Behavioral economics of retail food markets: Discounts, coupons and healthier menus

The purpose of this dissertation is to study the effect of different marketing strategies on changing consumers' behavior from the perspective of behavioral economics. The dissertation is composed of three related studies. The first two studies investigate the effect of markdown and coupon strategies on food retail markets. The first study proposes a markdown utility based on the mental accounting theory to capture and explain an incremental utility triggered by pricing strategy without actual price variation. This solves the puzzle of markdown effect, identified as a higher markdown elasticity of demand relative to the price elasticity of demand. A demand model for spinach and lettuce is estimated based on supermarket scanner data sets to verify the markdown effect on consumption of both product categories.;In the second study, a demand model for the snack chips category is estimated with household scanner data sets to identify the price-discount effect and the informational advertising effect of coupons on promoting household purchases. The conditions regarding a weekly coupon usage rate for coupon effect to exceed standard price discount effect are discussed.;The third study examines the effect of a quick-service restaurant (QSR) strategy which changes default energy-dense menu items to choices with healthier options on promoting kids' healthier eating consumptions. A series of difference-in-difference (DID) models are applied to compare Mexi-Fries and Crustos purchases before and after the strategy was put into effect among treatment stores and control stores. Insignificantly negative estimates imply that the strategy of adding choices into menus might encourage health-oriented purchasing behavior in a minor way.