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  • International Journal of Research in Marketing

Price and Quality Decisions by Self-Serving Managers

By: Marco Bertini, Daniel Halbheer and Oded Koenigsberg
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Abstract

We present a theory of price and quality decisions by managers who are self-serving. In the theory, firms stress the price or quality of their products, but not both. Accounting for this, managers exploit any uncertainty about the cause of market outcomes to credit positive results to the dominant, “strategic” factor and blame negative results on the other—as doing so is psychologically rewarding. The problem with biased attributions, however, is that they prompt biased decisions. We motivate this argument with evidence from one experiment and then develop a model to understand the cost of the bias under different market conditions. Counter to intuition, we find that firms in a competitive setting can profit from the self-serving nature of their managers.

Keywords

Causal Reasoning; Self-serving Bias; Strategic Orientation; Managerial Decision-making; Price; Quality; Decision Making; Theory

Citation

Bertini, Marco, Daniel Halbheer, and Oded Koenigsberg. "Price and Quality Decisions by Self-Serving Managers." International Journal of Research in Marketing 37, no. 2 (June 2020): 236–257.
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About The Author

Marco Bertini

Marketing
→More Publications

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    • March 2022
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    When It's Time to Expand Beyond the Base

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More from the Authors
  • Carbon Footprinting and Pricing under Climate Concerns By: Marco Bertini, Stefan Buehler, Daniel Halbheer and Don Lehmann
  • Project Maji: Pricing Water in Sub-Saharan Africa By: Elie Ofek, Marco Bertini, Dilyana Karadzhova Botha and Esel Çekin
  • When It's Time to Expand Beyond the Base By: Marco Bertini and Nader Tavassoli
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