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Research and Publications - Department of Economics, Finance & Legal Studies

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Browsing Research and Publications - Department of Economics, Finance & Legal Studies by Subject "Multidisciplinary Sciences"

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    Pull-to-center is not just for newsvendors
    (PLOS, 2022) Brokesova, Zuzana; Deck, Cary; Peliova, Jana; University of Economics Bratislava; University of Alabama Tuscaloosa
    The pull-to-center effect is a systematically observed suboptimal behavior in newsvendor experiments. Various explanations have been forward for this phenomenon, some of which are based on structural properties of the task while others are based upon the inventory context of the problem. To help distinguish between these two types of explanations, we compare behavior in a newsvendor game to behavior in a new, mathematically isomorphic, price gouging game. Our laboratory experiments replicate the standard results for newsvendors and yield the equivalent pattern in the price gouging game. This suggests previously observed newsvendor behavior is driven by structural aspects of the task consistent with models like prospect theory and impulse balance rather than context specific explanations pertaining to inventory management.
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    Testing for crowd out in social nudges: Evidence from a natural field experiment in the market for electricity
    (National Academy of the Sciences, 2019) Brandon, Alec; List, John A.; Metcalfe, Robert D.; Price, Michael K.; Rundhammer, Florian; University of Chicago; Boston University; University of Alabama Tuscaloosa; Georgia State University
    This study considers the response of household electricity consumption to social nudges during peak load events. Our investigation considers two social nudges. The first targets conservation during peak load events, while the second promotes aggregate conservation. Using data from a natural field experiment with 42,100 households, we find that both social nudges reduce peak load electricity consumption by 2 to 4% when implemented in isolation and by nearly 7% when implemented in combination. These findings suggest an important role for social nudges in the regulation of electricity markets and a limited role for crowd out effects.