PHD Publications

Thesis Summary In this dissertation, I examine the influence of visual crowding on consumers’ product search and choice. Visual crowding reduces individuals’ ability to distinguish objects in a scene from one another, thus making product search and choice more difficult. In the first chapter, I show that individuals’ ability to find a particular target product in a display varies in function of the embeddedness of the target, which depends on the locations of the target and non-target products in the display. I propose a metric that quantifies how visually crowded a target is in each location of a given product display, and that can be used to estimate the amount of visual search effort needed to find the target. In the second chapter, I examine how visual crowding impacts choice – specifically, how reducing visual crowding by adding space between products in an assortment influences variety perceptions and purchase behavior. In the third chapter, I explore visual attention to a product display in presence of different distractors. Overall, in this dissertation I try to ascertain which elements of product displays can reduce visual crowding and improve consumers’ shopping experiences. This research contributes to the literature on visual attention and assortments, and provides new insights for product display designs, in online and offline retail environments.

Thesis Summary In this thesis, I propose new measurement and models of ambiguity aversion and status quo bias. The ?rst two chapters utilize an agent’s attitude towards well-de?ned uncertainty (i.e., risk), which is better understood in the literature, to measure that of less well-de?ned uncertainty (i.e., ambiguity) and other components of decision making (e.g., utility function). This approach presents at least two advantages. First, it leads to an easily implementable tool for comparing ambiguity attitude across agents without requiring them to have the same risk attitude, as argued in Chapter 1. Second, it unveils a rich notion of trade-o ?s in the risk domain, through which popular decision-theoretic axioms can be reformulated to embed rank-dependent utility over risk into models of decision under uncertainty, as shown in Chapter 2. In the last Chapter, status quo bias is shown, under fairly general conditions, to be compatible with a rational decision model where the agent compares the likelihood of a status quo theory and various alternative theories, similar to statistical hypothesis testing. Taken together, the thesis provides new theoretical accounts of economic behavior that are amenable to formal analysis and empirical test.

Thesis Summary This dissertation explores several intertwined dimensions of decision-making research. In particular, while focusing on decisions under risk and uncertainty, this work illustrates the transversality of approaches that characterize this area of investigation by collecting an experimental study, a theoretical elaboration and an application. The continuous dialogue between these different approaches to decision-making research is critical to its development, as empirical investigations test and inform formal theories and further ensure their meaningful application in theoretical and empirical contexts, thus contributing to virtuous “creative destruction” dynamics in the field. For example, a large body of empirical evidence shows violations of the expected utility theory. In response, decision theory and behavioral economics provided a large variety of nonexpected utility theories. The existing evidence, however, does not clearly discriminate among such theories. Relative to the investigation of the sources of violations, particular attention has been traditionally devoted to testing several variations of the independence axiom. Yet, on the gains domain, many of the most well-known non-expected utility models abide to the minimal behavioral restrictions traditionally known as the axioms P3 and P4 of Savage (1954), that allow to separate tastes, as captured by a utility function on outcomes, and beliefs, as captured by the willingness to bet on events, often a distorted probability. In the first chapter of this dissertation, we derive a non-parametric procedure for testing the separability of tastes and beliefs hypothesis and we apply it to the results of two experiments. While P3 is rarely violated, our test finds widespread and pronounced violations of P4, thus suggesting that the assumption of separation of tastes and beliefs may not hold in empirical settings. On the theory side, the issue of separating tastes and beliefs was apparently closed by a series of papers of Ghirardato and Marinacci on biseparable preferences. Inspired by the findings of the previous chapter, the purpose of the second chapter of this dissertation is to reopen this question by investigating whether, or under what theoretical conditions, such separation actually holds and what its implications are. In particular, we will provide separability conditions in terms of preference midpoints and the novel concept of likelihood midpoints. In the third chapter, we make use of recent developments in decision-making criteria to provide an extension of the seminal biform games setup of Brandenburger and Stuart (2007). While biform games provide the theoretical basis for formal work in value-based strategy, our framework helps reconciling observed behavior in applied contexts with theory. In particular, we apply the results of our setup to the choice of bringing in substitutes to complementers in business ecosystems, a central decision in competitive strategy. Our solution has several advantages. First, it subsumes the original biform games framework and seamlessly integrates recent related work that provides bounds to value capture. Also, it allows solving issues such as the possible non-uniqueness of solutions and invariance to the competitive environment structure while maintaining the role of competition in determining value capture. Finally, it permits richer preferences representations that, for example, can include subjective distortions of objective chances of value capture.

Thesis Summary This dissertation examines whether the different categorization processes shaping audiences’ valuations in markets bring stability or variability to audiences’ valuations. While seminal research on categorization emphasized the stabilizing role of market categories, recent research suggests that audiences’ valuations can vary substantially even in markets which are wellstructured by pre-existing categories. This variability notably results from audiences’ heterogeneous preferences for typical offerings, from shifts in categories’ meanings or from audiences’ reliance on multiple models of valuation. Taking stock of these new results, this dissertation asks why audiences’ valuations are so variable and explores in more details the role that market categories play in this phenomenon. This dissertation proposes that i) ambiguous categories, ii) the influence of temporary attractions among audiences alongside more stable categories and iii) the co-existence of different types of evaluators all contribute to produce variability in audiences’ valuations. The first two empirical essays use data from publicly listed firms in the U.S. In these essays, firms’ similarity to existing category prototypes or audiences’ temporary attractions toward certain features are measured using semantics extracted from large corpora of annual reports and IPO prospectuses. The third essay is a theoretical model. This dissertation contributes to the literature on market categories, to the burgeoning research on optimal distinctiveness and to computational approaches to the study of organizations.

Thesis Summary This dissertation consists of three chapters in the field of audit research. The first chapter, joint with Francois Larmande, analyzes a model in which audit quality - above a given threshold - decreases accounting quality because of the substitution between accounting and real earnings management. The second chapter presents the joint work with Cedric Lesage, exploring the earnings management behavior of managers facing higher auditor’s expertise. The third chapter investigates how audit regulation affects managers’ disclosing and earnings management behaviors.

Thesis Summary This dissertation examines how categories — groupings that are built upon social and cognitive similarities — affect the evaluation of organizations in markets. Research shows that market audiences are likely to penalize organizations that combine multiple categories. Questioning the past studies' underlying assumptions, my work contextualizes this demand of categorical purity by studying the role of (i) category nesting, that is the hierarchical disposition of categories, (ii) audience members’ heterogeneity in expertise and modes of categorization (the way individuals group entities together), and (iii) the differences of valence among categories themselves. Using experimental tests (Chapter 1), longitudinal data on venture capital deals worldwide from 1994 to 2017 (Chapter 2) as well as theoretical developments (Chapter 3), this dissertation provides evidence of conditions under which categorically atypical organizations are better appraised than categorically pure organizations in markets. This work offers contribution to organization theory and economic sociology by speaking to research on market categories, experts’ evaluations and optimal distinctiveness.

Thesis Summary The rise of digital media technology over the last decades has transformed the way in which organizations are evaluated. Judgments by experts and critics, recognized for their knowledge of evaluation criteria, appropriate weightings, and appropriate preferences, are losing their appeal to customers in many industries. Every day, on a plurality of platforms and websites, individuals disclose information about their interactions with organizations and their products or services. Compared to traditional media or professional critics, digital users and customers tend to share subjective and partial experiences, have lower concerns for accuracy and balance, and often put emphasis on the emotional content. As more customers rely on this information for their purchasing choices, firms in many industries find themselves in a position where it is hard to ignore the opinions expressed online by customers as inconsequential. In this thesis, I study how the strategies and behaviors of organizations are affected by this “democratization” of evaluation process. The empirical setting for my analyses is the restaurant industry. In the first chapter, I study online reviews as a source of information for restaurants, which may learn about problems, errors, or improvement opportunities. I examine what features of customer feedback make it more likely to be considered by target restaurants. With an online experiment in the French restaurant industry, I find that decision makers allocate attention to feedback that is expected to have a stronger impact on the reputation and performance of the restaurant. However, I also find evidence of a “disturbance” effect of the emotions evoked by certain feedback features. With this chapter I emphasize the importance of incorporating affective mechanisms in the study of attention, and shed light on how individual-level emotions impact organizational-level outcomes. In the second chapter, I analyze the effects of the interaction between amateur and expert evaluations. In particular, I study the entry of an expert evaluator (i.e., Michelin guide) in a market, and how it pushes some organizations to make strategic choices that signal their aspirations. Drawing on literature on organizational status, I find that restaurants better rated by Michelin make changes to their offer with the aim to self-identify with the élite group. These changes consist in the adoption or removal of certain features displayed in their menus. In addition, by using topic modeling techniques applied to Yelp reviews, I observe that customers’ reactions to the entry of Michelin make restaurants more or less sensitive to the expert’s evaluations. In the third chapter, I focus on how organizations use public responses to customers to address criticism in online settings. Recent studies are not conclusive on the reputational benefits of public responses to reviews. These responses may reduce the likelihood of future negative reviews while, at the same time, draw attention to problems. Building on existing literature on reputation and impression management, I propose that organizations may resolve this trade-off by making a strategic use of different types of verbal accounts (e.g., apology). Although public responses to customers may be counterproductive, adapting the style of public responses to the features of customer reviews might be an optimal strategy for organizations. For this study I analyze restaurant reviews in France and the United States using standard econometric models supported by supervised learning techniques.

Thesis Summary This thesis consists of three articles. The two first articles study information flows in the financial markets, and the third one studies how mutual fund families may use relatively discretionary income sources to channel profits to specific funds within the family. The first article, joint with Daniel Schmidt, studies price and liquidity spillovers in financial markets. Using a quasi-natural experiment, we show that investors look at stock prices to extract signals, and use these to trade. In the second article, I show that mutual fund acquire information through the securities lending market. I show that active mutual funds start selling the stocks that are borrowed from them by short sellers, whereas index funds — that are prohibited from trading — do not. One the other hand, index funds are able to charge higher stock lending fees from the borrowers. I attribute this to them being better lenders in the sense that they can not use the information they gain to trade, and thereby extract profits from the short sellers’ information. The third article, also with Daniel Schmidt, studies fund family level policies in allocating securities loans and lending revenues between member funds. We show that fund families deviate from the claimed fair allocation, directing more securities loans and lending profits to index funds. The finding is in line with with funds substituting a lower expense ratio with higher securities lending income.

Thesis Summary This dissertation consists of three essays that develop marketing interventions to influence consumers judgment, choice, and behaviors. Essay 1 studies whether, how, and when crossmodal correspondences affect downstream judgments. Essay 2 develops a behavioral intervention aimed at reducing consumers’ choices of food portion sizes, which can be easily used in the settings of online food ordering such as food delivery apps. Essay 3 studies whether prosocial incentive scheme can effectively motivate consumers to participate in online referral programs.

Thesis Summary This thesis develops and utilizes tools in game theory and mechanism design to study multiple applications in economics and finance. The first chapter studies the problem of implementing communication equilibria of strategic games when players communicate with an impartial mediator through a network. I characterize necessary and sufficient conditions on the network structure such that any communication equilibrium of any game can be implemented on that network. The next chapter studies a model of supply chain congestion whereby capacity constraints lead to very inefficient Nash equilibria and I show how the use of correlated equilibria can substantially resolve those inefficiencies. The final two chapters study related issues in the design of bank capital requirements. In Chapter 3, I characterize optimal bank capital requirements when banks have private information about the value of their existing assets. I show how the implementation of capital requirements can eliminate the bank's cost of raising capital by revealing their information to the market and conditions under which doing so is optimal. In Chapter 4, I show how when the bank's private information is about the riskiness of its assets instead, then any risk sensitive capital requirement will lead banks to optimally misreport their risk whenever investors are sufficiently risk averse, highlighting important robustness concerns.