Self-Serving Behavior in Price-Quality Competition
Type
working paper
Date Issued
2013
Author(s)
Halbheer, Daniel
Abstract (De)
Managers like to think well of themselves and of the firms that employ them. Yet, such positive illusions can prejudice the evaluation of market outcomes and, as a result, provoke biased responses. In particular, we examine the possibility that managers self-servingly credit success in the market to product quality but blame failure on price. We draw on the social psychology of causal attributions to substantiate this idea and predict how managers adjust price and quality on the basis of prior results. Next, we report one experiment that tests the different elements of our theory, as well as insights from two surveys and a marketing simulation that add robustness to the findings. Finally, we develop an analytical model of price-quality competition to understand the profit impact of self-serving behavior. Counter to intuition, we find that under certain conditions firms can benefit from the biased actions of their managers.
Language
German
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Quantitative Economic Methods
Refereed
No
Subject(s)
Division(s)
Eprints ID
232063
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Name
SSRN-id2130414.pdf
Size
264.61 KB
Format
Adobe PDF
Checksum (MD5)
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