Latest Research Publications

Non-advertising-based mobile apps face several critical challenges when trying to monetize their free services—among them, the choice of pricing strategies (hard landing vs. soft landing; i.e., a “pay or churn” paywall vs. continuing to offer limited free services to existing users after monetization) and aspects of product design (whether to provide exclusive secondary offerings to paying users). The authors implemented a large-scale randomized field experiment with an app firm to test the causal effects of such pricing and product design strategies. Results show that both soft landing and exclusive secondary offerings decrease existing app users’ willingness to subscribe, but there is a positive interaction between these two strategies on subscriptions. The authors propose a theoretical framework, discuss potential mechanisms that might be at play, and conduct robustness checks to rule out several alternative explanations. A customer survey by the firm and an experiment on Prolific provide further support for the theoretical mechanism. To assess generalizability, the authors conducted a second field experiment and obtained consistent results. They also report the results from the actual implementation of the best-performing strategy by the firm. This research provides guidance on possible theoretical underpinnings of users’ responses and important managerial implications for app monetization.

Parenting motivation, the inspiration and drive to take care of one's children, is a powerful instinct for facilitating human reproduction. In a set of hypotheses, the authors address how, why, and among whom parenting motivation affects a pervasive decision-making tendency, namely, variety seeking. Six studies, including a large-scale panel data study and five online and lab studies, show that, when shopping, parenting motivation spurs feelings of time crunch that result in less variety seeking among consumers. The effect is diminished when time-saving parenting support exists (which reduces feelings of time crunch in parenting), when consumers are led to believe that they have sufficient time available for shopping, and when they do not have much loyalty to any brand offered in the choice set and thus cannot save time by simply choosing the top-of-mind product option. The current research thus contributes to the growing literature on how parenting motivation affects consumer decision making. In addition, it augments the literature on variety seeking by identifying an important factor that can influence it.

Despite workplace anxiety being a common experience of daily work life that is increasingly reliant on technology, we lack knowledge of technology-based job demands that prompt its occurrence. Drawing on theorization on workplace anxiety and integrating literature on information and communication technologies, we consider telepressure and normative response pressure as internal and external between-person sources of daily workplace anxiety. We further present a model of how employees adaptively (vs. maladaptively) respond to workplace anxiety on days they experience workplace anxiety, where anxiety prompts: (a) work e-mail activity, a self-regulatory behavior facilitating performance outcomes; and (b) non-work e-mail activity, a behavior that disengages employees from their work, debilitating performance outcomes. Utilizing a multilevel, time-lagged experience sampling field study across 10 workdays (Level 1 N = 809; Level 2 N = 96), we identify telepressure as a significant contributor of daily workplace anxiety. Further, we found support for an adaptive function of workplace anxiety. On days employees experienced workplace anxiety, their personal initiative and citizenship behaviors were enhanced through behavioral regulatory activity manifested in work e-mail activity. This indirect effect was strengthened for employees perceiving higher (vs. lower) work e-mail centrality. This research advances understanding of the adaptive function of workplace anxiety, such that employees are active drivers of their daily experiences of workplace anxiety.

A central problem in planning production capacity is how to effectively manage demand risk. We develop a model that integrates capacity planning and risk hedging decisions under a popular risk measure, conditional value at risk (CVaR). The CVaR objective generalizes the usual risk-neutral objective (such as the expected payoff) and allows for explicit modeling of the degree of aversion to downside risk (associated with low demand). The starting point of our model is to incorporate the impact on demand from a financial asset (including for instance, a tradable market index as a proxy for the general economy). This way, in addition to the capacity decision at the beginning of the planning horizon, there is also a dynamic hedging strategy throughout the horizon, and the latter plays the role of both mitigating demand risk and supplementing the payoff. The hedging strategy is restricted to partial information and constrained with a cap on loss (pathwise). To find the optimal hedging strategy, we construct and solve a dual problem to derive the optimal terminal wealth from hedging; the real-time hedging strategy is then mapped out via the martingale representation theorem. With the hedging strategy optimized, we show that optimizing the production quantity is a concave maximization problem. With both production and hedging (jointly) optimized, we provide a complete characterization of the efficient frontier and quantify the improvement over the production-only model. Furthermore, via sensitivity and asymptotic analyses, we spell out the impacts of the loss cap and the risk aversion level, along with other qualitative insights.

Differentially private multiple testing procedures can protect the information of individuals used in hypothesis tests while guaranteeing a small fraction of false discoveries. In this paper, we propose a differentially private adaptive FDR control method that can control the classic FDR metric exactly at a user-specified level α with a privacy guarantee, which is a non-trivial improvement compared to the differentially private Benjamini-Hochberg method proposed in Dwork et al. (2021). Our analysis is based on two key insights: 1) a novel p-value transformation that preserves both privacy and the mirror conservative property, and 2) a mirror peeling algorithm that allows the construction of the filtration and application of the optimal stopping technique. Numerical studies demonstrate that the proposed DP-AdaPT performs better compared to the existing differentially private FDR control methods. Compared to the non-private AdaPT, it incurs a small accuracy loss but significantly reduces the computation cost.

The scalability of a marketplace depends on the operations of the marketplace platform and its sellers’ capacities. In this study, we explore one strategy that a marketplace platform can use to enhance its scalability: providing an ancillary service to sellers. In our model, a platform can choose whether and when to provide this service to sellers and, if so, what prices to charge and which types of sellers to serve. Although such a service helps small sellers, we highlight that the provision of such a service can diminish the incentives of large sellers to make their own investment, thereby reducing their potential output. When the output reduction by large sellers is substantial, the platform may not want to provide the ancillary service, and, even if it does, it may choose to set a price higher than its marginal cost to motivate large sellers to scale. The platform may also choose to strategically delay the provision of the service.

We study whether and how banks’ social performance affects depositors, who hold demandable debt with pervasive government protection. Exploiting the regulatory releases of bank performance ratings for community development and a difference-in-differences design, we find a decline in deposit growth after the release of negative bank social performance. In addition, deposits that are impacted by the negative events flow to nearby banks with high social performance. Further analyses find that the results hold similarly among insured and uninsured deposits and are primarily driven by banks with a large proportion of deposits from high-trust and pro-social counties, and in poor information environments. Overall, we contribute to the literature by documenting the importance of social performance to nonshareholder stakeholders and providing implications for bank stability.

We undertake the first empirical analysis of profit shifting by U.S. firms during foreign tax holidays. We show that foreign tax holidays have become a prevalent and powerful tax planning strategy among U.S. firms. We find that U.S. firms significantly increase their outbound profit shifting while participating in foreign tax holidays. However, we also find that profit shifting associated with tax holidays comes at the cost of increased tax uncertainty. Our results have important implications for policy making and for understanding firm behavior.

Modern consumers are concerned about not only their material payoff, but also the fairness of the transaction when making purchasing decisions. In this paper, we investigate how consumers’ inequity aversion affects a manufacturer who sources inputs from upstream suppliers. We find that, when the manufacturer sources from a single supplier or when consumers observe the manufacturer’s cost, inequity aversion hurts both the supplier’s and manufacturer’s profits. However, when the manufacturer sources from multiple suppliers and consumers do not observe the manufacturer’s cost, inequity aversion reduces both the suppliers’ and manufacturer’s margins, which significantly alleviates the double marginalization problem, increases consumer demand, and improves channel efficiency. As a result, inequity aversion benefits the suppliers, manufacturer, and consumers alike, leading to a “win–win–win” outcome. By comparing cases in which consumers observe and do not observe the manufacturer’s cost, we also find that, when faced with inequity-averse consumers, a manufacturer may find it optimal to withhold its cost information to help secure lower procurement costs from upstream suppliers.