Firms must often decide how to target households that did not respond to past promotions. For example, when prospecting for new customers, households that purchase are no longer eligible, and so the remaining households are an increasingly pure pool of non-responders. Past response data reflects...

Economists typically assume that demand curves are downward sloping. We present evidence that increasing the price of an item from $44 to $49 may increase unit demand by up to 30%. This effect is substantial, has broad application, is easily replicated, and contradicts the downward-sloping...

In February 1995 Continental Airlines introduced an incentive scheme that promised monthly bonuses to all 35,000 hourly employees if the company achieved a firm-wide performance goal. Conventional wisdom suggests that free riding will render such schemes ineffective. We study the impact of the...

We compare bargaining costs with internal and external suppliers using a unique data set describing internal and external transactions of the same categories of parts at a single firm. The findings confirm that direct bargaining costs are higher with external suppliers, at least in part because...

During the summer of 2005, the three domestic U.S. automobile manufacturers offered a customer promotion that allowed customers to buy new cars at the discounted price formerly offered only to employees. The initial months of the promotion were record sales months for each of the three firms,...

Many markets have historically been dominated by a small number of best-selling products. The Pareto Principle, also known as the 80/20 rule, describes this common pattern of sales concentration. However, information technology in general and Internet markets in particular have the potential to...

We present findings from a controlled field experiment that allows us to investigate the dynamic effects of retail advertising. The experimental design overcomes limitations that have hindered previous investigations of this issue. Our study uncovers dynamic advertising effects that have not...

We use a dataset describing ownership of productive assets in the carpentry trade to evaluate several factors influencing the allocation of asset ownership between an employer and his employees. The findings suggest that the allocation involves a tradeoff between two incentive effects...