Analysis","authors":"Judy (Zijing) Zhang, H. Alice Li, Greg M. Allenby","doi":"10.1287/mksc.2023.0045","DOIUrl":"https://doi.org/10.1287/mksc.2023.0045","url":null,"abstract":"Marketing Science, Ahead of Print. <br/>","PeriodicalId":48382,"journal":{"name":"Marketing Science","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-04-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140572002","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}