Buying an item sight unseen on the Internet requires a significant amount of trust in the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Buying an item sight unseen on the Internet requires a significant amount of trust in the seller. Consider this hypothesis: Potential buyers tend to scrutinize the offers posted by sellers with poor reputations more than they do the offers posted by sellers with neutral or good reputations. As a result, if buyers notice a surcharge (such as a shipping fee) levied by a seller with a poor reputation, they reduce the (presurcharge) price they are willing to pay for the item. On the other hand, a surcharge does not affect buyers' (presurcharge) willingness to pay for an item offered by a seller with a neutral or a good reputation. Amar Cheema tested this hypothesis, which was described in a June 2008 paper entitled "Surcharges and Seller Reputation" and published in the Journal of Consumer Research. Cheema collected data on 271 completed eBay auctions for three DVD trilogies: The Godfather, The Lord of the Rings, and Star Wars. For each auction, Cheema recorded the winning bid, the surcharge, and the seller's eBay feedback score. Then he partitioned the 271 auctions into three almost equal- sized samples based on the seller's feedback score. The following is a simple linear regression model estimated for each group: y where y BO+B1x + E, winning bid (in dollars), and x = shipping cost (in dollars). The following equation lists the estimation results obtained for the sample of 91 low-reputation sellers: The estimated regression equation: 9=34.44-1.11x SSR: 378 SSE: 2,853 (Note: These results do not exactly duplicate Cheema's results but are representative of the Cheema study.) Y The mean square due to error (MSE) s² is an unbiased estimator of o², the variance of the error variable & in the regression model. In this regression analysis, the MSE equals , and the standard error of estimate equals Hint: For the next question, Σ(xi-x)²= (n - 1)(sample variance of shipping cost). The sample variance of shipping costs for the auctions in the sample is 3.39. A different sample of eBay auctions cannot be expected to provide the same value of b, as the current sample. So b₁ is a random variable. Its sampling distribution has an estimated standard deviation of A different sample of eBay auctions cannot be expected to provide the same value of b₁ as the current sample. So b₁ is a random variable. Its sampling distribution has an estimated standard deviation of Use the Distributions tool to help you answer the questions that follow. t Distribution Degrees of Freedom = 80 O ^ m The regression model specifies that winning bid and shipping cost are linearly related. Conduct at test (at the significance level a = 0.10) for a significant linear relationship between shipping cost and winning bid when the seller has a low reputation. The value of the test statistic is , and you conclude that there is a significant linear relationship between shipping cost and winning bid. The result of the significance test consistent with the notion that buyers pay attention to a surcharge when it is levied by a low-reputation seller. The 90% confidence interval estimate of B₁ is 2 to Since 0 is in the confidence interval, you significant linear relationship between shipping cost and winning bid. This result a low-reputation seller. consistent with the notion that buyers pay attention to a surcharge when it is levied by The test statistic is I and you 7 relationship between shipping cost and winning bid. conclude that there is a Conduct an F test (at a significance level a = 0.10) of overall significance for the regression. (With 1 degree of freedom in the numerator and n - 2 = 91 - 2 = 89 degrees of freedom in the denominator, F = 2.763 provides an area of 0.10 in the upper tail.) conclude that there is a significant linear Buying an item sight unseen on the Internet requires a significant amount of trust in the seller. Consider this hypothesis: Potential buyers tend to scrutinize the offers posted by sellers with poor reputations more than they do the offers posted by sellers with neutral or good reputations. As a result, if buyers notice a surcharge (such as a shipping fee) levied by a seller with a poor reputation, they reduce the (presurcharge) price they are willing to pay for the item. On the other hand, a surcharge does not affect buyers' (presurcharge) willingness to pay for an item offered by a seller with a neutral or a good reputation. Amar Cheema tested this hypothesis, which was described in a June 2008 paper entitled "Surcharges and Seller Reputation" and published in the Journal of Consumer Research. Cheema collected data on 271 completed eBay auctions for three DVD trilogies: The Godfather, The Lord of the Rings, and Star Wars. For each auction, Cheema recorded the winning bid, the surcharge, and the seller's eBay feedback score. Then he partitioned the 271 auctions into three almost equal- sized samples based on the seller's feedback score. The following is a simple linear regression model estimated for each group: y where y BO+B1x + E, winning bid (in dollars), and x = shipping cost (in dollars). The following equation lists the estimation results obtained for the sample of 91 low-reputation sellers: The estimated regression equation: 9=34.44-1.11x SSR: 378 SSE: 2,853 (Note: These results do not exactly duplicate Cheema's results but are representative of the Cheema study.) Y The mean square due to error (MSE) s² is an unbiased estimator of o², the variance of the error variable & in the regression model. In this regression analysis, the MSE equals , and the standard error of estimate equals Hint: For the next question, Σ(xi-x)²= (n - 1)(sample variance of shipping cost). The sample variance of shipping costs for the auctions in the sample is 3.39. A different sample of eBay auctions cannot be expected to provide the same value of b, as the current sample. So b₁ is a random variable. Its sampling distribution has an estimated standard deviation of A different sample of eBay auctions cannot be expected to provide the same value of b₁ as the current sample. So b₁ is a random variable. Its sampling distribution has an estimated standard deviation of Use the Distributions tool to help you answer the questions that follow. t Distribution Degrees of Freedom = 80 O ^ m The regression model specifies that winning bid and shipping cost are linearly related. Conduct at test (at the significance level a = 0.10) for a significant linear relationship between shipping cost and winning bid when the seller has a low reputation. The value of the test statistic is , and you conclude that there is a significant linear relationship between shipping cost and winning bid. The result of the significance test consistent with the notion that buyers pay attention to a surcharge when it is levied by a low-reputation seller. The 90% confidence interval estimate of B₁ is 2 to Since 0 is in the confidence interval, you significant linear relationship between shipping cost and winning bid. This result a low-reputation seller. consistent with the notion that buyers pay attention to a surcharge when it is levied by The test statistic is I and you 7 relationship between shipping cost and winning bid. conclude that there is a Conduct an F test (at a significance level a = 0.10) of overall significance for the regression. (With 1 degree of freedom in the numerator and n - 2 = 91 - 2 = 89 degrees of freedom in the denominator, F = 2.763 provides an area of 0.10 in the upper tail.) conclude that there is a significant linear
Expert Answer:
Answer rating: 100% (QA)
From the given information the simple linear regression model is y 3304043x SSR 7... View the full answer
Related Book For
Managerial Economics and Strategy
ISBN: 978-0134167879
2nd edition
Authors: Jeffrey M. Perloff, James A. Brander
Posted Date:
Students also viewed these economics questions
-
Charging prices closer to what consumers are willing to pay for a good: Select one: a. Increases producer surplus b. Reduces consumers surplus c. Reduces consumers surplus and Increases producer...
-
In a used car market, all potential buyers and sellers are risk neutral. The buyers value the good-quality used cars at $10,000 and the lemons at $4,000, while the reservation price of the lemon...
-
Do older college students tend to weigh more than younger college students? Our data are ages and weights for a random sample of 76 college students. A scatterplot (not shown here) shows that the...
-
In May 2020 Bernard, a self-employed plumber, and his son Gerald, a self-employed electrician, purchased 1,000 empty barrels from a Scottish whisky distillery. The barrels were over 100 years old and...
-
Suppose the U.S. discovers a new technology that will improve its exports. Therefore, there are rumors that this technology will bring the U.S. trade balance from trade deficits to expected long-term...
-
Lancet Engineering completed the following transactions in the month of June. a. Jenna Lancet, the owner, invested $195,000 cash, office equipment with a value of $8,200, and $80,000 of drafting...
-
What is the difference between a predator and a situational (accidental) fraudster?
-
For 2012, Selene Company initiated a sales promotion campaign that included the expenditure of an additional $25,000 for advertising. At the end of the year, Scott Brown, the president, is presented...
-
what are three techniques for processing BI DATA? explain clearly REPORTING ANALYSIS, RFM ANALYSIS,ONLINE ANALYTICAL PROCESSING,DATA MINING ANALYSIS?
-
Aubrae and Tylor Williamson began operations of their furniture repair shop (Furniture Refinishers, Inc.) on January 1, 2019. The annual reporting period ends December 31. The trial balance on...
-
7.4 MC 2.5 C +-- 5.6 cm 2.4 cm --- -3.5 C What is the electric field strength at a point 3.2 cm to the left of the middle charge? The Coulomb constant is 8.99 10 N. m/C. Answer in units of N/C. 006...
-
"It is the great multiplication of the production of all the different arts in consequence of the division of labour, which occasions in a well-governed society, that universal opulence which extends...
-
Carolyn Johnson, CPA, forgot to send account receivable confirmation letters to some of her client's customers during an audit. Such an act is probably an example of Group of answer choices Ordinary...
-
Summarize and Discuss how this contents might apply in your personal or professional life. The characteristics of a pure monopoly, the barriers to entry that makeand protect monopolies, price and...
-
1)What kind of benefits giving Asian Infrastructure Investment Bank (AIIB) if Uzbekistan joins in it? 2)What kind of benefits giving EEU if Uzbekistan joins in it? 3)What kind of benefits giving the...
-
Net operating income equals: Multiple choice question. (dollar sales - dollar sales to break even) unit contribution margin. unit sales unit contribution margin. dollar sales - dollar sales to...
-
What is the primary marketing objective when a product enters the decline stage of the product life cycle? O A. Reduce expenditures and milk the brand. OB. Maximize profits while defending market...
-
Represent each of the following combination of units in the correct SI form using an appropriate prefix: (a) m/ms, (b) k m, (c) k s /mg, and (d) k m N.
-
The marketing department of Acme Inc. has estimated the following demand function for its popular carpet deodorizer, Freshbreeze: Q = 1005 p , where Q is the quantity of an 8-ounce box (sold in...
-
Based on the Mini-Case Vertical Integration at Zara, would you expect vertical integration to be as profitable for clothing retailers who specialize in work clothes and uniforms as it is for Zara?
-
The Mini-Case Are Monopoly Mergers Harmful? states that there are about 5,000 ready-mix concrete plants in the United States. With so many plants in operation, why is there concern about mergers...
-
The microfinance concept has been a blessing for many people in developing countries. Its success there causes some to wonder if it can spur growth in areas of developed nations that need...
-
An institution that many people know little about and some governments find worrisome is offshore financial centers. They operate with little oversight, few regulations, and often little taxation....
-
What is the appeal of the eurocurrency market?
Study smarter with the SolutionInn App