REVISION: Heuristic Thinking and Limited Attention in the Car Market
Date Posted: Oct 01, 2010
Can heuristic information processing affect important product markets? We explore whether the tendency to focus on the left-most digit of a number affects how used car buyers incorporate odometer values in their purchase decisions. Analyzing over 22 million wholesale used-car transactions, we find substantial evidence of this left-digit bias; there are large and discontinuous drops in sale prices at 10,000-mile thresholds in odometer mileage, along with smaller drops at 1,000-mile thresholds. We
REVISION: Can Losing Leads to Winning?
Date Posted: Sep 21, 2009
Can losing during a competitive task motivate individuals and teams to exert greater effort and perform better overall? Analysis of over 45,000 collegiate and 18,000 professional basketball games illustrates that being slightly behind at halftime leads to a discontinuous increase in winning percentage. Teams that are losing by a small amount win approximately 2 (NCAA) and 6 (NBA) percentage points more often than expected. In the NBA, this psychological effect is roughly half the size of the pro
New: Is Tiger Woods Loss Averse? Persistent Bias in the Face of Experience, Competition, and High Stakes
Date Posted: Jun 17, 2009
Although experimental studies have documented systematic decision errors, many leading scholars believe that experience, competition, and large stakes will reliably extinguish biases. We test for the presence of a fundamental bias, loss aversion, in a high-stakes context: professional golfers’ performance on the PGA TOUR. Golf provides a natural setting to test for loss aversion because golfers are rewarded for the total number of strokes they take during a tournament, yet each individual hole h
New: Understanding College Application Decisions: Why College Sports Success Matters
Date Posted: Nov 28, 2008
Using a unique, national dataset that indicates where students choose to send their SAT scores, we find that college sports success has a large impact on student application decisions. For example, a school that has a stellar year in basketball or football on average receives up to 10% more SAT scores. Certain demographic groups (males, blacks, out-of-state students, and students that played sports in high school) are more likely to be influenced by sports success than their counterparts. We exp
New: The Impact of College Sports Success on the Quantity and Quality of Student Applications
Date Posted: Oct 01, 2008
Empirical studies have produced mixed results on the relationship between a school's sports success and the quantity and quality of students that apply to the school. This study uses two unique datasets to shed additional light on the indirect benefits that sports success provides to NCAA Division I schools. Key findings include: (i) football and basketball success significantly increase the quantity of applications to a school, with estimates ranging from 2-8% for the top 20 football schools an
New: Size Matters (and so Does Experience): How Personal Experience with a Fine Influences Behavior
Date Posted: Sep 22, 2008
In this paper, we disentangle the effects of new information from the effects of personal experience to describe how personal experience changes behavior. We examine personal experience with one of the most ubiquitous managerial and policy tools: the monetary fine. We demonstrate that experience with a fine, controlling for the effect of learning new information, significantly boosts future compliance. We also show that experience with a large fine boosts compliance more than experience with a s
New: What's in a Picture? Evidence of Discrimination from Prosper.com
Date Posted: Aug 13, 2008
We analyze discrimination in a new type of credit market known as peer-to-peer lending. Specifically, we examine how lenders in this online market respond to signals of characteristics such as race, age, and gender that are conveyed via pictures and text. We find evidence of significant racial disparities; loan listings with blacks in the attached picture are 25 to 35 percent less likely to receive funding than those of whites with similar credit profiles. Conditional on receiving a loan, the