Korea Trade Review (무역학회지)

Korea Trade Research Association (한국무역학회)
권호 표지
DOI QR코드

DOI QR Code

The Payment Term Choice on E-marketplace: Focusing on Status Quo Bias and Anchoring Effect

무역거래알선사이트에서의 결제조건 선택: 현상유지편향과 정박효과를 중심으로

  • Yoon Lee (Department of International Trade, Sungkyunkwan University) ;
  • Hong-joo Jung (Business School, Sungkyunkwan University)
  • 이윤 (성균관대학교 무역학과 ) ;
  • 정홍주 (성균관대학교 경영대학)
  • Received : 2021.01.05
  • Accepted : 2021.02.25
  • Published : 2021.02.28
Download PDF
⟨ Previous Next ⟩

Abstract

This paper investigated the preference change of payment terms in international trade along with counteroffer or first offer conditions of the other parties. Studies on trade payment terms have mainly focused on payment term determination factors such as firm size, product price level, country credit rate, etc. We tried to find other factors affecting payment terms choice, during the negotiation process. We applied behavioral economics theories such as 'Status Quo Bias' and 'Anchoring effect' to build our research model. To prove the existence of the above effects, we proceeded with field experiments to the exporting companies in Alibaba.com. Both 'Status Quo Bias' and 'Anchoring effect' were found in the field experiment. Most of the exporting companies preferred traditional payment methods to new payment methods. And an initial request for a low advance payment ratio led to a lower advance payment ratio. Also, the experience of using new payment methods could diminish status quo bias. This paper applied behavioral economics theories and field experiment methodology to the payment term studies in international trades. These attempts could contribute to expanding the diversity of methodology and scope of international trade studies.

Keywords

References

  1. Bae, Sang-Pil, Yong-Min Kim and Beom-Chul Park (2013), "A Study on the Relationship between Non-L/C Based Transaction Share and Payment Risk Management of Korean Exporters", Korea Trade Review, 38(5), 139-157.
  2. Beggs, A. and K. Graddy (2009), "Anchoring Effects: Evidence from Art Auctions", American Economic Review, 99(3), 1027-1039.
  3. Benton, A. A., H. H. Kelley and B. Liebling (1972), "Effects of Extremity of Offers and Concession Rate on the Outcomes of Bargaining", Journal of Personality and Social Psychology, 24(1), 73-83. https://doi.org/10.1037/h0033368
  4. Campana, P. (2016), "When Rationality Fails: Making Sense of the 'Slippery Slope'to Corporate Fraud", Theoretical Criminology, 20(3), 322-339. https://doi.org/10.1177/1362480615612147
  5. Chapman, G. B. and E. J. Johnson (1994), "The Limits of Anchoring", Journal of Behavioral Decision Making, 7(4), 223-242. https://doi.org/10.1002/bdm.3960070402
  6. Charles, P. (1979), The Application of Laboratory Experimental Method to Public Choice, In Collective Decision Making: Applications from Public Choice Theory, John Hopkins Press Cambridge.
  7. Choi, Kwang-Ho (2018), "A Study on Determinants of Export Payment Terms in Korean Small & Medium Enterprises", Korea Trade Review, 43(2), 159-180. https://doi.org/10.22659/KTRA.2018.43.2.159
  8. Edwards H. (1980), Export Credit: The Effective and Profitable Management of Export Credit and Finance, Oxon, Shaws Linton Publication Ltd, 108-109.
  9. Englich, B. (2006), "Blind or Biased - Justitia's Susceptibility to Anchoring Effects in the Courtroom Based on Given Numerical Representations", Law & Policy, 28(4), 497-514. https://doi.org/10.1111/j.1467-9930.2006.00236.x
  10. Furnham, A. and H. C. Boo (2011), "A Literature Review of the Anchoring Effect", The Journal of Socio-Economics, 40(1), 35-42.
  11. Galinsky, A. D. and T. Mussweiler (2001), "First Offers as Anchors: The Role of Perspective-Taking and Negotiator Focus", Journal of Personality and Social Psychology, 81, 657-669. https://doi.org/10.1037/0022-3514.81.4.657
  12. Hartman, R. S., M. J. Doane and Chi-Keung Woo (1991), "Consumer Rationality and the Status Quo", Quarterly Journal of Economics, 106, 141-162. https://doi.org/10.2307/2937910
  13. Heaton, J. B. (2019), "Managerial Optimism: New Observations on the Unifying Theory", European Financial Management, 25(5), 1150-1167. https://doi.org/10.1111/eufm.12218
  14. Ho, D. E. and K. Imai (2008), "Estimating Causal Effects of Ballot Order from a Randomized Natural Experiment: the Califonia Alphabet Lottery, 1978-2002", Public Opinion Quarterly, 72(2), 216-240. https://doi.org/10.1093/poq/nfn018
  15. Huh, Eun-Soog (1996), "An Empirical Study on the Determinant of the Export Payment Term of Korean Firms", Korea Trade Review, 21(1), 437-457.
  16. Hwang, Sin-Hae and Jeoung-Kun Kim(2018), "The Study of User Resistance to Fintech Payment Service: In the Perspective of Innovation Diffusion And Status Quo Bias Theory", The Journal of Information Systems, 27(1), 133-151.
  17. Johnson, E. J., J. Hershey, J. Meszaros and H. Kunreuther(1993), "Framing, Probability Distortions, and Insurance Decisions", Journal of Risk and Uncertainty, 7, 35-51. https://doi.org/10.1007/BF01065313
  18. Kahneman, D. and A. Tversky (1974), "Judgment under Uncertainty: Heurisitics and Biases", Science, New Series, 185(4157), 1124-1131.
  19. Kahneman, D. and A. Tversky (1979), "Prospect Theory: An Analysis of Decision under Risk", Econometrica, 47(2), 263-291. https://doi.org/10.2307/1914185
  20. Kahneman, D., J. L. Knetsch and R. H. Thaler (1990), "Experimental Tests of the Endowment Effect and the Coase Theorem. Journal of Political Economy", 98(6), 1325-1348. https://doi.org/10.1086/261737
  21. Kim, Hee-Woong and A. Kankanhalli (2009), "Investigating User Resistance to Information Systems Implementation: A Status Quo Bias Perspective", MIS Quarterly, 33(3), 567-582. https://doi.org/10.2307/20650309
  22. Krieger, M. and S. Felder (2013), "Can Decision Biases Improve Insurance Outcomes? An Experiment on Status Quo Bias in Health Insurance Choice", International Journal of Environmental Research and Public Health, 10(6), 2560-2577. https://doi.org/10.3390/ijerph10062560
  23. Langevoort, D. C. (1997), "Organized Illusions: Behavioral Theory of Why Corporations Mislead Stock Market Investors (and Cause Other Social Harms)", University of Pennsylvania Law Review, 146(1), 101-172. https://doi.org/10.2307/3312706
  24. Lee, Shi-Young and Hyo-Chan Lee (2010), "A Behavioral Economic Approach to International Economics", Korea Trade Review, 35(2), 1-20.
  25. Lee, Yeo-Jin and Jun-Hyung Kim (2018), "Out-of-Local Buyer's Premium: Borne by the Search Cost and Anchoring Effect", Journal of Korea Planning Association, 53(3), 113-132. https://doi.org/10.17208/jkpa.2018.06.53.3.113
  26. Lee, Yong-Keun and Seung-Soo Kim (2016), "A Study on Determinants of Import Payment Methods in Korean Small & Medium Enterprises", Korea International Commerce Review, 31(1), 3-19.
  27. Lee, Yoon and Hong-Joo Jung (2019), "Payment Method Determination Factors in International Trade E-Marketplace: Focused on Alibaba.com", Korea Trade Review, 44(5), 161-174. https://doi.org/10.22659/KTRA.2019.44.5.161
  28. Levin. I., J. Schreiber, M. Lauriola and G. Gaeth (2002), "A Tale of Two Pizzas: Building Up from a Basic Product Versus Scaling Down from a Fully-Loaded Product", Marketing Letters, 1(4), 335-344.
  29. Liebert, R. M., W. P. Smith, J. H. Hill and M. Keiffer (1968), "The Effects of Information and Magnitude of Initial Offer on Interpersonal Negotiation", Journal of Experimental Social Psychology, 4(4), 431-441. https://doi.org/10.1016/0022-1031(68)90068-1
  30. List, J. A. and M. S. Haigh (2005), "A Simple Test of Expected Utility Theory Using Professional Traders", Proceedings of the National Academy of Sciences, 102(3), 945-948. https://doi.org/10.1073/pnas.0408022101
  31. Loofgren, A., P. Martinsson, M. Hennlock and T. Sterner (2012), "Are Experienced People Affected by a Pre-Set Default Option-Results from a Field Experiment", Journal of Environmental Economics and management, 63(1), 66-72. https://doi.org/10.1016/j.jeem.2011.06.002
  32. Miller, R. M. (2005), Experimental Economics: How We Can Build Better Financial Markets, John Wiley and Sons Limited.
  33. Ortoleva, P. (2010), "Status Quo Bias, Multiple Priors and Uncertainty Aversion", Games and Economic Behavior, 69(2), 411-424.
  34. Park, Kyoung-Ja and Il Ryu (2014), "Making Decision on Discontinued Use of Social Network Services from Perspectives of Behavioral Economics : With Mental Account Theory and Rational Choice Theory", The Journal of Internet Electronic Commerce Resarch, 14(4), 377-398.
  35. Polites, G. L. and E. Karahanna (2012), "Shackled to the Status Quo: The Inhibiting Effects of Incumbent System Habit, Switching Costs, and Inertia on New System Acceptance", MIS Quarterly, 36(1), 21-42. https://doi.org/10.2307/41410404
  36. Ryu, Won-Woo (1997), "An Empirical Approaching the Rational Selection of the International Terms and Condition in Korean Export Firms", Journal of Korea Trade, 1, 175-195.
  37. Samuelson, W. and R. Zeckhauser (1988), "Status Quo Bias in Decision Making", Journal of Risk and Uncertaninty, 1, 7-59. https://doi.org/10.1007/BF00055564
  38. Schmidt, B. and J. Hewig (2015), "Paying Out One or All Trials: A Behavioral Economic Evaluation of Payment Methods in a Prototypical Risky Decision Study", The Psychological Record, 65(2), 245-250. https://doi.org/10.1007/s40732-014-0112-1
  39. Shapira, Z. and I. Venezia (2008), "On the Preference for Full-Coverage Policies. Why Do People Buy too Much Insurance?", Journal of Economic Psychology, 29(5), 747-761. https://doi.org/10.1016/j.joep.2007.07.007
  40. Shin, Seung-Kwan (2001), "A Study on Causes for Trade Payment Terms Changes", Korea Trade Review, 26(3), 127-148.
  41. Simon, H. (1957), Models of Man, John Wiley.
  42. Song, Jae-Do and Young-Hwan Ahn (2019), "Cognitive Bias in Emissions Trading", Sustainability, 11(5), 1365.
  43. Wansink, B., R. J. Kent and S. J. Hoch (1998), "An Anchoring and Adjustment Model of Purchase Quantity Decisions", Journal of Marketing Research, 35(1), 71-81. https://doi.org/10.1177/002224379803500108