Person: Mohan, Bhavya
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Mohan
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Bhavya
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Mohan, Bhavya
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Publication Lifting the Veil: The Benefits of Cost Transparency(2014-11-07) Mohan, Bhavya; Buell, Ryan; John, LeslieA firm’s costs are typically tightly-guarded secrets. However, across a field study and six laboratory experiments we identify when and why firms benefit from revealing unit cost information to consumers. A natural field experiment conducted with an online retailer suggests that cost transparency boosts sales. Six subsequent controlled lab experiments replicate this basic effect (Studies 2-6) and provide evidence for why it occurs: just as interpersonal disclosure of intimate information increases attraction, cost transparency by a firm increases brand attraction, in turn boosting consumer purchase interest. This relationship persists even after controlling for perceptions of price fairness and product quality (Study 3). Study 4 suggests that the beneficial effect of cost transparency holds when firms spend more on “less desirable” costs relative to “more desirable” costs. Studies 5-6 show that the effect of cost transparency weakens when high profit margins are made salient. Finally, Study 7 shows that the beneficial effect reverses (i.e. cost transparency backfires) when it is revealed that a firm’s profit margins are high relative to those of its competitors.Publication Paying Up for Fair Pay: Consumers Prefer Firms with Lower CEO-to-Worker Pay Ratios(2015-05-29) Mohan, Bhavya; Norton, Michael; Deshpande, RohitPrior research examining consumer expectations of equity and price fairness has not addressed wage fairness, as measured by a firm’s pay ratio. Pending legislation will require American public companies to disclose the pay ratio of CEO wage to the average employee’s wage. Our six studies show that pay ratio disclosure affects purchase intention of consumers via perceptions of wage fairness. The disclosure of a retailer’s high pay ratio (e.g., 1000 to 1) reduces purchase intention relative to firms with lower ratios (e.g., 5 to 1 or 60 to 1, Studies 1A, 1B, and 1C). Lower pay ratios improve consumer perceptions across a range of products at different price points (Study 2A and 2B), increase consumer ratings of both firm warmth and firm competence (Study 3), and enhance perceptions of Democrats and Independents without alienating Republican consumers (Study 4). A firm with a high ratio must offer a 50% price discount to garner as favorable consumer impressions as a firm that charges full price but features a lower ratio (Study 5).Publication Lifting the Veil: Essays on Firm Transparency and Consumer Behavior(2016-05-13) Mohan, Bhavya; Deshpande, Rohit; Buell, Ryan W.; John, Leslie A.This research examines the effects of firm transparency on consumer behavior. Three essays investigate how consumer behavior changes when firms are transparent about costs, wages, and promotional strategies. Essay one investigates when and why firms benefit from revealing confidential unit cost information to consumers. A natural field experiment conducted with an online retailer suggests that cost transparency can boost sales. Subsequent controlled lab experiments replicate this basic effect and provide evidence for why it occurs. Essay two examines whether consumer behavior is influenced by the disclosure of a firm’s pay ratio - the ratio of the total compensation of the CEO to the average annual compensation of all other employees. Pilot field data and a series of experiments show that pay ratio disclosure affects the purchase intentions of a subset of consumers, via perceptions of wage fairness. Essay three examines how marketing offers that are framed as percentages can confuse consumers, due to highly non-linear impacts in terms of actual value. Three lab studies and one field experiment show that while even highly numerate consumers are prone to error, the transparent provision of rate information can help consumers evaluate offers more accurately.