Jeffrey A. Livingston

The Hot Hand and the Cold Hand in Professional Golf

Previous studies have shown that people believe in the existence of the “hot hand” effect: recent good performances make one more confident and lead to more good performances. However, economists have found little evidence that such an effect is present. Motivated by models of momentum from psychology, this study examines hole-by-hole performances of four types of professional golfers, which is perhaps the ideal environment to evaluate whether such an effect exists. The results show that evidence consistent with the existence of hot hand and cold hand can be masked by looking only at overall mean impacts because the existence and magnitude of the effects can vary with the players experience.

What Attracts a Bidder to a Particular Internet Auction

Livingston (2002) shows that bidders in Internet auctions are easily convinced of a seller’s trustworthiness: they bid large amounts even if sellers have barely established a reputation for performance, suggesting that they believe that typical sellers usually perform. This study reinforces this conclusion by looking at how bidders choose which auction to bid in when there are several that are selling the same item. The analysis shows that so long as a seller has some history, bidders consider bidding in the seller’s auction. They then choose auctions that offer the best chance to obtain the good at the lowest price.

Functional forms in studies of reputation in online auctions

Many studies have examined how various factors affect prices in online auctions. These studies assume that the relationship between price and the seller’s reputation take a variety of functional forms, most frequently linear or linear-log. Others divide the sellers into categories by their reputations, and control for dummy variables indicating the seller’s category. Identifying the correct functional form is a critical issue for research on any topic involving online auctions. Studies that assume the wrong functional form run the risk of generating biased and inconsistent estimates of the effect of their variables of interest. In this study, the price-reputation relationship is estimated under each of these functional forms using data from auctions of three different products. The estimated effect of reputation on price is substantially larger when using a categorical specification. The models are then subjected to specification tests which suggest that the categorical model is the most appropriate choice.

Controls, Trust, and Reciprocity

This study investigates the effects of formal controls on trust and reciprocity within organizations. Prior research finds a positive effect of controls on trust-based cooperative behavior in settings where people work together and may benefit from each other’s behavior. Other work suggests that this result could be driven by control-induced reciprocity rather than control-induced trust. If this is the case, then controls may have less of a positive effect, or no effect, in relationships that do not involve direct interaction. We test the extent to which controls improve trust and reciprocity by comparing the effect of controls in a setting where people do not work together directly, but where behaviors can be observed (in other words, a setting where reciprocity is less likely to influence behavior), to a setting where people work together and can benefit from each other’s work. We find that controls increase cooperative behavior in both settings, but that controls increase this behavior significantly more in the setting where participants work together and can benefit from each other’s work (i.e., where reciprocity is more likely to occur). This suggests that both trust and reciprocity are enhanced by controls, and that controls will enhance cooperative behavior more in more interactive settings.

Empirically Testing for Indirect Network Externalities in the LCD Television Market

This paper examines price data on over 222 LCD televisions to estimate indirect network effects arising from two sources. First, we conjecture that the disconnect between the timing of when broadcasters are required to convert to an only digital-signal world and when television manufacturers were required to have an ATSC digital tuner install on all new televisions has created an indirect network effect whereby television that are backward compatible with the analog QAM and VSB-8 systems have short-run value. Over time, however, we argue that the ATSC digital tuner will become more valuable. The second indirect network effect we estimate stems from the number and types of ports available on LCD televisions. In each case, we find statistically significant evidence for the presence of indirect network effects in the market for LCD televisions.

The Nature of Sales in Online Markets: Asymmetric Consumer Information or Benefits to Bulk Shopping?

Price dispersion - firms charging different prices for the same product - is widely observed in both online and traditional offline markets. While most price dispersion is explained by stylized clearinghouse models such as Varian (1980), these models do not explain why prices in offline markets are lower on weekends than during the work week, and before Christmas than after Christmas. We argue that price dispersion online is fully explained by clearinghouse models. First, because search and travel costs are lower online, these anomalous pricing patterns disappear. Second, prices charged by firms, price dispersion, the number of firms posting prices, and the minimum price in the online markets for several products vary in ways that are all consistent with the predictions of clearinghouse models.