Using a large sample of individuals who hold Target Retirement Funds (TRFs), we examine how people use mental arithmetic in estimating their retirement age. We find a strong “zero” bias, in that investors have a strong preference for TRFs that end with zero (2030, 2040) as compared to TRFs...

Sweepstakes and contests are an extremely common promotional strategy used by firms. The sweepstakes and contests often differ significantly in the design of reward structure. For example, in 1999, Godiva Chocolates conducted a sweepstakes where one box of chocolates contained a diamond...

Sweepstakes and contests are an extremely common promotional strategy used by firms. The sweepstakes and contests often differ significantly in the design of reward structure. For example, in 1999, Godiva Chocolates conducted a sweepstakes where one box of chocolates contained a diamond...

In purchase situations where attribute information is either missing or difficult to judge, a well-known heuristic that consumers use to form evaluations is the halo effect. The psychology literature has widely considered the halo a reflection of consumers' inability to discriminate between...

Firms frequently position themselves as specialists. An implication of specialization is that the firm has forgone alternative opportunities. In the context of effort-intensive categories, we show that a firm can signal quality to consumers by specializing. In the model, a firm must decide to...