As technology platforms have created new markets and new ways of acquiring information, economists have come to play an increasingly central role in tech companies-tackling problems such as platform design, strategy, pricing, and policy. Over the past five years, hundreds of PhD economists have accepted positions in the technology sector. In this paper, we explore the skills that PhD economists apply in tech companies, the companies that hire them, the types of problems that economists are currently working on, and the areas of academic research that have emerged in relation to these problems.
Michael Luca
Lee J. Styslinger III Associate Professor of Business Administration
Lee J. Styslinger III Associate Professor of Business Administration
An interview with Susan Athey and Michael Luca about the mutual influence between economics and the tech sector.
Decision Making in a Data-Driven World
Have you logged into Facebook recently? Searched for something on Google? Chosen a movie on Netflix? If so, you've probably been an unwitting participant in a variety of experiments—also known as randomized controlled trials—designed to test the impact of changes to an experience or product. Once an esoteric tool for academic research, the randomized controlled trial has gone mainstream – and is becoming an important part of the managerial toolkit.
In The Power of Experiments: Decision-Making in a Data Driven World, Michael Luca and Max Bazerman explore the value of experiments, and the ways in which they can improve organizational decisions. Drawing on real world experiments and case studies, Luca and Bazerman show that going by gut is no longer enough—successful leaders need frameworks for moving between data and decisions. Experiments can save companies money—eBay, for example, discovered how to cut $50 million from its yearly advertising budget without losing customers. Experiments can also bring to light something previously ignored, as when Airbnb was forced to confront rampant discrimination by its hosts.
The Power of Experiments introduces readers to the topic of experimentation and the managerial challenges that surround them. Looking at experiments in the tech sector and beyond, this book offers lessons and best practices for making the most of experiments.
State waiting periods for handgun purchases prevent about 750 gun deaths each year in the United States, new research has found.
An estimated 910 gun deaths could also be avoided if those policies were adopted nationwide, according to the study, published Monday in the Proceedings of the National Academy of Sciences.
Continue reading here.
Abstract: We study the impact of the minimum wage on firm exit in the restaurant industry, exploiting recent changes in the minimum wage at the city level. The evidence suggests that higher minimum wages increase overall exit rates for restaurants. However, lower quality restaurants, which are already closer to the margin of exit, are disproportionately impacted by increases to the minimum wage. Our point estimates suggest that a one dollar increase in the minimum wage leads to a 14 percent increase in the likelihood of exit for a 3.5-star restaurant (which is the median rating), but has no discernible impact for a 5-star restaurant (on a 1 to 5 star scale).
Some restaurants owners have argued that raising the minimum wage may force them to close, or cut staff. Now a new study suggests that this only really happens to restaurants with lower customer satisfaction ratings as measured by Yelp.
Abstract: In an experiment on Airbnb, we find that applications from guests with distinctively African American names are 16 percent less likely to be accepted relative to identical guests with distinctively white names. Discrimination occurs among landlords of all sizes, including small landlords sharing the property and larger landlords with multiple properties. It is most pronounced among hosts who have never had an African American guest, suggesting only a subset of hosts discriminate. While rental markets have achieved significant reductions in discrimination in recent decades, our results suggest that Airbnb's current design choices facilitate discrimination and raise the possibility of erasing some of these civil rights gains.
NPR Hidden Brain Podcast
In the sharing economy, the goal to personalize the exchange can have some unintended consequences. The Hidden Brain podcast explores how discrimination plays out on AirBnB.
The company announced plans to combat discrimination on its platform. It’s still falling
short.
Not that long ago, online commerce promised not only to make markets more efficient but also more inclusive and less prone to discrimination. The rationale was simple: On the internet, no one knows whether you’re black or white, male or female, making it more difficult for discrimination to occur. Those early ideals have long since withered, as Airbnb and other online platforms have increasingly asked buyers and sellers to provide pictures and other racially identifying information to counterparties. Even worse, the emergence of discrimination in online markets is undoing gains that occurred in offline markets through decades of regulation and enforcement.
Read the rest of the story at Slate.
Read the rest of the story at Slate.
In the late 1980s, law professors Ian Ayres and Peter Siegelman set out to learn whether blacks and women got the same deals as white men when buying a new car. They trained 38 people—some white and some black, some male and some female—to negotiate a purchase using a fixed script, and uncovered disturbing differences: Across 153 dealerships, black and female buyers paid more for the same cars than white men did, with black women paying the most—on average, nearly $900 more than white men. Although the findings weren’t a surprise to most people, least of all to blacks and women, they were a compelling demonstration of just how discriminatory markets can be.
Read the rest at hbr.org.
Read the rest at hbr.org.
Most managers’ jobs involve making predictions. When HR specialists decide whom to hire, they’re predicting who will be most effective. When marketers choose which distribution channels to use, they’re predicting where a product will sell best. When VCs determine whether to fund a start-up, they’re predicting whether it will succeed. To make these and myriad other business predictions, companies today are turning more and more to computer algorithms, which perform step-by-step analytical operations at incredible speed and scale.
Read the rest at hbr.org.
Read the rest at hbr.org.
This article lays out seven steps to ensure that your experiment delivers.
Michael Luca is the Lee J. Styslinger III Associate Professor of Business Administration at Harvard Business School, and a faculty research fellow at the NBER. Professor Luca's research, teaching, and advisory work focuses on the design of online platforms, and on the ways in which data can inform managerial and policy decisions. His research has been published in academic journals including the Journal of Economic Perspectives, Management Science, the Proceedings of the National Academy of Sciences, American Economic Review: Papers and Proceeding, the American Economic Journal: Applied Economics, and the American Economic Journal: Microeconomics. He has also written about behavioral economics and online platforms for media outlets including The Wall Street Journal, The Atlantic, Wired, and Slate. His research has been written about in a variety of media outlets including The Wall Street Journal, New York Times, New Yorker, Atlantic, Economist, Washington Post, Financial Times, Guardian, Huffington Post, Harvard Business Review, Time, USA Today, Boston Globe, LA Times, San Francisco Chronicle, Fortune, Mashable, GQ, Wired, and Vox.
At Harvard, Professor Luca developed and teaches an MBA course called Data Driven Leadership. He has taught and developed materials for executive education and MBA courses on business analytics, behavioral economics, and leadership.
Professor Luca's current and past advisory roles include Board Member of the National Association for Business Economics (NABE), Academic Advisory Board Member of the Behavioural Insights Team, Advisory Board Member for the OECD Digital for SMEs Global Initiative, and Advisory Board Member for the CNBC Technology Executive Council.
- Featured Work
-
As technology platforms have created new markets and new ways of acquiring information, economists have come to play an increasingly central role in tech companies-tackling problems such as platform design, strategy, pricing, and policy. Over the past five years, hundreds of PhD economists have accepted positions in the technology sector. In this paper, we explore the skills that PhD economists apply in tech companies, the companies that hire them, the types of problems that economists are currently working on, and the areas of academic research that have emerged in relation to these problems.
An interview with Susan Athey and Michael Luca about the mutual influence between economics and the tech sector.
Decision Making in a Data-Driven WorldHave you logged into Facebook recently? Searched for something on Google? Chosen a movie on Netflix? If so, you've probably been an unwitting participant in a variety of experiments—also known as randomized controlled trials—designed to test the impact of changes to an experience or product. Once an esoteric tool for academic research, the randomized controlled trial has gone mainstream – and is becoming an important part of the managerial toolkit.
In The Power of Experiments: Decision-Making in a Data Driven World, Michael Luca and Max Bazerman explore the value of experiments, and the ways in which they can improve organizational decisions. Drawing on real world experiments and case studies, Luca and Bazerman show that going by gut is no longer enough—successful leaders need frameworks for moving between data and decisions. Experiments can save companies money—eBay, for example, discovered how to cut $50 million from its yearly advertising budget without losing customers. Experiments can also bring to light something previously ignored, as when Airbnb was forced to confront rampant discrimination by its hosts.
The Power of Experiments introduces readers to the topic of experimentation and the managerial challenges that surround them. Looking at experiments in the tech sector and beyond, this book offers lessons and best practices for making the most of experiments.
State waiting periods for handgun purchases prevent about 750 gun deaths each year in the United States, new research has found.
An estimated 910 gun deaths could also be avoided if those policies were adopted nationwide, according to the study, published Monday in the Proceedings of the National Academy of Sciences.
Continue reading here.Abstract: We study the impact of the minimum wage on firm exit in the restaurant industry, exploiting recent changes in the minimum wage at the city level. The evidence suggests that higher minimum wages increase overall exit rates for restaurants. However, lower quality restaurants, which are already closer to the margin of exit, are disproportionately impacted by increases to the minimum wage. Our point estimates suggest that a one dollar increase in the minimum wage leads to a 14 percent increase in the likelihood of exit for a 3.5-star restaurant (which is the median rating), but has no discernible impact for a 5-star restaurant (on a 1 to 5 star scale).Some restaurants owners have argued that raising the minimum wage may force them to close, or cut staff. Now a new study suggests that this only really happens to restaurants with lower customer satisfaction ratings as measured by Yelp.Abstract: In an experiment on Airbnb, we find that applications from guests with distinctively African American names are 16 percent less likely to be accepted relative to identical guests with distinctively white names. Discrimination occurs among landlords of all sizes, including small landlords sharing the property and larger landlords with multiple properties. It is most pronounced among hosts who have never had an African American guest, suggesting only a subset of hosts discriminate. While rental markets have achieved significant reductions in discrimination in recent decades, our results suggest that Airbnb's current design choices facilitate discrimination and raise the possibility of erasing some of these civil rights gains.NPR Hidden Brain PodcastIn the sharing economy, the goal to personalize the exchange can have some unintended consequences. The Hidden Brain podcast explores how discrimination plays out on AirBnB.The company announced plans to combat discrimination on its platform. It’s still falling short.Not that long ago, online commerce promised not only to make markets more efficient but also more inclusive and less prone to discrimination. The rationale was simple: On the internet, no one knows whether you’re black or white, male or female, making it more difficult for discrimination to occur. Those early ideals have long since withered, as Airbnb and other online platforms have increasingly asked buyers and sellers to provide pictures and other racially identifying information to counterparties. Even worse, the emergence of discrimination in online markets is undoing gains that occurred in offline markets through decades of regulation and enforcement.
Read the rest of the story at Slate.In the late 1980s, law professors Ian Ayres and Peter Siegelman set out to learn whether blacks and women got the same deals as white men when buying a new car. They trained 38 people—some white and some black, some male and some female—to negotiate a purchase using a fixed script, and uncovered disturbing differences: Across 153 dealerships, black and female buyers paid more for the same cars than white men did, with black women paying the most—on average, nearly $900 more than white men. Although the findings weren’t a surprise to most people, least of all to blacks and women, they were a compelling demonstration of just how discriminatory markets can be.
Read the rest at hbr.org.Most managers’ jobs involve making predictions. When HR specialists decide whom to hire, they’re predicting who will be most effective. When marketers choose which distribution channels to use, they’re predicting where a product will sell best. When VCs determine whether to fund a start-up, they’re predicting whether it will succeed. To make these and myriad other business predictions, companies today are turning more and more to computer algorithms, which perform step-by-step analytical operations at incredible speed and scale.
Read the rest at hbr.org.This article lays out seven steps to ensure that your experiment delivers. - Journal Articles
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- Luca, Michael. "Where Have All the Good Men Gone? Book Review of 'The Two-Parent Privilege' by Melissa S. Kearney." Wall Street Journal (September 25, 2023), A.17. View Details
- Athey, Susan, Kristen Grabarz, Michael Luca, and Nils Wernerfelt. "Digital Public Health Interventions at Scale: The Impact of Social Media Advertising on Beliefs and Outcomes Related to COVID Vaccines." e2208110120. Proceedings of the National Academy of Sciences 120, no. 5 (January 23, 2023). View Details
- Glaeser, Edward L., Michael Luca, and Erica Moszkowski. "Gentrification and Retail Churn: Theory and Evidence." Art. 103879. Regional Science and Urban Economics 100 (May 2023). View Details
- Dai, Weijia, Hyunjin Kim, and Michael Luca. "Which Firms Gain from Digital Advertising? Evidence from a Field Experiment." Marketing Science 42, no. 3 (May–June 2023): 429–439. View Details
- Balla-Elliott, Dylan, Zoë B. Cullen, Edward L. Glaeser, Michael Luca, and Christopher Stanton. "Determinants of Small Business Reopening Decisions After COVID Restrictions Were Lifted." Journal of Policy Analysis and Management 41, no. 1 (Winter 2022): 278–317. View Details
- Luca, Michael, Ginger Zhe Jin, and Daniel Martin. "Strategic Complexity? Using Experiments to Understand and Overcome Obfuscation." Management Science Review (June 29, 2022). (Summary of "Complex Disclosure," Management Science, May 2022.) View Details
- Jin, Ginger Zhe, Michael Luca, and Daniel Martin. "Complex Disclosure." Management Science 68, no. 5 (May 2022): 3236–3261. View Details
- Glaeser, Edward L., Ginger Zhe Jin, Michael Luca, and Benjamin T. Leyden. "Learning from Deregulation: The Asymmetric Impact of Lockdown and Reopening on Risky Behavior During COVID-19." Journal of Regional Science 61, no. 4 (June, 2021): 696–709. View Details
- Luca, Michael, and Oren Reshef. "The Effect of Price on Firm Reputation." Management Science 67, no. 7 (July 2021): 4408–4419. View Details
- Jin, Ginger Zhe, Michael Luca, and Daniel Martin. "Is No News (Perceived as) Bad News? An Experimental Investigation of Information Disclosure." American Economic Journal: Microeconomics 13, no. 2 (May 2021): 141–173. View Details
- Dai, Weijia (Daisy), and Michael Luca. "Digitizing Disclosure: The Case of Restaurant Hygiene Scores." American Economic Journal: Microeconomics 12, no. 2 (May 2020): 41–59. View Details
- Bartik, Alexander, Marianne Bertrand, Zoë B. Cullen, Edward L. Glaeser, Michael Luca, and Christopher Stanton. "The Impact of COVID-19 on Small Business Outcomes and Expectations." Proceedings of the National Academy of Sciences 117, no. 30 (July 28, 2020): 17656–66. View Details
- Luca, Michael, and Max Bazerman. "Want to Make Better Decisions? Start Experimenting." MIT Sloan Management Review 61, no. 4 (Summer 2020). View Details
- Luca, Michael, Deepak Malhotra, and Christopher Poliquin. "The Impact of Mass Shootings on Gun Policy." Art. 104083. Journal of Public Economics 181 (January 2020). View Details
- Donaker, Geoff, Hyunjin Kim, and Michael Luca. "Designing Better Online Review Systems." Harvard Business Review 97, no. 6 (November–December 2019): 122–129. View Details
- Kim, Hyunjin, and Michael Luca. "Product Quality and Entering Through Tying: Experimental Evidence." Management Science 65, no. 2 (February 2019): 596–603. View Details
- Glaeser, Edward L., Hyunjin Kim, and Michael Luca. "Nowcasting Gentrification: Using Yelp Data to Quantify Neighborhood Change." AEA Papers and Proceedings 108 (May 2018): 77–82. View Details
- Dai, Weijia, Ginger Jin, Jungmin Lee, and Michael Luca. "Aggregation of Consumer Ratings: An Application to Yelp.com." Quantitative Marketing and Economics 16, no. 3 (September 2018): 289–339. View Details
- Glaeser, Edward L., Scott Duke Kominers, Michael Luca, and Nikhil Naik. "Big Data and Big Cities: The Promises and Limitations of Improved Measures of Urban Life." Economic Inquiry 56, no. 1 (January 2018): 114–137. View Details
- Luca, Michael, Deepak Malhotra, and Christopher Poliquin. "Handgun Waiting Periods Reduce Gun Deaths." Proceedings of the National Academy of Sciences 114, no. 46 (November 14, 2017). View Details
- Edelman, Benjamin, Michael Luca, and Daniel Svirsky. "Racial Discrimination in the Sharing Economy: Evidence from a Field Experiment." American Economic Journal: Applied Economics 9, no. 2 (April 2017): 1–22. View Details
- Chalfin, Aaron, Oren Danieli, Andrew Hillis, Zubin Jelveh, Michael Luca, Jens Ludwig, and Sendhil Mullainathan. "Productivity and Selection of Human Capital with Machine Learning." American Economic Review: Papers and Proceedings 106, no. 5 (May 2016): 124–127. View Details
- Fisman, Ray, and Michael Luca. "Fixing Discrimination in Online Marketplaces." Harvard Business Review 94, no. 12 (November, 2016): 88–95. View Details
- Glaeser, Edward, Andrew Hillis, Scott Duke Kominers, and Michael Luca. "Crowdsourcing City Government: Using Tournaments to Improve Inspection Accuracy." American Economic Review: Papers and Proceedings 106, no. 5 (May 2016): 114–118. View Details
- Luca, Michael, Jon Kleinberg, and Sendhil Mullainathan. "Algorithms Need Managers, Too." Harvard Business Review 94, nos. 1/2 (January–February 2016): 96–101. View Details
- Luca, Michael, and Georgios Zervas. "Fake It Till You Make It: Reputation, Competition, and Yelp Review Fraud." Management Science 62, no. 12 (December 2016): 3412–3427. View Details
- Gilchrist, Duncan S., Michael Luca, and Deepak Malhotra. "When 3+1>4: Gift Structure and Reciprocity in the Field." Management Science 62, no. 9 (September 2016): 2639–2650. View Details
- Luca, Michael, and Jonathan Smith. "Strategic Disclosure: The Case of Business School Rankings." Journal of Economic Behavior & Organization 112 (April 2015): 17–25. View Details
- Bardhan, Pranab, Michael Luca, Dilip Mookherjee, and Francisco Pino. "Evolution of Land Distribution in West Bengal 1967–2004: Role of Land Reform and Demographic Changes." Journal of Development Economics 110 (September 2014): 171–190. View Details
- Dobrescu, Loretti I., Michael Luca, and Alberto Motta. "What Makes a Critic Tick? Connected Authors and the Determinants of Book Reviews." Journal of Economic Behavior & Organization 96 (December 2013): 85–103. View Details
- Luca, Michael, and Jonathan Smith. "Salience in Quality Disclosure: Evidence from the U.S. News College Rankings." Journal of Economics & Management Strategy 22, no. 1 (Spring 2013): 58–77. View Details
- Kang, Jun Seok, Polina Kuznetsova, Yejin Choi, and Michael Luca. "Where Not to Eat? Improving Public Policy by Predicting Hygiene Inspections Using Online Reviews." Proceedings of the Conference on Empirical Methods in Natural Language Processing (2013): 1443–1448. View Details
- Book Chapters
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- Glaeser, Edward L., Hyunjin Kim, and Michael Luca. "Nowcasting the Local Economy: Using Yelp Data to Measure Economic Activity." Harvard Business School Working Paper, No. 18-022, September 2017. (Revised October 2017.) View Details
- Luca, Michael. "User-Generated Content and Social Media." Chap. 12 in Handbook of Media Economics. Vol. 1B, edited by Simon Anderson, Joel Waldfogel, and David Strömberg. North-Holland Publishing Company, 2016. View Details
- Working Papers
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- Aneja, Abhay, Michael Luca, and Oren Reshef. "The Benefits of Revealing Race: Evidence from Minority-owned Local Businesses." Harvard Business School Working Paper, No. 23-042, January 2023. (Revised September 2023.) View Details
- Luca, Michael, Abhishek Nagaraj, and Gauri Subramani. "Getting on the Map: The Impact of Online Listings on Business Performance." Harvard Business School Working Paper, No. 23-031, December 2022. View Details
- Luca, Michael, Elizaveta Pronkina, and Michelangelo Rossi. "Scapegoating and Discrimination in Times of Crisis: Evidence from Airbnb." Harvard Business School Working Paper, No. 23-012, August 2022. (Revised March 2023.) View Details
- Bartik, Alexander, Zoë B. Cullen, Edward L. Glaeser, Michael Luca, Christopher Stanton, and Adi Sunderam. "When Should Public Programs Be Privately Administered? Theory and Evidence from the Paycheck Protection Program." Harvard Business School Working Paper, No. 21-021, August 2020. (Revised July 2023.) View Details
- Bartik, Alexander, Zoë Cullen, Edward L. Glaeser, Michael Luca, and Christopher Stanton. "What Jobs Are Being Done at Home During the COVID-19 Crisis? Evidence from Firm-Level Surveys." Harvard Business School Working Paper, No. 20-138, June 2020. View Details
- Luca, Dara Lee, and Michael Luca. "Survival of the Fittest: The Impact of the Minimum Wage on Firm Exit." Harvard Business School Working Paper, No. 17-088, April 2017. (Revised August 2018.) View Details
- Luca, Michael. "Reviews, Reputation, and Revenue: The Case of Yelp.com." Harvard Business School Working Paper, No. 12-016, September 2011. (Revised March 2016.) View Details
- Edelman, Benjamin, and Michael Luca. "Digital Discrimination: The Case of Airbnb.com." Harvard Business School Working Paper, No. 14-054, January 2014. View Details
- Cases and Teaching Materials
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- Luca, Michael, Jesse M. Shapiro, Adrian Obleton, Evelyn Ramirez, and Nathan Sun. "Experimenting with Algorithm Resume Screening." Harvard Business School Exercise 923-050, June 2023. View Details
- Luca, Michael, Jesse M. Shapiro, and Nathan Sun. "Shanty Real Estate: Teaching Note." Harvard Business School Teaching Note 923-031, January 2023. (Teaching Note for HBS Case Nos. 923-016, 923-017, 923-018, 923-019, 923-020, 923-021, 923-022, and 923-023.) View Details
- Luca, Michael, Jesse M. Shapiro, and Nathan Sun. "Shanty Real Estate: Confidential Information for iBuyer 1." Harvard Business School Exercise 923-019, October 2022. View Details
- Luca, Michael, Jesse M. Shapiro, and Nathan Sun. "Shanty Real Estate: Confidential Information for Homebuyer 1." Harvard Business School Exercise 923-016, October 2022. View Details
- Luca, Michael, Jesse M. Shapiro, and Nathan Sun. "Shanty Real Estate: Confidential Information for Homebuyer 2." Harvard Business School Exercise 923-017, October 2022. View Details
- Luca, Michael, Jesse M. Shapiro, and Nathan Sun. "Shanty Real Estate: Confidential Information for Homebuyer 3." Harvard Business School Exercise 923-018, October 2022. View Details
- Luca, Michael, Jesse M. Shapiro, and Nathan Sun. "Shanty Real Estate: Confidential Information for iBuyer 2." Harvard Business School Exercise 923-020, October 2022. View Details
- Luca, Michael, Jesse M. Shapiro, and Nathan Sun. "Shanty Real Estate: Confidential Information for iBuyer 3." Harvard Business School Exercise 923-021, October 2022. View Details
- Luca, Michael, Jesse M. Shapiro, and Nathan Sun. "Shanty Real Estate: Updated Confidential Information for Homebuyer." Harvard Business School Exercise 923-022, October 2022. View Details
- Luca, Michael, Jesse M. Shapiro, and Nathan Sun. "Shanty Real Estate: Updated Confidential Information for iBuyer." Harvard Business School Exercise 923-023, October 2022. View Details
- Luca, Michael, and Stacy Straaberg. "Racial Discrimination on Airbnb (B)." Harvard Business School Supplement 923-004, August 2022. (Revised January 2023.) View Details
- Luca, Michael, Jesse M. Shapiro, and Julia Kelley. "Real Estate iBuying." Harvard Business School Technical Note 923-001, August 2022. (Revised March 2023.) View Details
- Luca, Michael, and Max Bazerman. "Behavior Change for Good." Harvard Business School Teaching Note 920-041, March 2020. View Details
- Luca, Michael. "Racial Discrimination on Airbnb (A) and (B)." Harvard Business School Teaching Note 920-039, March 2020. (Revised February 2023.) View Details
- Luca, Michael, Scott Stern, Devin Cook, and Hyunjin Kim. "Racial Discrimination on Airbnb (A)." Harvard Business School Case 920-051, March 2020. (Revised August 2022.) View Details
- Luca, Michael. "The Role of Experiments in Organizations." Harvard Business School Module Note 920-044, March 2020. (Revised March 2023.) View Details
- Bazerman, Max, Michael Luca, and Marie Lawrence. "Behavior Change for Good." Harvard Business School Case 920-049, March 2020. View Details
- Luca, Michael, Ariella Kristal, and Emilie Billaud. "Creating the French Behavioral Insights Team." Harvard Business School Case 919-015, December 2018. (Revised June 2020.) View Details
- Beshears, John, Michael Luca, Alister Martin, and Simin Gharib Lee. "Nudging Hand Hygiene Compliance at the Brigham and Women's Hospital." Harvard Business School Case 918-035, March 2018. View Details
- Luca, Michael, Joshua Schwartzstein, and Gauri Subramani. "Managing Diversity and Inclusion at Yelp." Harvard Business School Case 918-009, August 2017. (Revised February 2023.) View Details
- Luca, Michael, Stephanie Chan, and Essie Alamsyah. "Paktor: Designing a Dating App." Harvard Business School Case 918-005, August 2017. (Revised November 2017.) View Details
- Luca, Michael, Kevin Mohan, and Patrick Rooney. "Launching Yelp Reservations." Harvard Business School Teaching Note 917-005, July 2016. View Details
- Luca, Michael, Weijia Dai, and Hyunjin Kim. "Advertising Experiments at RestaurantGrades." Harvard Business School Teaching Note 916-039, March 2016. (Revised February 2023.) View Details
- Dai, Weijia, Hyunjin Kim, and Michael Luca. "Advertising Experiments at RestaurantGrades." Harvard Business School Spreadsheet Supplement 916-702, March 2016. View Details
- Luca, Michael, Weijia Dai, and Hyunjin Kim. "Advertising Experiments at RestaurantGrades." Harvard Business School Exercise 916-038, March 2016. (Revised February 2023.) View Details
- Luca, Michael. "Designing a Dating App." Harvard Business School Background Note 916-030, January 2016. View Details
- Luca, Michael, and Patrick Rooney. "Behavioural Insights Team (A) and (B)." Harvard Business School Teaching Note 916-050, March 2016. (Revised January 2020.) View Details
- Luca, Michael, Kevin Mohan, and Patrick Rooney. "Launching Yelp Reservations (A)." Harvard Business School Case 916-003, July 2015. (Revised April 2016.) View Details
- Luca, Michael, Kevin Mohan, and Patrick Rooney. "Launching Yelp Reservations (B)." Harvard Business School Supplement 916-004, August 2015. View Details
- Luca, Michael, and Patrick Rooney. "Behavioural Insights Team (A)." Harvard Business School Case 915-024, March 2015. (Revised January 2020.) View Details
- Luca, Michael, and Patrick Rooney. "Behavioural Insights Team (B)." Harvard Business School Supplement 915-025, March 2015. (Revised January 2020.) View Details
- Edelman, Benjamin, and Michael Luca. "Airbnb (A)." Harvard Business School Case 912-019, December 2011. (Revised March 2012.) (request a courtesy copy.) View Details
- Edelman, Benjamin, and Michael Luca. "Airbnb (B)." Harvard Business School Supplement 912-020, December 2011. (Revised March 2012.) View Details
- Edelman, Benjamin, and Michael Luca. "Airbnb (A) and (B)." Harvard Business School Teaching Note 912-021, December 2011. (Revised March 2015.) View Details
- Luca, Michael. "Shanty Real Estate: Teaching Note Supplement." Harvard Business School Spreadsheet Supplement 923-715, February 2023. View Details
- Other Publications and Materials
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- Luca, Michael. "What the Research Really Says about American Immigration, Book review of Streets of Gold: America's Untold Story of Immigrant Success, by Ran Abramitzky and Leah Boustan." Washington Post (June 10, 2022). View Details
- Luca, Michael. "In Defense of Online Anonymity." Wall Street Journal (June 18, 2022). View Details
- Luca, Michael, Elizaveta Pronkina, and Michaelangelo Rossi. "Ensuring Your Products Aren’t Used for Discrimination." Harvard Business Review Digital Articles (October 10, 2022). View Details
- Luca, Michael. "The Sinister Logic of Hidden Online Fees." Wall Street Journal (online) (November 23, 2022). View Details
- Luca, Michael. "Leaders: Stop Confusing Correlation with Causation." Harvard Business Review Digital Articles (November 5, 2021). View Details
- Luca, Michael. "The Family Firm Review: Data-Driven Parenting." Wall Street Journal (September 1, 2021). View Details
- Books
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- Luca, Michael, and Max H. Bazerman. The Power of Experiments: Decision-Making in a Data-Driven World. Cambridge, MA: MIT Press, 2020. View Details
- Research Summary
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The growth of consumer review websites over the past decade has revolutionized the way in which consumers learn about product quality. The centrality of information to consumer welfare has also been underscored in public policy debates, where quality disclosure has become an increasingly popular policy instrument. How do these new sources of information affect consumer decisions and firm incentives? Professor Luca uses econometric methods to investigate this question, with a research agenda at the intersection of public policy and industrial organization.
To determine whether online consumer reviews influence the way that reputation is formed, Professor Luca has combined reviews from the website Yelp.com with public restaurant data. He has shown that a one-star increase in Yelp ratings results in a 5- to 9-percent increase in an independent restaurant’s revenue. Further, while chain restaurants are unaffected by rating changes, their market shares decline as Yelp penetrates the market.
Professor Luca also examines which features of review websites have the largest impact on consumer decision making. He has found that while consumers do not use all available information, they respond more strongly when a rating contains more information (number of reviews overall and number of “elite” reviewers).
Consumer reviews are an important source of information in the digital age. Yet there are limits to the role that reviews can play. In a case study, Professor Luca discusses the limits of reviews and how companies can create more comprehensive reputation systems geared toward facilitating trust in online marketplaces. In ongoing research, he is analyzing the role of information in online marketplaces such as Airbnb.
Professor Luca has investigated the relationship among quality disclosure, salience, and consumer behavior. He has found that when colleges are presented by rank in U.S. News & World Report, a one-rank improvement for an institution causes nearly a percentage point increase in the number of applications it receives. Conversely, rankings have no effect on application decisions when colleges are listed alphabetically, even though the quality data and methodology to calculate the rank are provided.
- Additional Information
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Curriculum Vitae
- Areas of Interest
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- decision-making
- electronic commerce
- electronic markets
- user-generated content
- economics
- education
- incentives
- information technology
- market design
- market institutions
- marketing
- social interactions
- word of mouth
- education industry
- information
- internet
- marketing industry
- media
- restaurant
Additional TopicsIndustries - In The News