A field experiment has been conducted at an amusement park. Participants rode a roller coaster and were photographed during the ride. Afterward, each rider chose whether or not to purchase a print(s) of the photograph that was taken. The experiment itself placed each rider into one of four conditions: - \$12.95 flat-rate price, i.e., FR - $12.95 flat-rate price with 50% of revenue going to charity, i.e., FR Charity - Name Your Own Price, i.e., NYOP - Name Your Own Price with 50% of revenue going to charity, i.e., NYOP Charity The charitable partner was a nationally recognized patient-support foundation. Two datasets from the experiment have been provided to you in comma-delimited files for your analysis. Datasets Description of "Sales.csv" This dataset contains the number of photos sold, the number of riders, and the total merchandise revenues for each of the four conditions. Each condition was in place for 2 days (two rows of data) except for the last condition, NYOP Charity, which was in place for 3 days. Variables - Condition = A factor with four levels, matching each of the possibilities described above: FR, FR Charity, NYOP , and NYOP Charity - NumberSold = The total number of photos purchased by consumers on a given day under the condition described - Riders = The total number of riders placed into the condition on a given day under the condition described - MerchandiseRevenues = Ancillary revenues related to merchandise purchased by riders at a location adjacent to the ride. Revenues are in US dollars. Description of "NYOP.csv" This dataset contains more specific information related to the NYOP and NYOP Charity conditions. Each row represents the purchasing behavior of a rider who made a purchase. Information on the condition of the rider, the number of photos purchased, and the price chosen by the rider have been collected. Variables - Condition = A factor with two levels, NYOP and NYOP Charity, capturing any rider who was in one of the two Name Your Own Price conditions - Number = The total number of photos purchased by a given rider - Price = The price chosen by the rider and paid in US dollars. Analysis You have been asked to carefully study the results from this field experiment to answer several questions your company has about the effectiveness of these different pricing strategies. In particular, you have been asked to write a memo that summarizes your findings. Below, we provide some guiding questions to help you in your exploration. Economics a. The unit cost of making a photo is $1.20. Compute the average daily profit under each of the four pricing strategies. b. Which strategy is the most profitable? What is the ranking of the strategies in terms of profits? c. Now think about the additional value created by the FR Charity and NYOP Charity conditions. Rather than focusing only on profits to the theme park, let's talk about total profits to society which should include both the theme park and the charity that benefits. What is the ranking of societal profits in this case? d. How much additional societal profit does the leading strategy generate over the others over the entire year (assume 365 days)? e. Are merchandise sales a concern? A field experiment has been conducted at an amusement park. Participants rode a roller coaster and were photographed during the ride. Afterward, each rider chose whether or not to purchase a print(s) of the photograph that was taken. The experiment itself placed each rider into one of four conditions: - \$12.95 flat-rate price, i.e., FR - $12.95 flat-rate price with 50% of revenue going to charity, i.e., FR Charity - Name Your Own Price, i.e., NYOP - Name Your Own Price with 50% of revenue going to charity, i.e., NYOP Charity The charitable partner was a nationally recognized patient-support foundation. Two datasets from the experiment have been provided to you in comma-delimited files for your analysis. Datasets Description of "Sales.csv" This dataset contains the number of photos sold, the number of riders, and the total merchandise revenues for each of the four conditions. Each condition was in place for 2 days (two rows of data) except for the last condition, NYOP Charity, which was in place for 3 days. Variables - Condition = A factor with four levels, matching each of the possibilities described above: FR, FR Charity, NYOP , and NYOP Charity - NumberSold = The total number of photos purchased by consumers on a given day under the condition described - Riders = The total number of riders placed into the condition on a given day under the condition described - MerchandiseRevenues = Ancillary revenues related to merchandise purchased by riders at a location adjacent to the ride. Revenues are in US dollars. Description of "NYOP.csv" This dataset contains more specific information related to the NYOP and NYOP Charity conditions. Each row represents the purchasing behavior of a rider who made a purchase. Information on the condition of the rider, the number of photos purchased, and the price chosen by the rider have been collected. Variables - Condition = A factor with two levels, NYOP and NYOP Charity, capturing any rider who was in one of the two Name Your Own Price conditions - Number = The total number of photos purchased by a given rider - Price = The price chosen by the rider and paid in US dollars. Analysis You have been asked to carefully study the results from this field experiment to answer several questions your company has about the effectiveness of these different pricing strategies. In particular, you have been asked to write a memo that summarizes your findings. Below, we provide some guiding questions to help you in your exploration. Economics a. The unit cost of making a photo is $1.20. Compute the average daily profit under each of the four pricing strategies. b. Which strategy is the most profitable? What is the ranking of the strategies in terms of profits? c. Now think about the additional value created by the FR Charity and NYOP Charity conditions. Rather than focusing only on profits to the theme park, let's talk about total profits to society which should include both the theme park and the charity that benefits. What is the ranking of societal profits in this case? d. How much additional societal profit does the leading strategy generate over the others over the entire year (assume 365 days)? e. Are merchandise sales a concern
