IDEAS home Printed from https://ideas.repec.org/p/vlg/vlgwps/2004-06.html
   My bibliography  Save this paper

Market feedback, cost system choice and competitve pricing: the advantage of not being a leader

Author

Listed:
  • Eddy Cardinaels
  • Filip Roodhooft
  • Luk Warlop
  • Gustaaf Van Herck

    (Vlerick Leuven Gent Management School)

Abstract

This study experimentally investigates the value of cost report accuracy in an interactive pricing context. Market agents received feedback about their own profits via either a volume-based costing or a more accurate activity-based costing report. They also received a typical market report containing the performance of their rivals. While prior work suggested that market discipline and learning from salient competitors can overcome performance decrements due to inaccurate costing, our results imply that the corrective nature of market feedback depends on the decision maker's role in the competitive play. Compared to other participants, decision makers endowed with the role of a 'reputational' market leader are less effective in screening available market feedback because they predominantly fixate on their own cost data. Even when receiving biased volume-based costing, reputational leaders ignore valuable market signals of opponents having access to more accurate cost data. Consequently other market players can take advantage of them.

Suggested Citation

  • Eddy Cardinaels & Filip Roodhooft & Luk Warlop & Gustaaf Van Herck, 2004. "Market feedback, cost system choice and competitve pricing: the advantage of not being a leader," Vlerick Leuven Gent Management School Working Paper Series 2004-06, Vlerick Leuven Gent Management School.
    • Handle: RePEc:vlg:vlgwps:2004-06
    as

    Download full text from publisher

    File URL: http://www.vlerick.be/en/2688-VLK/version/default/part/AttachmentData/data/vlgms-wp-2004-06.pdf
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vlg:vlgwps:2004-06. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Isabelle Vandenbroere (email available below). General contact details of provider: https://edirc.repec.org/data/vlgmsbe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.