Research Topics

Publications

Abstract: Quantiles are used for decision making in investment analysis and in the mining, oil and gas industries. However, it is unknown how common quantile-based decision making actually is among typical individual decision makers. This paper describes an experiment that aims to (1) compare how common is decision making based on quantiles relative to expected utility maximization, and (2) estimate risk attitude parameters under the assumption of quantile preferences. The experiment has two parts. In the first part, individuals make pairwise choices between risky lotteries, and the competing models are fitted to the choice data. In the second part, we directly elicit a decision rule from a menu of alternatives. The results show that a quantile preference model outperforms expected utility for 30%-55%, of participants, depending on the metric. The majority of individuals are risk averse, and women are more risk averse than men, under both models.

Abstract: Users are now typically able to access historical data in traffic, restaurant, and retailing contexts. This availability of information can be viewed as a means to reduce congestion. However, scientific support for this notion is weak. We investigate, using a laboratory experiment, whether an intermediate level of information provision might reduce congestion. We also study how the effect of making more information available changes over time. We show that providing all users with information is counterproductive in the short run. In the long run, users' behavior adjusts so that providing some or all individuals with information leads to more efficient outcomes than when no information is made available. Small Sample models capture a number of the patterns in the data, in particular the switching behavior between routes. The data show that making congestion information available to all parties reduces efficiency early on but is beneficial in the long run.

Working Paper

Abstract: How gifts impact the informativeness of the online reputation system and market efficiency is unclear, as theory offers limited insight. To address this issue, I conducted a laboratory experiment using an infinitely repeated game in a market for an experience good with reputation under two treatments: one allowing and one prohibiting gifts. Results show that allowing gifts does not compromise the informativeness of the reputation system: a positive correlation between sellers' previous average ratings and the quality of the offered products was preserved under both treatments. Sellers used gifts to compensate for higher prices and compete with more reputable sellers. Since sellers adopted this strategy over 90% of the time when permitted, gifts did not undermine the integrity of the reputation system. Additionally, gift-giving did not significantly influence purchasing decisions or product quality in transactions and, therefore, had no impact on market efficiency. Interestingly, sellers persistently offered high-value gifts (about 50% of sales profits) even though enhancing product quality was a more efficient strategy for reputation-building and profit-maximizing.