Assistant Professor of Business Administration
Ray Weaver is an Assistant Professor at Harvard Business School, where he teaches the first-year MBA course in marketing. His research focuses on social learning: the ways and extent to which people determine their wants and needs using information from the social environment. In addition to his academic career, Ray has held several positions at consulting and information technology firms, concentrating on the marketing of new technologies.
Most recently, Ray worked for Akamai, a Cambridge-based Internet infrastructure services company. As Akamai’s first marketing employee, he played a key role in shaping the company’s brand and marketing strategy during its rapid growth from no revenue to over $90M in its first full year of operations. Ray was Product Manager for Akamai’s first offering, and later Director of Product Marketing for its rich media product. He worked with customers from a wide variety of industries including media, entertainment and electronic commerce.
Prior to Akamai, Ray was a member of Intel’s mobile products group in Santa Clara. There, he helped launch Bluetooth and other wireless communications technologies. Ray also worked in the Chicago office of Deloitte Consulting. At Deloitte, he designed information systems for clients in the health care and transportation industries.
Ray received his Ph.D. in management science from MIT. He also holds an MBA from the Wharton School, where he was a Palmer Scholar; and B.S. degrees in computer science and electrical engineering from Washington University in St. Louis, at which he was a Woodward Fellow.
On November 4, 2011, Groupon, a marketing services company that promoted local businesses by selling deeply discounted vouchers for their products and services, completed its initial public offering that valued the company at $17 billion. Within a year Groupon's share price tumbled dramatically as the novelty for consumers started to wear off and merchants began to question the value of Groupon for their businesses. Is Groupon good for merchants? What are the future prospects for Groupon?
Keywords: Budgets and Budgeting;
Growth and Development;
Gupta, Sunil, Ray Weaver, and Dharmishta Rood. "Groupon.
" Harvard Business School Case 511-094, August 2012. (Revised from original March 2011 version.)
Angie's List is a paid subscription-based service that gives consumers online access to member-submitted reviews of plumbers, electricians, and other home service providers. Customer and revenue growth are strong, but customer acquisition costs are high and the company is unprofitable. It also faces increasing competition from free alternatives which have generated heavy buzz by creating a fun, social user experience. To survive in this environment, the CEO must decide how best to balance growth and profits: maintain the current course, launch a new product focused on health care provider reviews, reduce advertising expenses, or even eliminate its subscription fee.
Keywords: Online Technology;
Weaver, Ray. "Angie's List." Harvard Business School Case 511-063, September 2010.
What Happens When Deals Interfere with Preferences?
The idea that consumers are affected by what they perceive to be good or bad deals has both intuitive appeal and empirical support. Previous research has shown that this transaction utility can influence willingness to pay, compensation demanded, and brand choice. These findings suggest an intriguing possibility: Can transaction utility interfere with “real” preferences so thoroughly that consumers simultaneously choose one good but pay or demand more for a different one? We find that it can. We rule out anchoring and response mode compatibility as alternative explanations for our results, and show that an aversion to bad deals has greater influence than an attraction to good deals. Because transaction prices are highly sensitive to even arbitrary suggested reference prices, and non-transactional measures are remarkably insensitive to them, we argue that concerns about the merits of he deal distort rather than reflect true preferences.
Brands and Branding;
Demand and Consumers;
Power and Influence;
Preference Reversals Caused by Transaction Disutility
Weaver, Ray. "Preference Reversals Caused by Transaction Disutility."
Transaction Disutility and the Endowment Effect
Acquiring a good seems to increase its value to the owner, as owners generally demand more to sell than non-owners are willing to pay. This endowment effect is typically explained as loss aversion: the prospect of losing possessions causes psychological pain for which sellers demand a premium as compensation. An alternative explanation is transaction disutility: people are reluctant to trade on subjectively disadvantageous or unfair terms. Consumers evaluate trades against perceived market prices, and because market prices usually exceed the value of ownership to most consumers, sellers experience transaction disutility and demand high reservation prices. We show that reducing reference prices shrinks or eliminates the endowment effect. Moreover, further reducing prices to levels below consumer values induces transaction disutility in buyers. Thus, the size of the endowment effect is U-shaped as a function of reference price. We also find that the effect is smallest among people who most value the good. These results suggest that an aversion to bad deals, not an aversion to losing possessions per se, causes buying and selling prices to diverge.
Goods and Commodities;
Demand and Consumers;
Creating Truthtelling Incentives with the Bayesian Truth Serum
The “Bayesian Truth Serum” (BTS) is a survey scoring method that provides truthtelling incentives for respondents answering multiple-choice questions about intrinsically private matters: opinions, tastes, past behavior. The method requires respondents to supply not only their own answers, but also percentage estimates of others’ answers. The formula then assigns high scores to answers that are surprisingly common, i.e. whose actual frequency exceeds their predicted frequency. Two studies demonstrate that this method both encourages and rewards truthful responses. First, we conducted a general knowledge questionnaire in which we listed items such as brand names, famous people, and scientific terms. One-third of the items were nonexistent foils. Respondents who were paid for higher BTS scores claimed to recognize fewer foils, even when given competing incentives to overclaim their knowledge. Participants also earned more money when they denied knowledge of foils. Our second study explored whether survey takers could exploit the system using strategic deception. We found that they could not: on four surveys with diverse content, truthtelling outscored the wide variety of deception strategies we tested.
Keywords: Forecasting and Prediction;
Motivation and Incentives;
Prelec, Drazen, and Ray Weaver. "Creating Truthtelling Incentives with the Bayesian Truth Serum.
" August 2008. (Received a Best Paper Award at the 2010 International Conference on Modelling and Simulation in Engineering, Economics and Management (MS 2010) from the Association for Modelling and Simulation in Enterprises.)