Liking what others “Like”: using Facebook to identify determinants of conformity

In this paper we explore the micro-level determinants of conformity. Members of the social networking service Facebook express positive support to content on the website by clicking a Like button. We set up a natural field experiment to test whether users are more prone to support content if someone else has done so before. To find out to what extent conformity depends on group size and social ties we use three different treatment conditions: (1) one stranger has Liked the content, (2) three strangers have Liked the content, and (3) a friend has Liked the content. The results show that one Like from a single stranger had no impact. However, increasing the size of the influencing group doubled the probability that subjects expressed positive support. Friendship ties were also decisive. People were, on average, four times more likely to press the Like button if a friend, rather than a stranger, had done so before them. The existence of threshold effects in our experiment clearly shows that both group size and social proximity matters when opinions are shaped.     

Do watching eyes affect charitable giving? Evidence from a field experiment

The presence of implicit observation cues, such as picture of eyes, has been shown to increase generosity in dictator games, and cooperative behavior in field settings. I combine these approaches, by testing if a picture of watching eyes affects unconditional giving in a natural environment, where the recipient is a charity organization. Taken together, this study reduces the influence of three potential confounding factors in previous experiments: (i) experimenter demand effects, (ii) that the facial cue reminds subjects of a human counterpart, and (iii) a social multiplier effect. Specifically, the paper reports results from an experiment, conducted in a Swedish supermarket chain, where customers face a naturally occurring decision problem. People who recycle cans and bottles have to choose whether to keep the recycled amount or donate it to a charity organization. By posting a picture of human eyes on recycling machines, I am able to test whether this causes an increase in donations to the charity. Based on a sample covering a 12-day period, 38 stores and 16775 individual choices, I find no general effect. However, when controlling for store and day fixed effects, and using a proxy for store attendance, the picture of eyes increased donated amount by 30 percent during days when relatively few other people visited the store. This result gives further support to the conclusion that subtle social cues can invoke reputation concerns in humans, although the relatively small effect suggests that previous estimates could be biased upward, or at least that the influence of observational cues is context dependent.     

Tactical Service Failure: A Case Study on Public Funding as a Marketing Issue

This article analyzes the ways in which public-sector service providers may use service-delivery failure as a way of securing resources. In tactical service failure, an organization tactically delivers nonadequate service, so as to project a media image of being harmed by its funding cuts. Analyzing this process enables new insight into both public funding and provider-to-funder (P2F) marketing and selling. This research uses a single case study method to confirm the existence of the phenomenon first detected through long-term media analysis. To explore the single case, the authors interviewed a former city official who participated in tactical-service-failure processes and their marketing. The article shows how and why service providers may opt for this tactic and the potential gains and pitfalls of utilizing it. New insight is offered into how media connections are used to influence public-funding decisions.     

Convexity theory for the term structure equation

We study the convexity and model parameter monotonicity properties for prices of bonds and bond options when the short rate is modeled by a diffusion process. We provide sharp conditions on the model parameters under which the convexity of the price in the short rate is guaranteed. Under these conditions, the price is decreasing in the drift and increasing in the volatility of the short rate. We also study the convexity properties of the logarithm of the price and find simple conditions on the coefficients that guarantee that the price is log-convex or log-concave.      

Nonparametric estimation for self-selected interval data collected through a two-stage approach

Self-selected interval data arise in questionnaire surveys when respondents are free to answer with any interval without having pre-specified ranges. This type of data is a special case of interval-censored data in which the assumption of noninformative censoring is violated, and thus the standard methods for interval-censored data (e.g. Turnbull’s estimator) are not appropriate because they can produce biased results. Based on a certain sampling scheme, this paper suggests a nonparametric maximum likelihood estimator of the underlying distribution function. The consistency of the estimator is proven under general assumptions, and an iterative procedure for finding the estimate is proposed. The performance of the method is investigated in a simulation study.     

Heuristic algorithms for a second-best congestion pricing problem

Designing a congestion pricing scheme involves a number of complex decisions. Focusing on the quantitative parts of a congestion pricing system with link tolls, the problem involves finding the number of toll links, the link toll locations and their corresponding toll level and schedule. In this paper, we develop and evaluate methods for finding the most efficient design for a congestion pricing scheme in a road network model with elastic demand. The design efficiency is measured by the net social surplus, which is computed as the difference between the social surplus and the collection costs (i.e. setup and operational costs) of the congestion pricing system. The problem of finding such a scheme is stated as a combinatorial bi-level optimization problem. At the upper level, we maximize the net social surplus and at the lower level we solve a user equilibrium problem with elastic demand, given the toll locations and toll levels, to simulate the user response. We modify a known heuristic procedure for finding the optimal locations and toll levels given a fixed number of tolls to locate, to find the optimal number of toll facilities as well. A new heuristic procedure, based on repeated solutions of a continuous approximation of the combinatorial problem is also presented. Numerical results for two small test networks are presented. Both methods perform satisfactorily on the two networks. Comparing the two methods, we find that the continuous approximation procedure is the one which shows the best results.