Author Archives: support

Does Wage Transparency Undermine Teamwork? Cornell Study Finds Otherwise

Recent research from Cornell University reveals that pay transparency does not negatively impact collaboration. However, the study also found that employers tended to prefer candidates with a lower salary history compared to their own during the hiring process.

Since 2018, around half of the states in the U.S., including New York, have either implemented or are considering laws related to pay transparency. Previous studies have raised concerns that visible salary differences might negatively affect teamwork, mainly when a significant gap exists between co-workers’ salaries.

Kevin Kniffin, assistant professor and co-author of the study, challenges this assumption. According to his research, individuals tend to prefer working with higher-paid colleagues, but only if those colleagues are perceived to have superior skills from which they can learn.

“There was an expectation that individuals might want to earn more than their teammates, but our findings suggest the opposite,” Kniffin explained. Alongside him, Angus Hildreth, assistant professor of management and organizations, co-authored the study.

Kniffin asked, “Why do people seem to prefer working with teammates who earn more?” He answered that the main reason appears to be the anticipation of learning from the co-worker and ultimately benefiting personally from that relationship.

“It’s like saying, ‘I’m ready to join a group or enter into a collaboration and sacrifice a bit of my self-esteem, maybe even my status, in order to potentially gain something valuable for my future,’” Hildreth elaborated.

The theory was further tested in a different collaborative scenario: hiring. In this setup, participants with hiring experience acted as employers choosing between a candidate with a higher salary history than theirs or a lower one. The majority, 71%, chose the candidate with a lower salary history. This preference became even more distinct—rising to 83%—when it was revealed that both candidates possessed similar skill sets.

Kniffin noted, “As both teamwork and pay transparency continue to increase across organizations, our research illuminates some surprising dynamics that people should be prepared for.” This study sheds light on the complexities of pay transparency and its implications for team dynamics and hiring practices.

More information: Kevin Kniffin et al, Partnering Up (and Down): Examining When and Why People Prefer Collaborating With Higher Paid Peers (and Lower Paid Subordinates), American Psychologist. DOI: 10.1037/amp0001397

Journal information: American Psychologist Provided by Cornell University

Minor Deposits, Major Choices: The Effect of Multiple Savings Accounts on Retirement Withdrawal Decisions

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A recent study by Dr. Abigail Hurwitz and Professor Orly Sade from Hebrew University, soon to be published in Management Science, illuminates how retirees navigate their savings across various accounts and the resultant effects on their retirement payout options. Entitled “Is One Plus One Always Two? Insuring Longevity Risk While Having Multiple Savings Accounts”, this research delves into the decision-making processes of individuals possessing more than one retirement savings account, specifically focusing on the choice between annuitization—securing oneself against longevity risk—and opting for a lump-sum withdrawal.

The study utilises exclusive data from a prominent Israeli insurance company and enhances its findings through a lab-based experiment and an online survey experiment. A pivotal observation made through the research is that smaller savings accounts are far more frequently withdrawn as lump sums than their larger counterparts. The study employs occupational roles as wealth indicators, uncovering that individuals with higher anticipated earnings are more inclined to annuitise their savings, albeit less so when dealing with smaller accounts. According to Dr. Hurwitz and Prof. Sade, this pattern reflects income levels and the strategy of diversifying savings across numerous accounts.

Dr. Abigail Hurwitz remarked on the significance of how multiple accounts are structured in influencing annuitization decisions, particularly distinguishing between smaller and larger accounts. She noted that these findings significantly affect retirees, especially their long-term financial stability.

The research methodology included administrative data alongside a series of experimental studies. An online survey and a laboratory experiment uncovered a tendency among retirees to avoid annuitizing smaller accounts, a behaviour influenced by mental accounting. Individuals treat funds differently based on their categorisation or allocation in this psychological principle. Further, a follow-up survey involving financial experts revealed that such professionals are less swayed by how funds are distributed across different accounts and tend to evaluate the total portfolio more holistically.

Prof. Orly Sade highlighted the implications of these insights for financial institutions, particularly those managing pension funds. She stressed that understanding the size distribution of accounts is critical for accurately predicting annuitization behaviour and assessing longevity risk, which are essential for asset and liability management strategies and directly influence the reserves necessary for annuity providers.

The findings of this study provide essential insights into how retirees manage their savings and make decisions about annuitization, underscoring substantial implications not only for financial institutions but also for policymakers in shaping future financial security strategies for the ageing population.

More information: Abigail Hurwitz et al, Is One Plus One Always Two? Insuring Longevity Risk While Having Multiple Savings Accounts, Management Science. DOI: 10.1287/mnsc.2022.02489

Journal information: Management Science Provided by The Hebrew University of Jerusalem

The Impact of Social Structure on Monetary Sharing Practices

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People worldwide often rely on informal financial systems, utilizing personal networks for borrowing and lending. Understanding these networks is critical to understanding local economies and tackling poverty. A recent study by MIT economist Jacob Moscona highlights a fascinating case in East Africa, where the structure of social groups—whether based on family units or age groups—significantly influences how money is circulated.

In many societies, extended families serve as the primary social structure. However, East Africa presents a unique case with its many age-based social groups. In these societies, individuals are initiated into adulthood in cohorts, creating strong intra-cohort bonds that influence financial transactions. Moscona’s research shows that in age-based societies, financial transactions are more likely to occur within these cohorts rather than across generations. This contrasts sharply with kin-based societies where money flows within family lines.

This difference in financial behaviour has real-world implications for public health and welfare. For example, in kin-based societies, it is common for grandparents to share pension income with grandchildren. The study shows that in Uganda, an additional year of pension payments in such societies reduces the likelihood of child malnutrition by 5.5 per cent, unlike in age-based societies, where such intergenerational financial support is rare.

The study’s findings are published in the paper “Age Set versus Kin: Culture and Financial Ties in East Africa,” co-authored by Moscona and Awa Ambra Seck of Harvard Business School. It adds to the body of economic research on informal financial arrangements, a field previously enriched by the work of scholars like MIT’s Robert Townsend, who studied finances in rural Thailand. Traditionally, the analysis of age-based versus kin-based groups has been more common among anthropologists, as seen among the Maasai of Northern Kenya, where age-group friends share resources extensively, often more so than with their siblings.

The researchers analyzed the Hunger Safety Net Program in Kenya, which included both kin-based and age-based groups. They observed that monetary benefits in age-based communities primarily benefited the recipient’s own cohort with little spillover to other generations. Conversely, in kin-based communities, financial benefits were observed across generations. The study also examined Uganda’s Senior Citizen Grant program, which confirmed similar patterns of financial flow aligned with social ties, significantly affecting child nutrition in kin-based households.

These observations underscore the significant impact of social structures on financial interactions and policy effectiveness. Understanding these differences is crucial for designing social programs that address poverty and improve welfare. Moscona emphasizes that recognizing how informal financial flows within different social structures interact with formal interventions can lead to more effective policies, reducing poverty and inequality.

This study highlights how the fabric of society—the nature of its social ties—shapes financial behaviours and, by extension, influences the well-being of its members. In societies where kin-based groups predominate, financial support between generations promotes less inequality, while in age-based groups, the absence of such support makes individuals more vulnerable. This knowledge is vital for policymakers crafting interventions that effectively combat poverty and enhance social welfare.

More information: Jacob Moscona et al, Age Set versus Kin: Culture and Financial Ties in East Africa, American Economic Review. DOI: 10.1257/aer.20211856

Journal information: American Economic Review Provided by Massachusetts Institute of Technology

Creating a Comprehensive Measure for Employee Well-Being

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The definition of worker well-being within the modern workplace has evolved significantly, transcending traditional metrics like wages and material wealth to embrace more complex dimensions of psychological wealth. This broader conception includes critical elements such as job motivation, satisfaction, and workplace interpersonal relationships. These factors collectively play a pivotal role in shaping an individual’s sense of well-being and productivity in the workplace.

This study introduces the Abundance Index for Workers (AIW) to address the need for a more holistic assessment of these expanded criteria. The AIW represents a pioneering tool designed to comprehensively measure the nuanced aspects of workers’ well-being. This tool integrates a range of psychological tests and methodologies adapted from various other scientific disciplines, thereby creating a multifaceted test battery that is robust and sensitive to the varied dimensions of employee well-being.

The development of the AIW leveraged data from the Tsukuba Salutogenic Occupational Cohort Study (T-SOCS), an ambitious project aimed at assessing the daily life, work conditions, and mental health status of employees within the network of research institutes, municipalities, and private corporations in Tsukuba Science City. This extensive study provided a rich dataset from which the AIW’s test battery was crafted. By applying these data, researchers were able to calibrate and validate the effectiveness of the AIW, ensuring its reliability in measuring what it purports to measure.

Furthermore, the AIW was critically evaluated against established measures of worker well-being, such as levels of presenteeism—where employees work despite experiencing health problems—and the prevalence of depressive symptoms among the workforce. The comparisons affirmed the AIW’s validity and highlighted its unique capability to capture a more comprehensive spectrum of well-being metrics that traditional tools may overlook, providing a more accurate and holistic view of worker well-being.

The findings from this research underscore the efficacy of the AIW as a diagnostic tool to assess well-being in the workplace. It has shown promise in capturing the complex interplay between various psychological and socio-environmental factors contributing to an employee’s overall well-being. The AIW’s comprehensive approach not only allows for a more nuanced understanding of the factors that enhance or impair worker well-being but also provides crucial insights that can inspire the development of more effective workplace practices and policies, leading to a healthier and more productive workforce.

The continued use of the AIW is anticipated to facilitate a deeper understanding of the factors that contribute to a healthy work environment. This will lead to improved interventions that not only boost employee satisfaction and productivity but also promote a healthier, more engaged workforce. Through such developments, organizations can create more productive and nurturing work environments, ultimately leading to sustained business success and employee well-being.

More information: Shotaro Doki et al, Designing a test battery for workers’ well-being: the first wave of the Tsukuba Salutogenic Occupational Cohort Study, Environmental Health and Preventive Medicine. DOI: 10.1265/ehpm.23-00372

Journal information: Environmental Health and Preventive Medicinen Provided by University of Tsukuba

Dislike of Inequality Fuels Backing for Wealth Redistribution

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Traditional economic models typically posit that personal income is the sole concern of individuals regarding their support for redistribution policies. However, an international team of scholars from the University of Zurich, the University of Lille, and the University of Copenhagen is challenging this perspective.

Their research highlights that the general attitudes people hold towards inequality play a pivotal role in this context. Ernst Fehr, the study’s lead author and director of the UBS Center for Economics in Society at UZH’s Economics Department, explains, “Accounting for people’s distaste for inequality allows us to more accurately predict who will favour policies designed to narrow the income disparity.”

The study reveals that inequality aversion is not uniform but manifests in two distinct forms. Some individuals are primarily concerned with disadvantageous inequality, which relates to being worse off than others. In contrast, others are more affected by advantageous inequality, which involves discomfort at the existence of individuals who are poorer than themselves. These attitudes significantly vary across the population, and understanding their influence on political support for redistribution policies is still somewhat nascent.

Involving about 9,000 participants from Denmark, aged between 20 and 64, the researchers employed a behavioural experiment to gauge individual levels of inequality aversion. They then correlated these levels with the participants’ support for policies that enforce income redistribution through political means and their propensity for charitable giving, evidenced by real-life donations. These donations provide insight into their personal preferences for redistributing wealth.

The study’s findings indicate that individuals who exhibit a strong aversion to both types of inequality are more inclined to endorse political measures to redistribute wealth. Interestingly, the nature of inequality aversion also affects charitable behaviour: those who are particularly sensitive to advantageous inequality tend to be more generous, whereas those who are more concerned with disadvantageous inequality tend to give less.

Ernst Fehr summarizes, “Our research supports the theory of inequality aversion, which posits that a broad dislike for inequality significantly impacts both economic and political actions on individual and societal levels.”

More information: Ernst Fehr et al, Inequality aversion predicts support for public and private redistribution, Proceedings of the National Academy of Sciences. DOI: 10.1073/pnas.2401445121

Journal information: Proceedings of the National Academy of Sciences Provided by University of Zurich

Job Stress Could Raise the Likelihood of Abnormal Heart Rhythms

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A recent study published in the Journal of the American Heart Association, a peer-reviewed open-access journal, reveals that work-related stress resulting from job strain and an imbalance between effort and rewards could significantly increase the risk of developing atrial fibrillation (AFib). AFib, the most common type of arrhythmia, poses severe risks, including stroke, heart failure, and other cardiovascular complications. Projections indicate that over 12 million Americans will be affected by AFib by 2030, according to statistics from the American Heart Association.

The groundbreaking research, led by Xavier Trudel, PhD, an occupational and cardiovascular epidemiologist and associate professor at Laval University in Quebec, examines the impact of job strain and effort-reward imbalance on the incidence of atrial fibrillation. Job strain refers to high-demand work environments where employees face heavy workloads and tight deadlines with little control over their work or decision-making processes. Effort-reward imbalance occurs when rewards such as salary, recognition, or job security are perceived as inadequate relative to the effort expended.

Dr. Trudel’s study involved nearly 6,000 white-collar workers in Canada, with a follow-up period of 18 years. The findings indicate a stark increase in AFib risk associated with these work-related stressors: employees experiencing high job strain had an 83% higher risk of developing AFib, those who perceived an effort-reward imbalance had a 44% greater risk, and individuals subjected to both stressors faced a 97% increased risk.

These findings have profound implications, suggesting that preventive strategies should include addressing psychosocial stressors in the workplace to foster healthier work environments that benefit both employees and their organizations. Dr. Trudel emphasizes the potential of workplace interventions to reduce such stressors, which could, in turn, lower the risk of AFib. His team has previously demonstrated the effectiveness of organizational interventions that reduced blood pressure by modifying work conditions, such as slowing down project timelines, implementing flexible work hours, and promoting open discussions between managers and employees.

However, the study’s focus solely on white-collar workers in managerial, professional, and office roles within Canada limits its findings’ generalizability. The specific work contexts and demographics may not represent the experiences of blue-collar workers or those in different geographic locations.

This research underscores the need to investigate how workplace stress affects heart health across employment and populations. Future studies could expand the scope to include a broader range of workers and work environments, enhancing our understanding of the link between occupational stress and cardiovascular disease and informing more effective public health policies and workplace practices.

More information: Edwige Tiwa Diffo et al, Psychosocial Stressors at Work and Atrial Fibrillation Incidence: An 18‐Year Prospective Study, Journal of the American Heart Association. DOI: 10.1161/JAHA.123.032414

Journal information: Journal of the American Heart Association Provided by American Heart Association

Amidst the Pandemic, Employers Who Cultivated ‘Collective Engagement’ Saw Reduced Employee Turnover

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A recent study highlights that specific workplaces managed to significantly curb employee turnover during the COVID-19 pandemic better than others. Researchers discovered that business units that had previously cultivated a strong sense of “collective engagement” among their staff experienced lower turnover rates than those that hadn’t fostered such engagement.

Patrick Flynn, an assistant professor of management at North Carolina State University’s Poole College of Management and co-author of the study, explained that while numerous studies have explored how internal changes within a company, such as adjustments in management, pay, or benefits, influence employee retention and turnover, less focus has been placed on how external factors beyond an employer’s control might impact turnover rates. Flynn pointed out that these external factors could range from local competitors offering better salaries to major global crises like the COVID pandemic, which was used as a backdrop for this study to examine how large-scale external events could affect workforce stability.

In their research, Flynn and his colleagues partnered with a major U.S.-based company with a presence in every state and over 70,000 employees. They analysed employee turnover data across all company stores during the first half of 2020. They correlated this with results from a comprehensive employee engagement and satisfaction survey conducted at the end of 2019.

The findings revealed a general drop in employee turnover from March to April 2020, coinciding with the initial shock of the pandemic. However, from May to June, despite an overall rise in turnover, certain stores markedly outperformed others in retaining staff. These stores shared a common characteristic: significantly higher levels of collective engagement. Flynn described this as a unified understanding and commitment to the company’s mission and community among the employees, fostered by effective store leadership.

While the study did not detail the management strategies used to cultivate this collective engagement, the correlation suggests that such engagement was crucial in reducing turnover during the pandemic. Looking ahead, Flynn expressed interest in further exploring whether collective engagement can consistently mitigate turnover in response to various external pressures and if specific techniques to foster such engagement are particularly effective during external crises.

More information: Patrick Flynn et al, How context shapes collective turnover over time: The relative impact of internal versus external factors, Journal of Applied Psychology. DOI: 10.1037/apl0001230

Journal information: Journal of Applied Psychology Provided by North Carolina State University

Study Suggests Different Regulations for Influencers Advocating Sustainable Lifestyles on Social Media

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A recent study has highlighted the need for distinct regulatory measures for influencers promoting sustainable lifestyles on social media to enhance consumer protection. The research identifies deficiencies in existing and upcoming EU consumer protection regulations that oversee the commercial activities of content creators who endorse sustainable products and services.

The study underscores the significant influence of effective and trustworthy communication about sustainable lifestyles on social media on consumer behaviour. This influence is not confined to traditional influencers but also extends to ‘de-influencers’, who encourage their followers to choose greener or more ethically produced alternatives.

The study’s recommendations stress the importance of preserving content creators’ freedom of speech and their ability to conduct business without undue restrictions. One of the proposed changes involves redefining the legal status of content creators as professionals when they receive payment for their endorsements. This redefinition would not only provide them with greater legal clarity but also enable targeted training on their legal responsibilities, thereby facilitating the establishment of codes of conduct.

The researchers propose that when influencers pass on sustainable claims made by brands, and if there is no reasonable cause to question these claims, the responsibility for any misinformation should fall on the brands rather than the influencers. However, this liability shifts if influencers exert significant creative control over the content and originate their sustainability claims.

Professor Joasia Luzak of the University of Exeter, who led the study, noted that influencers’ communications are shaped by the social media platforms they use and their relationships with the brands they represent. Influencers might need more capability to critically assess the integrity of the information provided when given marketing materials for a product. This scenario could lead them to unintentionally mislead their audience due to insufficient access to accurate information, though it could also reflect a lack of diligence on their part.

Existing regulations stipulate that influencers must not mislead consumers through direct actions or by omission. They can be held accountable, individually or jointly with the brand they represent, if they fail to adhere to these guidelines. The study critiques the current requirement that influencers engage in ‘frequent’ commercial activities to be recognised as engaging in commercial practices. This criterion does not consider influencers who spread their activities across various platforms or engage in non-monetised content. The emphasis on ‘frequent’ posting overlooks the potential harm even a commercial post can cause.

The study advocates for removing the ‘frequency’ requirement, suggesting that online content creation should be considered a professional activity based on the commercial intent behind the communication rather than the commercial gain derived from it. Registration of such professional activity in Member States should be mandatory to ensure that content creators are not exempt from obligations under the current European consumer protection framework.

Moreover, empowering consumers to hold content creators accountable alongside brands could significantly enhance the avenues available for seeking compensation for damages, thereby strengthening consumer protection and accountability.

The EU Green Transition Directive prohibits misleading consumers about product durability, repairability, and environmental or social impacts. Given that sustainable influencers often highlight these attributes, those qualifying as traders under the new regulations must ensure that their claims, or those made by the brands they represent, are substantiated.

More information: Joasia Luzak et al, 3Rs of Sustainable Activism on Social Media: Relatability, Reliability and Redress, Journal of Consumer Policy. DOI: 10.1007/s10603-024-09574-x

Journal information: Journal of Consumer Policy Provided by University of Exeter

Exploring the Influence of Consumer Emotions on Search Engine Usage and Paid Ad Clickthrough Rates: Insights from a Recent Study

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Three researchers from the University of Georgia have recently published a study in the Journal of Marketing that delves into the influence of positive emotions on online search behaviours. Specifically, they explore how feelings experienced during an online product search can modify the nature of search queries and affect engagement with paid search advertisements.

Entitled “Positive Emotions During Search Engine Use: How You Feel Impacts What You Search For and Click On,” this study was authored by Sarah C. Whitley, Anindita Chakravarty, and Pengyuan Wang. The research arrives at a time when digital advertising spending in the U.S. skyrockets, with advertisers pouring approximately $110 billion into paid search ads last year alone. Despite this increased investment, the effectiveness of digital ads remains a contentious issue, with advertisers struggling to understand the motivations behind consumer interactions with online ads.

Historically, research suggested that advertisers should focus on keywords like deal-related words, brand and retailer names, product categories, and location information to enhance ad relevance and increase consumer engagement. The current study builds on this by offering new insights into how emotional states influence consumer search patterns and their responses to paid search ads, highlighting a crucial yet often neglected aspect of digital advertising strategy.

The research examines the role of positive emotions that are incidental to the search task, investigating how these emotions influence consumer behaviour at two critical points in the search process: keyword selection and ad clicks. According to Whitley, experiencing positive emotions can prompt consumers to use emotionally charged keywords, which affects their search behaviour and interaction with paid ads. Chakravarty adds that this emotional priming can bypass consumers’ scepticism about advertisers’ motives, leading to a higher likelihood of clicking on emotionally resonating advertisements.

These findings have significant implications for Chief Marketing Officers and digital advertising strategists. The study suggests that incorporating positive emotional keywords into search ads could enhance click-through rates, providing advertisers with a novel and cost-effective strategy. This approach could be efficient when consumers are more likely to experience positive emotions like weekends and holidays.

Moreover, products that inherently evoke pleasure, such as clothing, entertainment, and dining options, might succeed more with this strategy. Marketing managers in these sectors could gain a competitive edge by targeting positive emotion keywords in their digital campaigns.

Wang underscores the importance of this research in the broader context of digital marketing, where understanding the psychological drivers of consumer behaviour is crucial for crafting effective advertising strategies. By embracing the role of emotions, advertisers can forge stronger connections with their audience, enhancing engagement and optimising the returns on their digital advertising investments. This study challenges traditional advertising approaches and encourages a more nuanced understanding of the interplay between emotions and consumer behaviour in the digital realm.

More information: Sarah C. Whitley et al, Positive Emotions During Search Engine Use: How You Feel Impacts What You Search for and Click On, Journal of Marketing. DOI: 10.1177/00222429241263012

Journal information: Journal of Marketing Provided by American Marketing Association

Recent Study Indicates Online Advertising Has Minimal Influence on Consumer Perceptions of Facebook

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Policymakers are delving deeper into discussions about the relative social costs and benefits associated with digital advertising. The consensus is that advertising usually benefits platforms and advertisers, but how consumers are impacted is unclear. In pursuit of clarity, a comprehensive new study has focused on advertising’s effects on Facebook users, particularly comparing the experiences of users who view ads against those who do not. The findings reveal no significant differences in how the two groups value Facebook, which suggests that ads’ negative impacts are minor or that certain benefits counterbalance their detrimental effects.

This significant research, a collaborative effort among academics from Carnegie Mellon University, Stanford University, Northwestern University, and Meta, is detailed in a recent working paper published by the National Bureau of Economic Research (NBER).

Avinash Collis, an assistant professor at Carnegie Mellon’s Heinz College specialising in management science and economics, spearheaded the research. He notes that the impact of online ads on consumer welfare is ambiguous; ads might either irritate users with irrelevant information or assist them in discovering beneficial products and services.

The nature of online advertising, coupled with the logistical challenges of conducting extensive experiments and monitoring long-term effects, has meant that research in this area is limited. The study in question leverages data from a long-term field experiment on Facebook’s advertising, initiated in 2013 and still ongoing, highlighting its ongoing relevance and potential for further insights.

In 2022, over 53,000 Facebook users from both the ad-viewing and no-ad groups participated in a survey, which included an incentivised online choice experiment to gauge how much users value Facebook. The results indicated no significant statistical difference in valuation between the two groups, suggesting that the current level of advertising on Facebook does not substantially impair user experience to a degree that would make a no-ads environment significantly more appealing. The study suggests that any negative impact of ads on user satisfaction could be less than 10% of the value users place on Facebook.

The researchers proposed that the reason for this could be the neutralising effect of well-targeted ads, which might offset the annoyance caused by irrelevant ones. Alternatively, they considered that ads’ positive and negative impacts could be too minor to be statistically significant. Notably, users in the ad group spent 9.4% less time on Facebook than those in the no-ad group, although this did not influence their overall platform valuation.

The study acknowledges certain limitations, including focusing solely on Facebook and not considering other platforms. Additionally, the no-ads group was still exposed to some advertising. It’s also worth noting that more than half of the researchers involved in the study are affiliated with Meta, Facebook’s parent company.

Erik Brynjolfsson, a professor at Stanford’s Institute for Human-centered AI and co-leader of the study, pointed out that both in the United States and Europe, policymakers are considering regulations that would limit online platforms’ ability to display targeted ads. This study, with its valuable insights from the largest and longest-running experiment designed to assess the utility and disutility of ads, could have significant implications for these policy discussions.

More information: Erik Brynjolfsson et al, The Consumer Welfare Effects of Online Ads: Evidence from a 9-Year Experiment, NBER working paper. DOI: 10.1007/s00394-023-03123-x

Journal information: NBER working paper Provided by Carnegie Mellon University

Employing the Phrase ‘Artificial Intelligence’ in Product Descriptions Lowers Buying Intentions

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A study by researchers at Washington State University found that including the term “artificial intelligence” in product descriptions may inadvertently harm sales.

The research, detailed in the Journal of Hospitality Marketing & Management, involved experimental surveys with over 1,000 US adults to explore how transparency about AI usage impacts consumer behaviour.

The results consistently indicated that products labelled as incorporating artificial intelligence were less appealing to consumers, said Mesut Cicek, clinical assistant professor of marketing and the study’s lead author.

“Mentioning AI seems to diminish emotional trust, which, in turn, reduces the likelihood of purchase,” Cicek noted. He highlighted that emotional trust is crucial in shaping how consumers view AI-enabled products.

The research team used varied questions and descriptions across different product and service sectors during the experiments. In one instance, participants reviewed identical bright television descriptions, with the key distinction being the inclusion or exclusion of “artificial intelligence” in the text. Those who encountered the term were less inclined to buy the television.

The study also found that the adverse reaction to AI mentions was more pronounced for “high-risk” items—products or services that typically evoke higher levels of uncertainty or concern, such as costly electronics, medical devices, or financial services. The potential for significant risks, including economic loss or threats to physical safety, means referencing AI in such product descriptions can make consumers more apprehensive and less likely to purchase, Cicek explained.

“We examined the impact across eight different product and service categories, and the outcome was uniform: it’s disadvantageous to use such terms in product descriptions,” he added.

Cicek’s findings offer important insights for businesses. “Marketers need to think carefully about how they present AI in their product descriptions or devise strategies to build emotional trust. Highlighting AI might not always be advantageous, especially for high-risk items. It’s better to focus on the features or benefits and steer clear of AI buzzwords,” he advised.

More information: Mesut Cicek et al, Adverse impacts of revealing the presence of “Artificial Intelligence (AI)” technology in product and service descriptions on purchase intentions: the mediating role of emotional trust and the moderating role of perceived risk, Journal of Hospitality Marketing & Management. DOI: 10.1080/19368623.2024.2368040

Journal information: Journal of Hospitality Marketing & Management Provided by Washington State University

The Impact of a Large Dating Pool in Online Dating Platforms

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Online dating sites have increasingly become a vital platform for individuals seeking romantic partnerships, transforming how people meet and connect. Despite their widespread popularity, it is less widely known that the success of such interactions often hinges on the size of the dating pool accessible on these platforms.

Recent research has shed light on how the number of potential matches, or the “market size,” and the number of competitors vying for attention, or “competition size,” can significantly influence user behaviour in online dating scenarios. A comprehensive study by Jessica Fong of the University of Michigan, titled “Effects of Market Size and Competition in Two-Sided Markets: Evidence from Online Dating,” provides critical insights into these dynamics. The study, published in the INFORMS journal Marketing Science, aims to decipher how these factors individually and collectively impact the decisions made by online daters.

Fong’s research delves into the psychology behind user selectivity and activity on dating platforms, exploring the hypothesis that a larger pool of potential partners would enable users to be more selective. Conversely, increasing the number of competitors should theoretically make users less picky, as they face more competition for attention and responses.

To conduct her study, Fong partnered with an online dating platform, which provided her with a unique dataset: real-time information about the number of active male and female users and their geographical proximity. This setup allowed her to simulate various dating market conditions and directly observe how changes in market and competition sizes influenced user behaviour.

Her findings revealed some surprising patterns. Contrary to the typical assumption that more choices lead to greater engagement, Fong discovered that increasing the number of available potential partners decreased the likelihood of users participating in the platform. Specifically, a 50% increase in potential partners was associated with a 1% drop in user participation rates. This suggests a paradox where too many options can feel overwhelming or diminish the perceived value of each interaction, leading to lower engagement levels.

Additionally, the study examined the gender dynamics at play, particularly in the context of heterosexual dating scenarios where men are seeking women. Here, the “competition size” involved the number of men present on the site, while the “market size” pertained to the number of potential female partners. Fong’s analysis pointed out that men adjusted their selectivity based on their awareness of the number of other men and the number of women available. This indicates that decision-making in dating scenarios can be highly strategic and responsive to perceived chances of success.

These findings have profound implications for understanding consumer behaviour in two-sided markets beyond dating, such as job recruitment platforms or housing markets, where multiple parties must make choices that affect each other. Fong’s research adds depth to our understanding of economic and social behaviours in digital environments, emphasizing the complex interplay of individual preferences, market conditions, and competitive pressures.

This study contributes to the academic discourse on economic behaviour in two-sided markets. It offers practical insights for online dating platforms aiming to optimize user experience and engagement strategies. By understanding how market size and competition affect user behaviour, these platforms can better tailor their features and algorithms to foster engagement and successful user outcomes.

More information: Jessica Fong et al, Effects of Market Size and Competition in Two-Sided Markets: Evidence from Online Dating, Marketing Science. DOI: 10.1287/mksc.2023.0142

Journal information: Marketing Science Provided by Institute for Operations Research and the Management Sciences