Consumers tend to switch frequently between online retailers. To boost repeat purchases, retailers employ a variety of strategies. One readily implementable approach involves enclosing an appreciation letter in the shipping package. This research investigates the effectiveness of this practice. A two-wave laboratory experiment found that handwritten letters significantly increased the likelihood of repeat purchases compared to printed letters or no letters, as they signalled to consumers a higher level of effort from seller. Another experiment further demonstrated the role of perceived seller effort by showing that letters with less-refined calligraphy exerted a stronger influence than aesthetically pleasing ones, because consumers inferred that the former conveyed sellers’ personal effort, while the later appeared to be a professional persuasion tactic and crafted by external hires. The results of a randomized field experiment that tracked the actual purchases of 2000 consumers over six months mirrored the laboratory findings. Handwritten letters, particularly those signalling the seller’s personal effort, effectively boosted repeat purchases.

We show that bonds issued by financial firms have higher spreads than bonds issued by industrial firms with the same rating and we denote this difference the financial premium. During the period 1987{2020 the premium was on average 43bps in the U.S. corresponding to a 31% higher spread and the premium is higher for lower ratings and in financial crises. Furthermore, the premium relates to measures of systemic risk and predicts economic activity. We derive a model that explains the empirical results: banks hold a diversified portfolio of corporate bonds (loans) and bank bonds therefore reflect more systematic risk than the individual corporate bonds.

This paper develops a macro development model for understanding the mechanisms behind industrial upgrading in a catching-up economy. Our model features hierarchical demand for consumption goods and inter-industry technology spillovers. When the market of new consumption varieties emerges, the rising demand drives the incentives of domestic innovation, resulting in technology progress and cost reduction. The cost reduction of existing varieties in turn leads to surplus of aggregate capital, which seeks opportunities in next new industries that produce new varieties. The dynamic feedback of capital-push new market and demand-pull innovation moves the domestic technology frontier and the consumption frontier in an upward spiral, and in this process the dual-sector economic structure the co-existence of domestic technology-mature industries and domestic technology-immature industries evolves endogenously. A hump-shaped behavior of the savings rate arises in our model with the endogenous aggregate production function. Because of the presence of dynamic externality, the laissez-faire equilibrium is inefficient and the optimal development policy involves two-sided interventions: suppressing consumption and enhancing capital accumulation in the early stage of development while reversing the sign to stimulate consumption in a later stage.