Published Papers
[1] Regret Theory: A New Foundation
We present a new behavioral foundation for regret theory. The central axiom of this foundation — trade-off consistency — renders regret theory observable at the individual level and makes our foundation consistent with the existing measurement method. For the first time, our behavioral foundation allows deriving a continuous regret theory representation and separating utility from regret.
Finally, the axioms in the behavioral foundation clarify that regret theory minimally deviates from expected utility by relaxing transitivity only.
Awards: Finalist, 2014, INFORMS Decision Analysis Society Student Paper Award
[2] Regret Theory and Risk Attitudes
We examine risk attitudes under regret theory and derive analytical expressions for two components - the resolution and regret premiums - of the risk premium under regret theory. We posit that regret-averse decision makers are risk seeking (resp., risk averse) for low (resp., high) probabilities of gains and that feedback concerning the forgone option reinforces risk attitudes. We test these hypotheses experimentally and estimate empirically both the resolution premium and the regret premium. Our results confirm the predominance of regret aversion but not the risk attitudes predicted by regret theory; they also clarify how feedback affects attitudes toward both risk and regret.
[3] Risk and time preferences interaction: An experimental measurement
We experimentally characterize and measure the interaction between risk and time preferences. Our results indicate that risk and time preferences are intertwined.
We find that decision makers are insensitive to time delay for small probabilities of gains, but become progressively more sensitive to time delay as the probability of
gain increases. We compare the fit of existing decision models that capture risk and time preferences. Our results indicate that the models which allow for probabilitytime interaction and capture magnitude effect fit the data better. We also show that
accounting for risk-time preferences interaction leads to lower estimated discount rates.
[4] Raising the Temperature in the Tropics: Gradual Targets Promote Energy Conservation Habits
In tropical countries, ACs account for a significant fraction of energy consumption. Increasing the AC temperature can lead to substantial reduction in energy use. We conduct a randomized control trial (RCT) in which people are financially rewarded for setting a higher AC temperature than usual and investigate whether people can adapt to the higher temperature.
Along with a no-incentive control condition, two treatments were conducted over two time periods. In treatment 1, subjects were incentivized to raise the temperature gradually, by 1°C in period 1, and an additional 1°C in period 2. In treatment 2, subjects were only incentivized to abruptly increase the temperature by 2°C in period 2.
The treatment with gradual temperature targets worked better in maintaining the higher AC temperature during the intervention and post-intervention periods. Energy usage data confirmed that these higher AC temperatures translated into lower energy consumption.
[5] Adoption of New technology Vaccines
with Laura Zimmermann and Barsha Saha,Forthcoming at Journal of Marketing
[Download PDF]
We explore aversion towards new technology and ways to overcome this aversion with a simple nudge in the context of vaccine decision making. A plethora of research has shown that consumers are hesitant to receive a potentially life-saving vaccination. But are consumers more hesitant towards certain vaccines (i.e., those that are based on a new technology such as mRNA) even if they are more effective? We present four experiments (Ntotal = 478) which test the propositions of a formal model that incorporates ambiguity and other people’s choices into the decision to vaccinate. We show that consumers are unduly averse towards new technology vaccines compared to traditional technology vaccines due to higher perceived uncertainty of side effects. We test a simple nudge based on herd behavior to overcome this new technology aversion. By communicating increasing population vaccination rates, we effectively increase uptake of new technology vaccines at a higher rate than uptake of traditional vaccines. Rather than being driven by social conformity or social learning, information about herd behavior seems to alleviate perceived uncertainty (or ambiguity) by narrowing the confidence interval of risk estimates. We do not find evidence of free-riding due to herd immunity.
[6] Algorithmic support and newsvendor risk attitudes
with Matthias Seifert and Prana Narayan ,Forthcoming at European Journal of Operations Research
[Download PDF]
We study how managers allocate resources in response to algorithmic recommendations that are programmed with specific levels of risk aversion. Using the anchoring and adjustment heuristic, we derive our predictions and test them in a series of multi-item newsvendor experiments. We find that highly risk-averse algorithmic recommendations have a strong and persistent influence on order decisions, even after the recommendations are no longer available. Furthermore, we show that these effects are similar regardless of factors such as source of advice (i.e., human vs. algorithm) and decision autonomy (i.e., whether the algorithm is externally assigned or chosen by the subjects themselves). Finally, we disentangle the effect of risk attitude from that of anchor distance and find that subjects selectively adjust their order decisions by relying more on algorithmic advice that contrasts with their inherent risk preferences. Our findings suggest that organizations can strategically utilize risk-averse algorithmic tools to improve inventory decisions while preserving managerial autonomy.
[7] Self-Selected Versus Assigned Target to Reduce Smartphone Use and Improve Mental Health: Protocol for a Randomized Controlled Trial
with Kamal kant Sharma, Ashish Sachdeva , JMIR Res Protoc 2024;13:e53756
https://www.researchprotocols.org/2024/1/e53756/
To be effective, marketers of information need insights into the motivational bases of information acquisition. Conventionally, information acquisition is motivated by its instrumental value—the value derived from adapting action to new knowledge. In this paper, we analyse a model of individual preferences that anticipate elation and disappointment—the emotional responses to good and bad news. We assume loss aversion (bad news looms larger than good news) and diminishing sensitivity. While emotions are generally presumed to cause information avoidance, our key finding is that a consumer faced with a large potential loss of low probability may seek non-instrumental information for the purpose of reassurance. When information is weakly instrumental, the pursuit of reassurance can cause a consumer who is less likely to face a loss to value information more than a consumer who is more likely to face the same loss. This paradox disappears at higher levels of information instrumentality. We provide empirical support for this effect, first in the context of an incentivized controlled experiment involving a compound lottery choice (N = 403), and then in the context of a survey (N = 1349) about the desire to undertake COVID-19 testing, carried out at the early stages of the pandemic.
Awards: Best Paper Award in the theme “Marketing, Wellbeing, and Healthcare” at the 2018 American Marketing
Association Winter Academic Conference.
[11] Leveraging Rational addiction theory to reduce mobile usage
with Laura Zimmermann and Pham Quang Duc, Revise and Resubmit, Journal of Marketing
Understanding how to incentivize consumers to change a behavior depending on the
nature of inter-temporal consumption is important for marketers.
We develop a model that examines how a (forward-looking or myopic) consumer responds to temporary monetary incentives offered to reduce the consumption of a good depending on the nature of inter-temporal consumption (habit forming or satiating). We empirically test our predictions in the domain of mobile usage since many consumers would like to reduce their smartphone usage but fail to do so. In two pre-registered randomized control trials, we provide temporary targets and monetary incentives to reduce smartphone usage. When future targets and incentives are pre-announced, subjects behave in a forward-looking (rather than myopic) manner and reduce their mobile usage as predicted by habit formation models even before they are actually incentivized to do so (rather than increase consumption as predicted by satiation models). Subjects maintain a lower usage during the incentivized period and sustain a lower usage even after incentives are removed. Consistent with predictions of habit formation, we show that the reduction in post-treatment usage is driven mainly by subjects who reduced their usage during the treatment periods. Our manuscript thus provides empirical support for the theoretical framework of rational addiction (or forward-looking habit formation) in the domain of mobile usage and shows that pre-announcing future targets and incentives can be a cost-effective intervention to kickstart behavioral change in this domain.
[12] Efficiency and Equity in repeated games
with Konstantinos Stouras and Sanjiv Erat , Revise and Resubmit, Journal of Economic Behavioral and Organization
Problem definition: Inequity can naturally emerge among service providers on platforms, such as ride-share applications, due to competition for finite indivisible rewards. In this article, we examine whether such inequity can persist even in the long-run, and the levers that the platform can utilize to manage and mitigate it.
Academic/Practical relevance: Beyond its intrinsic unfairness, inequity has the potential to cause participation to drop and consequently hurt the platform's bottomline.
Methodology/results: Relying on past literature and stylized modeling, we theorize momentum among participants in repeated contests wherein past wins increase the chances of future entry, and consequently future earnings. This momentum enables inequity to persist even in the long-run. Two interventions — one that modifies the winner-take-all incentives and another which enables communication between participants — are examined. A controlled laboratory experiment provides evidence consistent with our theoretical predictions that both of these levers have the potential to reduce inequity — the former by directly reducing earnings asymmetry, and the latter by diminishing participants' propensity to play momentum strategies.
Managerial implications: Due to the propensity of participants to play momentum strategy, repeated interactions on platforms may prove insufficient to reduce inequity. This underscores the need for proactive measures to address and mitigate the impact of momentum on inequity.
[13] Make it Stick: The Role of Alternative Activities in Reducing Habitual Smartphone Consumption
with with Laura Zimmermann and Pham Quang Duc , R&R, Journal of Public Policy and Marketing
Sustaining a behavior change is challenging, especially when consumption patterns are habitual as in the case of smartphone usage. Across two longitudinal field studies involving 5,686 observations of objectively measured smartphone usage from 153 individuals, we explore how to reduce smartphone consumption sustainably by preventing relapse. Our research focuses on leveraging positive alternatives, like learning a new language or engaging in regular walks, to help sustain reductions in smartphone usage even after an intervention period with incentives has ended. We study whether consumers who are incentivized to both adopt a beneficial activity and curb an undesired habit demonstrate greater long-term success compared to those who are solely incentivized to reduce the undesired habit. Results indicate that individuals who achieved both targets (instead of one) had lower social media and smartphone usage during the post-treatment relative to their baseline, especially if a higher proportion of their idle time was occupied by the positive alternative. We further find that individuals who successfully engaged in an alternative activity perceived themselves to be less addicted to social media. Finally, reducing social media, but not overall screen time, was associated with subjective well-being improvements, underscoring the relevance of curbing excessive social media consumption for policymakers.
Other Research Papers & Projects
[1] Behavioral Game theory
Standard game theory has been criticized for requiring unreasonable assumptions about human cognitive abilities, and for failing to predict actual choices in experiments and in the field. Recent developments in behavioural game theory address these shortcomings by allowing people to be boundedly rational. We discuss two such developments: (1) the cognitive hierarchy (CH) model, which has successfully predicted non-equilibrium behaviour in one-shot games; and (2) the experience weighted attraction (EWA) model, which accurately tracks how choices converge to equilibrium over time. We use the famous p-beauty contest to demonstrate how both models work. Both have successfully been applied to many games and in the field.
