I Will Survive: Predicting Business Failures From Customer Ratings

The success, if not survival, of service businesses depends on their ability to satisfy their customers. Yet, businesses often recognize slumping customer satisfaction too late and ultimately fail. To prevent this, marketers require early warning tools. In this paper, we build upon online ratings as a direct measure of customer satisfaction and, based on this, predict business failures. Specifically, we develop a variable-duration hidden Markov model; it models the rating sequence of a service business in order to predict the likelihood of failure. Using 64,887 ratings from 921 restaurants, we find that our model detects business failures with a balanced accuracy of 78.02%, and this prediction is even possible several months in advance. In comparison, simple metrics from practice have limited ability in predicting business failures; for instance, the mean rating yields a balanced accuracy of only around 50%. Furthermore, our model recovers a latent state (“at risk”) with an elevated failure rate. Avoiding the at-risk state is associated with a reduction in the failure rate of more than 41.41%. Our research thus entails direct managerial implications: we assist marketers in monitoring customer satisfaction and, for this purpose, offer a data-driven tool that provides early warnings of impending business failures

Aversive event anticipation affects connectivity between the ventral striatum and the orbitofrontal cortex in an fMRI avoidance task

Ability to anticipate aversive events is important for avoiding dangerous or unpleasant situations. The motivation to avoid an event is influenced by the incentive salience of an event-predicting cue. In an avoidance fMRI task we used tone intensities to manipulate salience in order to study the involvement of the orbitofrontal cortex in processing of incentive salience. In the task, cues predicting either aversive or neutral avoidable tones were presented. Ventral striatum, amygdala and anterior insula activations were significantly stronger during presentation of cues for aversive than neutral tones. A psychophysiological interaction analysis showed stronger connectivity between the ventral striatum and the orbitofrontal cortex during aversive than neutral conditions. The present study shows an interaction between the ventral striatum, a structure previously linked to negative incentive salience, and the orbitofrontal cortex supporting a role for this region in processing salience. In addition, this study replicates previous findings suggesting that the task is robust

DAT1 polymorphism is associated with risk taking in the Balloon Analogue Risk Task (BART)

Twin-studies suggest that a significant portion of individual differences in the propensity to take risks resides in people's genetic make-up and there is evidence that variability in dopaminergic systems relates to individual differences in risky choice. We examined the link between risk taking in a risk taking task (the Balloon Analogue Risk Task, BART) and a variable number tandem repeat (VNTR) polymorphism in the 3'UTR of the dopamine transporter gene (SLC6A3/DAT1). Behavior in BART is known to be associated with activity in striatal reward-processing regions, and DAT1 is assumed to modulate striatal dopamine levels. We find that carriers of DAT1 alleles, which presumably result in lower striatal dopamine availability, showed more risk taking, relative to carriers of the alleles associated with higher striatal dopamine availability. Our analyses suggest that the mechanism underlying this association is diminished sensitivity to rewards among those who take more risks. Overall, our results support the notion that a behavioral genetic approach can be helpful in uncovering the basis of individual differences in risk taking

The neural correlates of health risk perception in individuals with low and high numeracy

The ability to use numerical information in different contexts is a major goal of mathematics education. In health risk communication, outcomes of a medical condition are frequently expressed in probabilities. Difficulties to accurately represent probability information can result in unfavourable medical decisions. To support individuals with low-numeracy skills, pictographs such as graphs or icon arrays have been proposed to increase risk communication. The neurocognitive mechanism underlying the processing of health risk perception in individuals with low- and high-numeracy remain to be explored. To investigate the neural correlates of health risk perception, the brain responses of individuals with low- and high-numeracy were measured using functional magnetic resonance imaging. In the health risk perception condition, participants were instructed to indicate how concerned they would be of having cancer, given an icon array in which the probability of developing cancer was displayed. In the number line condition the same icon arrays were presented and participants were instructed to indicate the absolute number of displayed black icons. Results of the study showed that the low-numeracy group was more accurate in the health risk condition compared to the high-numeracy group, which overestimated health risks. A comparison of brain activation between the groups demonstrated that the high-numeracy group expressed larger brain engagement during the health risk condition in regions that are commonly associated with conflict monitoring, decision-making and emotional processing. These results provide initial evidence that individuals with high-numeracy engage regions of the brain to a different extent compared to individuals with low-numeracy.ISSN:1615-679XISSN:1863-969