Measuring Consumer Preferences Using Conjoint Poker

We develop and test an incentive-compatible Conjoint Poker (CP) game. The preference data collected in the context of this game are comparable to incentive-compatible choice-based conjoint (CBC) analysis data. We develop a statistical efficiency measure and an algorithm to construct efficient CP designs. We compare incentive-compatible CP to incentive-compatible CBC in a series of three experiments (one online study and two eye-tracking studies). Our results suggest that CP induces respondents to consider more of the profile-related information presented to them compared with CBC

Choosing a website to play Poker - A comparison between utilitarian and hedonic users

The objective of this thesis is to identify the relative importance of criteria in online poker website selection among utilitarian and hedonic poker players. This study aims to reveal whether the relative importance of the criteria varies according to a player's motives for playing. Although user acceptance of both utilitarian and hedonic technologies has been relatively widely studied, similar research on systems that can be used for both purposes appears to be lacking. To address this issue, extensive research methods are utilized to form thorough understanding of the issue at hand. First, an extensive literature review is conducted to discover potential criteria that are likely to determine whether users will accept or reject a certain poker website, based on previous research on technology acceptance. The recognized criteria are validated through four interviews with utilitarian and hedonic poker players. To discover the relative importance of criteria for different users, an online survey is conducted, including a Discrete Choice Experiment. Responses are gathered from over 300 respondents, including both utilitarian and hedonic users. The data is thoroughly analyzed to identify the relative importance of the criteria, and to reveal how the motivation for playing affects the order of the criteria. The findings suggest that the most important criterion for all users is reputation. Network size is also found to be a significant criterion for many poker players, as well as the loyalty program provided by a poker website. The findings also propose that the relative importance of criteria does vary according to a user's motives for playing

Choice Experiments: Application to Air Quality Policy Options and Investigation of Method\u27s Incentive Compatibility

More than half of all Americans live in areas that violate at least one of the U.S. Environmental Protection Agency’s air quality standards for ground-level ozone and fine particulate matter. The majority of these areas have many options to come into compliance with the standards, such as requiring vehicle inspection/maintenance programs, changing gasoline blends, and requiring additional controls on power plants. Chapter 1 explores the use of conjoint-based choice experiments to assist local policymakers in determining the most beneficial policy strategy using the case study of Knoxville, Tennessee. Given that different policy actions pass costs onto households in different ways and that households may have varying preferences regarding how they pay those costs, I test whether willingness to pay for air quality improvements is sensitive to the method of payment. Potential heterogeneity of preferences is modeled through a mixed logit specification. Results indicate positive willingness to pay among Knoxville area residents for improvements in air quality, with vehicle inspection and an increase in the price of gasoline as the preferred payment vehicles over an increase in the electricity bill. Chapter 2 investigates the underlying incentive compatibility of choice experiments with tests of the mechanism in an induced value laboratory setting. The theoretical properties of both dichotomous choice and trichotomous choice elicitation formats are explored under plurality voting rules and more generally under the assumption that the respondent perceives her decision to have some influence on the outcome. Results indicate that certain belief structures can lead to incentive compatible outcomes in a trichotomous choice format, depending on how a respondent believes the agency will incorporate respondent decisions into the provision of a public good. In addition, the trichotomous choice treatments had fewer deviations from theory and were less subject to status quo bias than treatments with dichotomous choice questions. Implications for the design of choice experiments and contingent valuation surveys are discussed

Managerial risk in information technology investments : effects of framing, narrow framing and time inconsistent preferences on real options exercise decisions

Real options theory has been advocated as a solution to risky IT investment decisions. IT investments decisions are risky due to uncertainty around future outcomes and the inability of traditional financial measures (like NPV, IRR) to account for inherent managerial flexibility. On the one hand, it is argued that real options analysis captures and formalizes managers' intuition, hence creating a disciplined decision making process. On the other hand, the intuitive valuation of the options is criticized due to the prevalent effects of various judgmental biases. In this dissertation, we explore three potential biases that can affect the real option exercise decisions in terms of either suboptimal option exercise choice due to framing and narrow framing effects, or suboptimal exercise time due to time inconsistent preferences of IT managers. We test for framing effects in individual IT project decisions and narrow framing effects in IT portfolio decisions, by conducting an online experiment among top and mid-level IT professionals. The results show that IT professionals are prone to framing real options at exercise time and simplifying complicated real option exercise decisions by isolating them in IT portfolios. Further, their decisions are influenced by their personal risk preferences. We analyze the effect of time-inconsistent preferences of present-biased managers on the exercise time of real growth and abandonment options and the realized values using a discrete time option valuation model. The results show that present-biased managers are more likely to exercise growth options early when the net payoffs are low, the growth option payoffs have high volatility, and the risk free discount rate is small. Also, present-biased managers are more likely to exercise abandonment option late when the net payoffs from continuing the project are high, salvage value of the project is low, and the rate of change in the salvage value over the period of time is low. In addition, present biased managers are more likely to exercise a growth option early in its life when the project is performing well. We provide implications for practice and IT governance

Attention and preference measurement

This dissertation contains two essays examining the role of attention and information processing in stated choices under choice-based preference measurement tasks. While choice experiments have long been used in marketing as a way to measure consumer preferences, full rationality of consumers is always assumed, meaning consumers are able to process all the choice relevant information before making a decision. Moreover, conditioned on the premise that consumers process all the choice-relevant information, incentive-alignment mechanism introduced in choice experiments are considered the gold standard for inducing consumers to choose as they would in real-life situations. However, if consumers are boundedly rational and processing information is costly, we expect consumers to maximize not only the utility derived from the option they choose but also the utility derived from the process. Therefore, given a certain incentive structure, the amount of information processed by consumers is endogenized by individual preference toward the focal product in a choice experiment. Furthermore, research has shown that varying incentives in experiments might also result in changes in attention, which implies that the amount of attention paid in real-life choice situations (the probability of realizing a choice is 1) is different than the attention paid to choices paired with smaller incentives in most preference-measurement tasks (the probability of realizing a choice is strictly greater than 0 but lower than 1). In this dissertation, we first focus in Chapter 1 on the link between information processing and stated choices in an incentive-alignment choice experiment by developing a new preference measurement. We explore the impact of incentives on attention, information processing, and stated choices by conducting an experiment described in Chapter 2. In Chapter 1, we develop a dynamic discrete choice model of information search and choice under bounded rationality, that we calibrate using a combination of eye-tracking and choice data. Our model extends the directed cognition model of Gabaix et al. (2006) by capturing fatigue, proximity effects, and imperfect memory encoding and by estimating individual-level parameters and partworths within a likelihood-based, hierarchical Bayesian framework. We show that modeling eye movements as the outcome of forward-looking utility maximization improves out-of-sample predictions, enables researchers and practitioners to use shorter questionnaires, and allows better discrimination between attributes. In Chapter 2, we empirically investigate whether incentives impact attention, information processing, and stated choices. We vary the probability that the respondent's choice will be realized from 0 (hypothetical) to 0.01, 0.50, 0.99, and 1 (deterministic) and collect data on both response times and eye tracking. We find a U-shaped relationship between the probability that the choice will be realized and the level of attention. Hypothetical questions and deterministic questions induce similar attention and information processing but different choices