Human behavior and decision-making

Human behavior and decision-making is a featured research topic at Harvard Business School.
Ever since their origins about three decades ago, the Behavioral Science areas of economics, ethics and managerial psychology have been rapidly evolving. In the 1980's and 1990's, early work by Max Bazerman in judgment and negotiation, Matthew Rabin in behavioral economics, and James Sebenius in negotiations was instrumental in shaping research on Human Behavior & Decision-Making. Today, our research focuses on individual and interactive judgment and decision making and explores the role of personal bias, cognition and learning, time, perception, ethics and morality, and emotion.  
  1. Men as Cultural Ideals: How Culture Shapes Gender Stereotypes

    Amy Cuddy, Elizabeth Baily Wolf, Peter Glick and Michael I. Norton

    Four studies test whether cultural values moderate the content of gender stereotypes, such that male stereotypes more closely align with core cultural values (specifically, individualism vs. collectivism) than do female stereotypes. In Studies 1 and 2, using different measures, Americans rated men as less collectivistic than women, whereas Koreans rated men as more collectivistic than women. In Study 3, bi-cultural Korean Americans who completed a survey in English about American targets rated men as less collectivistic than women, whereas those who completed the survey in Korean about Korean targets did not, demonstrating how cultural frames influence gender stereotype content. Study 4 tested generalizability by reanalyzing Williams and Best's (1990) cross-national gender stereotype data across 26 nations. National-level collectivism strongly correlated with viewing collectivistic traits as more, and individualistic traits as less, stereotypically masculine. Together, the four studies show strong support for the cultural moderation hypothesis, qualifying past conclusions about the universality of the content of gender stereotypes.

    Keywords: gender; stereotypes; Gender Characteristics; United States; South Korea;


    Cuddy, Amy, Elizabeth Baily Wolf, Peter Glick, and Michael I. Norton. "Men as Cultural Ideals: How Culture Shapes Gender Stereotypes." Paper presented at the 15th Society for Personality and Social Psychology Annual Meeting, Austin, TX, February 15, 2014. View Details
  2. Risk, Information, and Incentives in Online Affiliate Marketing

    Benjamin Edelman and Wesley Brandi

    We examine online affiliate marketing programs in which merchants oversee thousands of affiliates they have never met. Some merchants hire outside specialists to set and enforce policies for affiliates, while other merchants ask their ordinary marketing staff to perform these functions. For clear violations of applicable rules, we find that outside specialists are most effective at excluding the responsible affiliates, which we interpret as a benefit of specialization. However, in-house staff are more successful at identifying and excluding affiliates whose practices are viewed as "borderline" (albeit still contrary to merchants' interests), foregoing the efficiencies of specialization in favor of the better incentives of a company's staff. We consider the implications for marketing of online affiliate programs and for online marketing more generally.

    Keywords: affiliate marketing; incentives; fraud; advertising; Online Technology; Marketing Communications; Ethics; Online Advertising;


    Edelman, Benjamin, and Wesley Brandi. "Risk, Information, and Incentives in Online Affiliate Marketing." Journal of Marketing Research (JMR) 52, no. 1 (February 2015): 1–12. (Lead Article.) View Details
  3. Location Choices under Strategic Interactions

    Juan Alcacer, Cristian Dezso and Minyuan Zhao

    The literature on location choices has mostly emphasized the impact of location and firm characteristics. However, most industries with a significant presence of multi-location firms are oligopolistic in nature, which suggests that strategic interaction among firms plays an important role in firms' decision-making processes. This paper explores how strategic interaction among competitors affects firms' geographic expansion across time and markets. Specifically, we build a model in which two firms that differ in their capabilities enter sequentially into two markets with different potentials for profit. The model is solved using game theory under three learning scenarios that capture the ability of a firm to transfer its capabilities across markets: no learning, local learning, and global learning. Three equilibrium strategies arise: accommodate, marginalize, and collocate. We identify how these strategies emerge depending on the tradeoff between the opportunity costs of absence (giving competitors a lead in a market) and the entrenchment benefits (the cost advantage firms develop through learning-by-doing when they enter early). Both the opportunity costs of absence and the entrenchment benefits vary according to initial relative firm capabilities, relative market profitability, and learning rates. Our model offers a comprehensive approach to understanding the drivers of firm location choices by modeling not only the impact of location and firm heterogeneity, but also the strategic interaction among firms.

    Keywords: Location strategies; multinational strategy; oligopolistic competition; game theory; firm heterogeneity; Geographic Location; Multinational Firms and Management; Balance and Stability; Decision Choices and Conditions; Game Theory;


    Alcacer, Juan, Cristian Dezso, and Minyuan Zhao. "Location Choices under Strategic Interactions." Strategic Management Journal 36, no. 2 (February 2015): 197–215. View Details
  4. CVS Health: Promoting Drug Adherence

    Leslie John, John Quelch and Robert Huckman

    The case describes a program that CVS Health recently implemented to improve medication adherence, an important problem from a societal, public policy, and firm perspective. A test of the program, costing hundreds of thousands of dollars to implement, increased the proportion of adherent customers by 1.4 percentage points. Students are asked to quantify the system-wide economic benefit of this improvement and draw upon insights from behavioral science to examine approaches for boosting medication adherence.

    Keywords: marketing strategy; medication adherence; Affordable Care Act (ACA); Marketing Strategy; Communication Strategy; Customer Value and Value Chain; Decisions; Health Care and Treatment; Goals and Objectives; Resource Allocation; Marketing Communications; Consumer Behavior; Measurement and Metrics; Service Delivery; Behavior; Motivation and Incentives; Social Issues; Information Technology; Value Creation; Health Industry; Pharmaceutical Industry; Insurance Industry; Public Relations Industry; Retail Industry; United States;


    John, Leslie, John Quelch, and Robert Huckman. "CVS Health: Promoting Drug Adherence." Harvard Business School Case 515-010, January 2015. View Details
  5. Mobile Money: The Effect of Service Quality and Competition on Demand

    Karthik Balasubramanian and David F. Drake

    The use of electronic money transfer through cellular networks ("mobile money") is rapidly increasing in the developing world. The resulting electronic currency ecosystem could improve the lives of the estimated 2 billion people who live on less than $2 a day by facilitating more secure, accessible, and reliable ways to store and transfer money than are currently available. The development of this ecosystem requires a network of agents to conduct cash-for-electronic value transactions and vice versa. This paper estimates the effect of competition and service quality on mobile money demand. In this setting, service quality consists of service reliability (lower stockout and system downtime rates), pricing transparency, and agent expertise. Among our results, we find that agents experience reduced demand for service failures due to stockouts, but not for service failures due to network downtime, suggesting that consumers differentially ascribe responsibility for service failure based on the type of failure they experience. We find that both stockout rate and agent expertise are important competitive dimensions in this setting. Pricing transparency, on the other hand, has a main effect on demand but has no significant interaction with competitive intensity. This paper furthers our understanding of the impact and interaction of quality and competition in service settings, while developing a foundation for the exploration of mobile money by OM scholars.

    Keywords: service operations; operations strategy; competition; base of the pyramid; mobile money; Competition; Currency; Service Operations; Mobile Technology;


    Balasubramanian, Karthik, and David F. Drake. "Mobile Money: The Effect of Service Quality and Competition on Demand." Harvard Business School Working Paper, No. 15-059, January 2015. View Details
  6. Match Your Own Price? Self-Matching as a Retailer's Multichannel Pricing Strategy

    Pavel Kireyev, Vineet Kumar and Elie Ofek

    Multichannel retailing has created several new strategic choices for firms. With respect to pricing, an important decision is whether to offer a "self-matching policy." Self-matching allows a multichannel retailer to offer the lowest of its online and in-store prices to consumers. In practice, we observe considerable heterogeneity in self-matching policies: there are firms that offer to self-match and firms that explicitly state they will not match prices across channels. Using a game-theoretic model, we investigate the strategic forces behind the adoption (or non-adoption) of self-matching across a range of competitive scenarios, including a monopolist, a mixed duopoly comprised of a multichannel retailer competing with a pure e-tailer, as well as two competing multichannel retailers. Even though self price matching is likely to reduce a retailer's profits, with some consumers paying the lower price, we uncover two novel mechanisms that can make self-matching profitable in a duopoly setting. Specifically, self-matching can dampen competition, both online and in-store, and its effectiveness in this respect depends on the decision-making stage of various consumers and the heterogeneity of their preference for the online vs. store channels. Surprisingly, self-matching strategies can also be profitable when stores face consumers using smartphones to discover online prices. Our findings provide insights for managers on how and when self-matching can be an effective pricing strategy to embrace.

    Keywords: Price Self-matching; multichannel retailing; Pricing strategy; Marketing Strategy; Price; Distribution Channels; Supply and Industry; Retail Industry;


    Kireyev, Pavel, Vineet Kumar, and Elie Ofek. "Match Your Own Price? Self-Matching as a Retailer's Multichannel Pricing Strategy." Harvard Business School Working Paper, No. 15-058, January 2015. View Details
  7. Regulator Leniency and Mispricing in Beneficent Nonprofits

    Jonas Heese, Ranjani Krishnan and Frank Moers

    We posit that nonprofits that provide a greater supply of unprofitable services (beneficent nonprofits) face lenient regulatory enforcement for mispricing in price-regulated markets. Consequently, beneficent nonprofits exploit such regulatory leniency and exhibit higher mispricing. Drawing on organizational legitimacy theory, we argue that both regulators and beneficent nonprofits seek to protect their legitimacy with stakeholders, including those who demand access to unprofitable services. Using data from hospitals, we examine mispricing via "upcoding", which involves misclassifying ailment severity. Archival analysis indicates less stringent regulatory enforcement of upcoding for beneficent nonprofit hospitals, defined as hospitals that provide higher charity care and medical education. After observing regulator leniency, beneficent hospitals demonstrate higher upcoding. Our results suggest that lenient enforcement assists beneficent nonprofits to obtain higher revenues in price-regulated markets.

    Keywords: Regulator leniency; nonprofit organizations; beneficence; mispricing; upcoding; Nonprofit Organizations; Fairness; Revenue;


    Heese, Jonas, Ranjani Krishnan, and Frank Moers. "Regulator Leniency and Mispricing in Beneficent Nonprofits." Harvard Business School Working Paper, No. 15-056, January 2015. View Details
  8. Poker-faced Morality: Concealing Emotions Leads to Utilitarian Decision Making

    Jooa Julia Lee and F. Gino

    This paper examines how making deliberate efforts to regulate aversive affective responses influences people's decisions in moral dilemmas. We hypothesize that emotion regulation—mainly suppression and reappraisal—will encourage utilitarian choices in emotionally charged contexts and that this effect will be mediated by the decision maker's decreased deontological inclinations. In Study 1, we find that individuals who endorsed the utilitarian option (vs. the deontological option) were more likely to suppress their emotional expressions. In Studies 2a, 2b, and 3, we instruct participants to either regulate their emotions, using one of two different strategies (reappraisal vs. suppression), or not to regulate, and we collect data through the concurrent monitoring of psycho-physiological measures. We find that participants are more likely to make utilitarian decisions when asked to suppress their emotions rather than when they do not regulate their affect. In Study 4, we show that one's reduced deontological inclinations mediate the relationship between emotion regulation and utilitarian decision making.

    Keywords: Decisions; Moral Sensibility; Emotions;


    Lee, Jooa Julia, and F. Gino. "Poker-faced Morality: Concealing Emotions Leads to Utilitarian Decision Making." Organizational Behavior and Human Decision Processes 126 (January 2015): 49–64. View Details
  9. Bridge the Gap: Rebuilding America’s Middle Skills

    Joseph B. Fuller

    The market for middle-skills jobs—those that require more education and training than a high school diploma but less than a four-year college degree—is consistently failing to clear. That failure is inflicting a grievous cost on the competitiveness of American firms and on the standard of living of American workers. How can business lead the charge to close the gap?

    Keywords: Business or Company Management; Human Capital; Education; Competency and Skills; Macroeconomics; United States;

  10. JBS

    David E. Bell

    JBS is a Brazilian protein company that started in beef, but has quickly expanded into pork and chicken, and around the world. The company has many critics who say it has expanded too quickly and that it is overextended financially. The case allows the reader to form their own opinion and consider whether the success/failure of the company is due to the personal style of the CEO, Wesley Batista. A current issue is the recent expansion of the company into value-added protein products in a division called JBS Foods.

    Keywords: Protein; Beef; Brazil; Prepared Foods; Agribusiness; Agriculture; Expansion; Growth Management; Food; Animal-Based Agribusiness; Agriculture and Agribusiness Industry; Brazil;


    Bell, David E. "JBS." Harvard Business School Case 515-066, December 2014. View Details
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