More Like this

1. Measuring Ex Ante Welfare in Insurance Markets

   https://doi.org/10.1093/restud/rdaa015  

   Hendren, Nathaniel (June 2020, The Review of Economic Studies)

   null (Ed.)

   Abstract The willingness to pay for insurance captures the value of insurance against only the risk that remains when choices are observed. This article develops tools to measure the ex ante expected utility impact of insurance subsidies and mandates when choices are observed after some insurable information is revealed. The approach retains the transparency of using reduced-form willingness to pay and cost curves, but it adds one additional sufficient statistic: the percentage difference in marginal utilities between insured and uninsured. I provide an approach to estimate this additional statistic that uses only the reduced-form willingness to pay curve, combined with a measure of risk aversion. I compare the approach to structural approaches that require fully specifying the choice environment and information sets of individuals. I apply the approach using existing willingness to pay and cost curve estimates from the low-income health insurance exchange in Massachusetts. Ex ante optimal insurance prices are roughly 30% lower than prices that maximize observed market surplus. While mandates reduce market surplus, the results suggest they would actually increase ex ante expected utility. 

   more » « less
2. First-Choice Maximality Meets Ex-ante and Ex-post Fairness

   https://doi.org/10.24963/ijcai.2023/303  

   Guo, Xiaoxi; Sikdar, Sujoy; Xia, Lirong; Cao, Yongzhi; Wang, Hanpin (August 2023, IJCAI)

   For the assignment problem where multiple indivis- ible items are allocated to a group of agents given their ordinal preferences, we design randomized mechanisms that satisfy first-choice maximality (FCM), i.e., maximizing the number of agents as- signed their first choices, together with Pareto- efficiency (PE). Our mechanisms also provide guarantees of ex-ante and ex-post fairness. The generalizedeager Boston mechanism is ex-ante envy-free, and ex-post envy-free up to one item (EF1). The generalized probabilistic Boston mech- anism is also ex-post EF1, and satisfies ex-ante ef- ficiency instead of fairness. We also show that no strategyproof mechanism satisfies ex-post PE, EF1, and FCM simultaneously. In doing so, we expand the frontiers of simultaneously providing efficiency and both ex-ante and ex-post fairness guarantees for the assignment problem. 

   more » « less
3. Welfare Effects of Ex-Ante Bias and Tie-Breaking Rules on Observational Learning with Fake Agents

   https://doi.org/10.23919/WiOpt58741.2023.10349844  

   Poojary, Pawan; Berry, Randall (August 2023, IEEE)

   Networks that provide agents with access to a common database of the agents' actions enable an agent to easily learn by observing the actions of others, but are also susceptible to manipulation by “fake” agents. Prior work has studied a model for the impact of such fake agents on ordinary (rational) agents in a sequential Bayesian observational learning framework. That model assumes that ordinary agents do not have an ex-ante bias in their actions and that they follow their private information in case of an ex-post tie between actions. This paper builds on that work to study the effect of fake agents on the welfare obtained by ordinary agents under different ex-ante biases and different tie-breaking rules. We show that varying either of these can lead to cases where, unlike in the prior work, the addition of fake agents leads to a gain in welfare. This implies that in such cases, if fake agents are absent or are not adequately present, an altruistic platform could artificially introduce fake actions to effect improved learning. 

   more » « less
4. Why ex post peer review encourages high-risk research while ex ante review discourages it

   https://doi.org/10.1073/pnas.2111615118  

   Gross, Kevin; Bergstrom, Carl T. (December 2021, Proceedings of the National Academy of Sciences)

   Peer review is an integral component of contemporary science. While peer review focuses attention on promising and interesting science, it also encourages scientists to pursue some questions at the expense of others. Here, we use ideas from forecasting assessment to examine how two modes of peer review—ex ante review of proposals for future work and ex post review of completed science—motivate scientists to favor some questions instead of others. Our main result is that ex ante and ex post peer review push investigators toward distinct sets of scientific questions. This tension arises because ex post review allows investigators to leverage their own scientific beliefs to generate results that others will find surprising, whereas ex ante review does not. Moreover, ex ante review will favor different research questions depending on whether reviewers rank proposals in anticipation of changes to their own personal beliefs or to the beliefs of their peers. The tension between ex ante and ex post review puts investigators in a bind because most researchers need to find projects that will survive both. By unpacking the tension between these two modes of review, we can understand how they shape the landscape of science and how changes to peer review might shift scientific activity in unforeseen directions. 

   more » « less
5. Not Registered? Please Sign Up First: A Randomized Field Experiment on the Ex Ante Registration Request

   https://doi.org/10.1287/isre.2021.0999  

   Huang, Ni; Mojumder, Probal; Sun, Tianshu; Lv, Jinchi; Golden, Joseph M. (September 2021, Information Systems Research)

   Online commerce websites often request users to register in the online shopping process. Recognizing the challenges of user registration, many websites opt to delay their registration request until the end of the conversion funnel (i.e., ex post registration request). Our study explores an alternative approach by asking users to register with the website at the beginning of their shopping journey (i.e., ex ante registration request). Guided by a stylized analytical model, we conducted a large-scale randomized field experiment in partnership with an online retailer in the United States to examine how the ex ante request affects users’ registration decisions, short-term customer conversions, and long-term purchase behaviors. Specifically, we randomly assigned the new users in the website’s incoming traffic to one of two experimental groups: one with an ex ante registration request preceding the ex post request (treatment) and the other with only an ex post registration request (control). Our results show that the ex ante request leads to an increased probability of user registration; that is, the users in the treatment group, on average, are 58.08% relatively more likely to register with the website than those in the control group. Furthermore, the ex ante request leads to significant increases in customer purchases in the long run. Based on our estimation of the local average treatment effects, the ex ante registered users are 10.89% relatively more likely to make a purchase, place a 16.76% relatively greater number of orders, and generate 13.22% relatively higher total revenue for the firm in the long run. Finally, the ex ante request also does not impact customer conversion in the short-term. Further investigation into the long-term and short-term effects provides suggestive evidence on several potential mechanisms, such as firm-initiated interaction and screening of low-interest users. Our study provides managerial implications to the e-commerce websites on customer acquisition and contributes to the research on IT artifact design. 

   more » « less