Self-Serving Behavior in Price-Quality Competition

Marco Bertini (mbertini@london.edu), Daniel Halbheer and Oded Koenigsberg (okoenigsberg@london.edu)
Additional contact information
Marco Bertini: London Business School, London
Oded Koenigsberg: London Business School, London

No 334, Working Papers from University of Zurich, Department of Business Administration (IBW)

Abstract: 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.

Keywords: Self-serving behavior; attribution theory; price-quality competition; managerial decision-making (search for similar items in EconPapers)
JEL-codes: D21 D22 L21 L22 M31 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2013-05
New Economics Papers: this item is included in nep-cdm
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://repec.business.uzh.ch/RePEc/zrh/wpaper/334_IBW_full.pdf (application/pdf)

Related works:
Working Paper: Self-Serving Behavior in Price-Quality Competition (2013)
Working Paper: Self-Serving Behavior in Price-Quality Competition (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zrh:wpaper:334

Access Statistics for this paper

More papers in Working Papers from University of Zurich, Department of Business Administration (IBW) Contact information at EDIRC.
Bibliographic data for series maintained by Daniela Koller (workingpaper@business.uzh.ch).