Wednesday, October 23, 2013

Greeks bearing grudges

The volk aren't buying the wagons, thanks to Adolf (is this the 1,000 year Reich?);
Did consumers actually switch to other brands, or did they simply postpone purchases? We find that [Greek] prefectures that saw German massacres in 1941-44 did not only buy fewer German cars – they also bought more cars from other manufacturers. This shows that losses in terms of sales for German car producers during conflict months were not temporary.
Boycotts are amongst the most common forms of political action. On average, almost half of Fortune 50 firms are subject to some kind of boycott at any one point in time. Remarkably, the evidence that boycotts reduce sales is limited. While many US consumers were outraged by France's refusal to support the invasion of Iraq, for example, it is unclear if they actually reduced their purchases of French products .... Nor should we be surprised that calls for boycotts typically go unheeded. Consumers "like what they like"; deviating from their ideal consumption basket is costly. While they want others to punish transgressions, they would ideally like to free-ride on the boycott of others ....
In Marcel Proust's A la recherche du temps perdu, the narrator's childhood memories are brought back by the taste of a madeleine. It appears that the bitter taste of the past can have similar effects – revived memories affect the purchases of major consumer goods such as German cars. These findings are related to recent theoretical work that highlights selective, context-dependent memory as a source of behavioural biases (Gennaioli and Shleifer 2010). Our study suggests that where local memory interacts with current conflict, the collective action problem of boycotts can be overcome – memories of past misdeeds can spur consumers to incur the cost that would otherwise stop them from participating in a boycott.
 Hold the fries, Napoleon.

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