<P>22 COX FACULTY RESEARCH any music listeners, especially those from younger generations, perceive themselves as listening to new, cutting-edge music. Not so, according to new research by SMU Cox Marketing Professor Morgan Ward and co-authors Joseph Goodman of Washington University and Julie Irwin of University of Texas. The research paper The Same Old Song: The Power of Familiarity in Music Choice, currently under review, indicates that familiarity trumps novelty. Ward explains, In life we have many day-to-day decisions and responsibilities. We are sorting through so much information, and at the end of the day, we are ‘cognitive misers. Choosing something familiar is easy to process and comfortable. The desire to not expend so much energy on choices is what I believe drives these ?ndings. Familiarity is a stronger predictor of music choice than other prevalent measures such as liking and satiation, according to this research, the first to quantify the effect of familiarity versus other forces (including liking) on consumer choice and to determine the power of these variables on actual market behavior. Also factored into the study is the listeners stimulation level and cognitive load. The authors prove that when people are engaged in activities requiring more stimulation, they prefer more familiar music. The findings indicate that familiarity is a major driver of actual music choice and market share. People were under the impression that radio was no longer relevant, says Ward. Radio is very relevant. We now have new forms of music on popular websites like Pandora and Spotify, and these brands are already maximizing insights such as ours. Ward and her fellow researchers note that music outlets with playlists would do well to concentrate on familiar songs, even if consumers say they want more novelty. When a new song is introduced, the authors suggest it should be played often and be offered to consumers through promotions. For music platforms allowing users to create a playlist, such as iTunes, marketers should heavily promote familiar music and make it easy to find for purchase, rather than emphasizing unfamiliar music. The researchers predict sucess for apps like Spotify and Pandora, which offer newly released music along with familiar artists, styles and melodies. Familiarity Breeds Content Morgan Ward, Assistant Professor of Marketing M egulators are grappling with serious questions about liquidity in the market, especially during times of stress like the Flash Crash of 2010. High-frequency traders (HFTs), also known as proprietary (prop) traders, withdrew from the market in droves, and the market dropped about 10 percent in a matter of minutes. Stock markets can be volatile, and some traders may do more harm than good in times of market stress. Should Exchanges Impose Market Maker Obligations? Thats the question posed by SMU Cox Finance Professor Kumar Venkataraman and co- author Amber Anand of Syracuse University. Their research pushes the debate about high- frequency traders impact on market stability and the value of the specialist market maker. Venkataraman suggests, Mini-crashes are observed in markets around the world. But what causes them? If a market decline is based on fundamental news, thats okay. But if it is driven by vanishing liquidity, then it poses a problem and hurts investor con?dence. Market declines that are followed by almost complete price reversals similar to the 2010 Flash Crash reveal serious ?aws in market structure that need to be addressed. The authors document that high-frequency traders do a decent job of trading in large, liquid stocks, but not in small, illiquid stocks. The study concludes that a specialist is not only an incremental liquidity provider, but also the only reliable counterparty available for investors in smaller cap stocks. The research compares and contrasts the specialist market makers who have exchange- assigned trading obligations with other liquidity providers who do not. It identi?es market conditions when one group is active and the other inactive. Ultimately, the authors shed light on the true value of a market structure with market maker obligations. Venkataraman remarks, If you impose obligations on specialists to trade at unpro?table times or in less pro?table stocks (because the HFTs will compete with them when it is pro?table), we need to ?gure out how specialists should be compensated for the liquidity services they provide. Venkataraman presented his research findings to the Securities and Exchange Commission on April 25 and the Commodities Futures Trading Commission on April 26. COX FACULTY RESEARCH Vanishing Liquidity Hurts Investor Con?dence Kumar Venkataraman, Finance Department Chair and Fabacher Endowed Professor of Alternative Asset Management R</p> <UL><LI><a href="http://www.mzines.net/publication/279/rszbsppbj/1/1/">Front-Cover</a></LI> <LI><a href="http://www.mzines.net/publication/279/rszbsppbj/2/2/">Inside-Front-Cover</a></LI> <LI><a href="http://www.mzines.net/publication/279/rszbsppbj/3/3/">Page-1</a></LI> <LI><a href="http://www.mzines.net/publication/279/rszbsppbj/4/4/">Page-2</a></LI> <LI><a href="http://www.mzines.net/publication/279/rszbsppbj/5/5/">Page-3</a></LI> <LI><a href="http://www.mzines.net/publication/279/rszbsppbj/6/6/">Page-4</a></LI> <LI><a href="http://www.mzines.net/publication/279/rszbsppbj/7/7/">Page-5</a></LI> <LI><a href="http://www.mzines.net/publication/279/rszbsppbj/8/8/">Page-6</a></LI> <LI><a href="http://www.mzines.net/publication/279/rszbsppbj/9/9/">Page-7</a></LI> <LI><a 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