Savannah Wei Shi

Information acquisition during online decision-making : A model-based exploration using eye-tracking data

We propose a model of eye-tracking data to understand information acquisition patterns on attribute-by-product matrices, which are common in online choice environments such as comparison websites. The objective is to investigate how consumers gather product and attribute information from moment to moment. We propose a hierarchical hidden Markov model that consists of three connected layers: a lower layer that describes the eye movements, a middle layer that identifies information acquisition processes, and an upper layer that captures strategy switching. The proposed model accounts for the data better than several alternative models. The results show that consumers switch frequently between acquisition strategies, and they obtain information on only two or three attributes or products in a particular acquisition strategy before switching. Horizontal and contiguous eye movements play an important role in information acquisition. Furthermore, our results shed new light on the phenomenon of gaze cascades during choice. We discuss the implications for Web design, online retailing, and new directions for research on online choice.

Usage Experience with Decision Aids and Evolution of Online Purchase Behavior

This study investigates how prior usage experience with various decision aids available in an Internet shopping environment contributes to online purchase behavior evolution. Four types of decision aids are examined: those for 1 nutritional needs, 2 brand preference, 3 economic needs, and 4 personalized shopping lists. We construct and estimate nonhomogeneous hidden Markov models of store-and category-level purchase decisions, in which parameters vary over time across hidden states as driven by usage experience with different decision aids. We find that consumers evolve through distinct behavioral states over time, and the evolution is attributable to their prior usage experience with various decision aids. Moreover, the impact varies by the specific decision aid, behavioral state, and category characteristics. In addition, consumers gravitate toward habitual decision processes in online grocery stores, and their average price and promotion sensitivities increase first and then decrease but the level of heterogeneity rises continuously. We identify beneficial versus potentially undesirable decision aids and demonstrate how the proposed research method can help online retailers improve their store environments, design customized promotions, and quantify the payoffs of these strategies.

From Minnows to Whales: An Empirical Study of Purchase Behavior in Freemium Social Games

ABSTRACT This paper empirically investigates whether and how social dynamics, in combination with user past performance, drives purchase propensity in freemium social games online. Two essential elements of freemium social games are (1) social dynamics—users can perform various levels of social interactions, and (2) freemium setting—users can play fully functional games for free, or make multiple cash purchases to enhance their gaming experience. The key to success of such flexible freemium games is to encourage users to make continued, large purchases even though they could enjoy the product for free. Using an online freemium social game data set, the authors find that both formal social groups formed within the game and informal social connections influence purchase decisions. Furthermore, informal social connections moderate the effect of user past performance on spending. Managerially, the study proposes several design and targeting strategies for freemium social games and other businesses adopting a similar model, including fostering a social environment at various levels; implementing targeted promotional activities based on social status and social connections will benefit revenue in this flexible freemium context.

Video Content Marketing: The Making of Clips

Consumers have an increasingly wide variety of options available to entertain themselves. This poses a challenge for content aggregators who want to effectively promote their video content online through original trailers of movies, sitcoms, and video games. Marketers are now trying to produce much shorter video clips to promote their content on a variety of digital channels. This research is the first to propose an approach to produce such clips and to study their effectiveness, focusing on comedy movies as an application. Web-based facial-expression tracking is used to study viewers’ real-time emotional responses when watching comedy movie trailers online. These data are used to predict both viewers’ intentions to watch the movie and the movies box office success. The authors then propose an optimization procedure for cutting scenes from trailers to produce clips and test it in an online experiment and in a field experiment. The results provide evidence that the production of short clips using the proposed methodology can be an effective tool to market movies and other online content.

Would you snap up the deal? A study of consumer behaviour under flash sales

Flash sales refer to an emerging e-commerce practice in which a firm offers one or more products/service at a substantial discount within limited time. Macro-economic environment (residential areas), demographic (age, income and occupation) and ad media decision may collectively affect purchase behaviour on flash-sale websites. This study investigates the unique characteristics of consumer behaviour under flash sales in developing countries, based on large-scale survey data from a major flash-sale website in China. We find that purchase behaviour differs substantially across regions and, within each region, purchase propensity is moderated by income. Regional marketing strategy is therefore of great importance. Contrary to our expectations, flash-sale websites are less likely to attract impulse purchase. Rather, consumers who make more purchases exhibit higher levels of cautiousness. TV commercials and social media are currently the major ad media, yet shopping engines and search engines should not be overlooked.

The impact of world oil price shocks on the Canada/U.S. real exchange rate

ABSTRACT This article investigates whether and how changes in the world oil price affect the Canada/U.S. real exchange rate. We applied vector autoregression and vector error correction models for the real exchange rate, world oil price, monetary differential, government spending, and productivity differential between the two countries. Our results demonstrate that a surge in the world oil price will lead to an appreciation of the Canadian dollar in the short and long term. Product differentials and U.S. government spending have a negative impact on the Canada/U.S. real exchange rate, and Canadian government spending leads to a depreciation of the Canadian dollar.

Crowdfunding: Designing an Effective Reward Structure

Many crowdfunding platforms allow developers maximum flexibility in terms of the number and types of rewards offered in a project. However, designing an effective reward structure continues to be a...Many crowdfunding platforms allow developers maximum flexibility in terms of the number and types of rewards offered in a project. However, designing an effective reward structure continues to be a major challenge. This article empirically examines consumers’ responsiveness to different factors related to reward structures on crowdfunding platforms. We collected data from 2,262 rewards programs across 219 projects and applied a mixed Tweedie model to investigate the impact of various reward structures on the number of backers and the revenue generated at each reward tier. The results revealed a significant effect of reward limit setting on backers’ interest, but this effect varies by reward tiers. Higher tiers attenuate price sensitivity. The reward type matters as well: material rewards are better received than symbolic ones on crowdfunding platforms, but only in lower reward tiers. These findings have direct implications for launching crowdfunding projects that will be more effective in creating buzz and reaching their fundraising goals.

The Effects of Bid Pulsing on Keyword Performance in Search Engines

ABSTRACT The objective of this study is to empirically examine whether and how bid pulsing affects keyword auction performance in search engine advertising. In keyword auctions, advertisers can choose a “set and forget” fixed bidding amount (fixed bidding), or they can change the bid value based on certain types of rules (pulse bidding). A keyword auction data set from Yahoo! reveals that around 60 percent of advertisers frequently changed their bid value for a particular keyword category; moreover, such pulse-bidding behavior is observed throughout the entire time course for some companies. Both cross-sectional and longitudinal analyses on this data set demonstrate that when a company pulses its bid values, the ranking, the number of exposures, and the number of clicks of the target ad listing will all benefit; in addition, the average bid price will be lower. The results are consistent across four keyword categories. Among the three keyword categories that are in ascending order of level of competitiveness,the magnitude of the pulse-bidding effect also increases. The study extends search engine advertising literature by providing empirical evidence of pulse-bidding strategy under the generalized second price auction and by exploring the consequence of such strategy. Managerially, our results suggest that, keeping all other costs and the bidding environment the same, increasing the frequency and scale of bid pulsing will improve keyword performance; this is especially the case when bidding on a highly competitive keyword category.