The Effect of Payment Schemes on Inventory Decisions: The Role of Mental Accounting

A hotel website exclusive discount is widely adopted by major chain hotels to increase the volume of direct bookings. Although the traditional purpose of a discount promotion is to attract customers to the business, this research suggests that a hotel website exclusive price discount can induce consumers’ additional spending. Principles of mental accounting and two thinking styles (analytic vs. holistic) predict different effects of a price discount and the add-on product type by individual thinking styles. A quasi-experiment investigated the effect of an unexpected discount, relatedness of add-on item to a hotel stay, and individual thinking styles on add-on purchasing. The mediating role of impulse buying was subsequently examined using the PROCESS model. The effect of a price discount and the relatedness of add-on item are significant for analytic thinkers, whereas holistic thinkers report higher likelihood to purchase add-on items regardless of relatedness. Holistic thinkers’ likelihood to purchase is enhanced through an impulse buying tendency. The findings provide further evidence for the role of individual differences in response to pricing tactics by suggesting that a price promotion increases add-on purchases for analytic thinkers, whereas promoting a sense of impulsiveness can be more effective for holistic thinkers.

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The role of deforestation risk and calibrated compensation in designing payments for environmental services

Environment and Development Economics ◽

10.1017/s1355770x08004336 ◽

2008 ◽

Vol 13 (3) ◽

pp. 375-394 ◽

Cited By ~ 62

Author(s):

JENNIFER ALIX-GARCIA ◽

ALAIN DE JANVRY ◽

ELISABETH SADOULET

Keyword(s):

Common Property ◽

Budget Constraint ◽

Environmental Services ◽

Payments For Environmental Services ◽

Land Productivity ◽

Payment Scheme ◽

Payment Schemes ◽

Using Data ◽

Poor Communities

ABSTRACTThis paper discusses the gain in efficiency from including deforestation risk as a targeting criterion in payments for environmental services (PES) programs. We contrast two payment schemes that we simulate using data from Mexican common property forests: a flat payment scheme with a cap on allowable hectares per enrollee, similar to the program implemented in many countries, and a payment that takes deforestation risk and heterogeneity in land productivity into account. We simulate the latter strategy both with and without a budget constraint. Using observed past deforestation, we find that while risk-targeted payments are far more efficient, capped flat payments are more egalitarian. We also consider the characteristics of communities receiving payments from both programs. We find that the risk-weighted scheme results in more payments to poor communities, and that these payments are more efficient than those made to non-poor ejidos. Finally, we show that the risk of deforestation can be predicted quite precisely with indicators that are easily observable and that cannot be manipulated by the community.

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Product Demand Forecasting and Dynamic Pricing considering Consumers’ Mental Accounting and Peak-End Reference Effects

Journal of Applied Mathematics ◽

10.1155/2014/139030 ◽

2014 ◽

Vol 2014 ◽

pp. 1-10 ◽

Cited By ~ 3

Author(s):

Wenjie Bi ◽

Mengqi Liu

Keyword(s):

Steady State ◽

Dynamic Pricing ◽

Demand Forecasting ◽

Mental Accounting ◽

Product Demand ◽

Proposed Model ◽

Payment Schemes ◽

Maximal Profit ◽

Demand Forecasting Model ◽

Double Entry

We introduce a demand forecasting model for a monopolistic company selling products to consumers with double-entry mental accounting, which means consumers experience pleasure when consuming goods or service and feel pains when paying for them. Moreover, as the monopolist changes prices, consumers form a reference price that adjusts an anchoring standard based on the lowest price that they perceived, namely, the peak-end anchoring. We obtain the steady state prices under three different payment schemes for two- and infinite-period. We also analyze the relationship between these steady prices and maximal profit and compare the steady state prices of different payment schemes by changing the double-entry mental accounting’s parameters through numerical examples. The proposed model is computationally tractable for demand forecasting of realistic size.

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The mental accounting and moderating role of habit in usage of online social media: Implications for higher education

2011 IEEE International Symposium on IT in Medicine and Education ◽

10.1109/itime.2011.6130862 ◽

2011 ◽

Author(s):

Tao Hu ◽

Jian Fei

Keyword(s):

Higher Education ◽

Social Media ◽

Mental Accounting ◽

Online Social Media ◽

Moderating Role

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Escalation and De-escalation of Commitment in Response to Sunk Costs: The Role of Budgeting in Mental Accounting

Organizational Behavior and Human Decision Processes ◽

10.1006/obhd.1995.1029 ◽

1995 ◽

Vol 62 (1) ◽

pp. 38-54 ◽

Cited By ~ 167

Author(s):

Chip Heath

Keyword(s):

Mental Accounting ◽

Sunk Costs ◽

Escalation Of Commitment

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THE ROLE OF ISLAMIC BANKING IN AGRICULTURE FINANCING (CASE STUDY OF INDONESIAN AGRICULTURE SECTOR)

Humanities & Social Sciences Reviews ◽

10.18510/hssr.2019.7230 ◽

2019 ◽

Vol 7 (2) ◽

pp. 261-269

Author(s):

Satria Utama ◽

Aqidah Asri Suwarsi ◽

Listiono .

Keyword(s):

Agricultural Sector ◽

Low Cost ◽

Secondary Data ◽

Islamic Banking ◽

Agricultural Finance ◽

Agriculture Sector ◽

Payment Schemes ◽

Swot Matrix ◽

The Impact

Purpose: This paper aims to analyze the role of Islamic banking in improving the agricultural sector as well as providing alternative solutions such as financing scheme for agricultural financing. Methodology: The research method is qualitative. A review of the extant literature was carried out for collecting primary and secondary data. In-depth interviews with key informants such the farmer and Islamic bank financing manager were also conducted. Data analysis was performed by adopting data reduction, data display with SWOT matrix, verification, and conclusion. Main findings: This paper finds that Islamic banking allocates financing for agricultural sector which is less than 10 percent of total financing. The finding is in line with the problem faced by the farmer. Based on the interview, it is known that the main problem of agriculture industry is limited access to the source of capital. The second finding pertains to the lack of Islamic banking’s role in agricultural financing caused by high risk perception and minimum competence of human resources to maintain the agricultural financing. Applications: This paper suggests the implementation of Ba'I As Salam scheme as an alternative for agricultural financing. Salam Financing Scheme is more suitable for agricultural financing than the murabaha financing that are commonly used today. Because the salam financing scheme intends to finance the sale and purchase of new commodities that are to be processed or produced and the delivery of their goods in the future, as well as allow for irregular payment schemes made in the harvest. Some of these advantages can be agricultural financing solution that is more in line with the characteristics of agricultural sector cash flow. Novelty/Originality of this study: Previous Studies related to the agricultural sector only deals with the impact of agricultural finance without offering low cost financing models as the solution to the main problem in the agricultural sector. This study provides solutions to these problems.

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