Negotiation, Organizations & Markets

- September 2024
- Case
Not Everyone’s Cup of Coffee: Organizing the Café Industry

By: Jillian Jordan and Kathleen McGinn
- September 2024
- Case
Not Everyone’s Cup of Coffee: Organizing the Café Industry

By: Jillian Jordan and Kathleen McGinn
- 2024
- Working Paper
How Real Is Hypothetical?: A High-Stakes Test of the Allais Paradox

By: Uri Gneezy, Yoram Halevy, Brian Hall, Theo Offerman and Jeroen van de Ven

Researchers in behavioral and experimental economics often argue that only incentive-compatible mechanisms can elicit effort and truthful responses from participants. Others argue that participants make less-biased decisions when the stakes are sufficiently high. Are these claims correct? We investigate the change in behavior as incentives are scaled up in the Allais paradox, and document an increase, not decrease, in deviations from expected utility with higher stakes. We also find that if one needs to approximate participants’ behavior in real high-stakes Allais (which are often too expensive to conduct), it is better to use hypothetically high stakes than real low stakes, as is typically the practice today.
- 2024
- Working Paper
How Real Is Hypothetical?: A High-Stakes Test of the Allais Paradox

By: Uri Gneezy, Yoram Halevy, Brian Hall, Theo Offerman and Jeroen van de Ven

Researchers in behavioral and experimental economics often argue that only incentive-compatible mechanisms can elicit effort and truthful responses from participants. Others argue that participants make less-biased decisions when the stakes are sufficiently high. Are these claims correct? We investigate the change in behavior as incentives are...
- Working Paper
The Returns to Skills During the Pandemic: Experimental Evidence from Uganda

By: Livia Alfonsi, Vittorio Bassi, Imran Rasul and Elena Spadini

The Covid-19 pandemic represents one of the most significant labor market shocks to the world economy in recent times. We present evidence from a field experiment to understand whether and why skilled and unskilled workers were differentially impacted by the shock, in the context of a low-income economy, Uganda. We leverage a panel of workers and firms, tracked from 2012 to 2022, including high frequency surveys over the pandemic. In 2013, workers were randomly assigned to receive six months of sector-specific vocational training, in one of eight high productivity sectors. We document that over the pandemic, employment and earnings margins follow V-shaped dynamics, whereby the outcomes of treated (skilled) workers are more severely impacted by lockdowns, they recover more quickly between lockdowns, and remain resilient to the shock as the economy recovers. Cumulatively over the pandemic, skilled workers spend 61% more time than controls employed in one of our study sectors, and their total earnings are 17% higher. We explore supply- and demand-side mechanisms through which the returns to skills are maintained through the crisis. We document that skilled workers are more exposed to the shock because they are more likely to be laid off during the first lockdown as firms respond to the rapid, severe and uncertain shock by immediately laying off higher earning workers. However, skilled workers recover quickly because of their greater accumulation of sector-specific experience pre-pandemic, and the certifiability of their skills that allows them to switch employers in the same sector during the crisis. Our findings have implications for understanding the returns to skills acquired through vocational training in good economic times and times of crisis.
- Working Paper
The Returns to Skills During the Pandemic: Experimental Evidence from Uganda

By: Livia Alfonsi, Vittorio Bassi, Imran Rasul and Elena Spadini

The Covid-19 pandemic represents one of the most significant labor market shocks to the world economy in recent times. We present evidence from a field experiment to understand whether and why skilled and unskilled workers were differentially impacted by the shock, in the context of a low-income economy, Uganda. We leverage a panel of workers and...

About the Unit

The NOM Unit seeks to understand and improve the design and management of systems in which people make decisions: that is, design and management of negotiations, organizations, and markets. In addition, members of the group share an abiding interest in the micro foundations of these phenomena.

Our work is grounded in the power of strategic interaction to encourage individuals and organizations to create and sustain value (in negotiations, in organizations, and in markets). We explore these interactions through diverse approaches: Although many of us have training in economics, we also have members with backgrounds in social psychology, sociology, and law.

NOM seeks to apply rigorous scientific methods to real-world problems -- producing research and pedagogy that is compelling to both the academy and practitioners.

Recent Publications

Not Everyone’s Cup of Coffee: Organizing the Café Industry

By: Jillian Jordan and Kathleen McGinn

September 2024 |
Case |
Faculty Research

Citation

Educators

How Real Is Hypothetical?: A High-Stakes Test of the Allais Paradox

By: Uri Gneezy, Yoram Halevy, Brian Hall, Theo Offerman and Jeroen van de Ven

2024 |
Working Paper |
Faculty Research

Researchers in behavioral and experimental economics often argue that only incentive-compatible mechanisms can elicit effort and truthful responses from participants. Others argue that participants make less-biased decisions when the stakes are sufficiently high. Are these claims correct? We investigate the change in behavior as incentives are scaled up in the Allais paradox, and document an increase, not decrease, in deviations from expected utility with higher stakes. We also find that if one needs to approximate participants’ behavior in real high-stakes Allais (which are often too expensive to conduct), it is better to use hypothetically high stakes than real low stakes, as is typically the practice today.

Keywords: Research; Behavioral Finance; Economics; Behavior; Prejudice and Bias

Citation

Read Now

Modest Victims: Victims Who Decline to Broadcast Their Victimization Are Seen As Morally Virtuous

By: Nathan Dhaliwal, Jillian J. Jordan and Pat Barclay

2024 |
Working Paper |
Faculty Research

What do people think of victims who conceal their victimhood? We propose that the decision to not broadcast that one has been victimized serves as a costly act of modesty—in doing so, one is potentially forgoing social support and compensation from one’s community. We posit that individuals who are less demanding and more cooperative are more willing to forego these benefits, such that burying one’s victimhood can serve as a costly signal of virtue. Through a mathematical model, and five empirical studies conducted on Prolific Academic and a university subject pool (total n = 2896), we support the hypothesis that people who decide not to advertise their victim status can be perceived as more cooperative social partners. Moreover, we find that the reputation benefits of burying versus broadcasting can persist even when broadcasting can function to warn other potential victims of an ongoing threat (Study 2), and in contexts where broadcasting would elicit sympathy from observers (Study 3). Interestingly, however, we find that the reputation costs of broadcasting can be mitigated when broadcasting is directed at a smaller audience of close ties (versus a broader audience that includes weak ties) (Study 4). We also find that buriers are seen as less demanding than broadcasters (Study 4), and provide evidence that attributions of reduced demandingness may underlie preferences for buriers: when participants have access to direct information about a victim’s level of demandingness, the reputation benefits of burying relative to broadcasting are attenuated (Study 5). Together, this research suggests that declining to broadcast one’s status as a victim is perceived as a costly signal of virtue.

Keywords: Public Opinion; Mathematical Methods; Communication; Perception; Reputation

Citation

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Partisans neither Expect nor Receive Reputational Rewards for Sharing Falsehoods over Truth Online.

By: Isaias Ghezae, Jillian J. Jordan, Izzy Gainsburg, Mohsen Mosleh, Gordon Pennycook, Robb Willer and David Rand

August 2024 |
Article |
PNAS Nexus

A frequently invoked explanation for the sharing of false over true political information is that partisans are motivated by their reputations. In particular, it is often argued that by indiscriminately sharing news that is favorable to one’s political party, regardless of whether it is true–or perhaps especially when it is not true–partisans can signal loyalty to their group, and improve their reputations in the eyes of their online networks. Across three survey studies (total N = 3,038), and an analysis of over 26,000 tweets, we explored these hypotheses by measuring the reputational benefits that people anticipate and receive from sharing different content online. In the survey studies, we showed participants actual news headlines that varied in (a) veracity, and (b) favorability to their preferred political party. Across all three studies, participants anticipated that sharing true news would bring more reputational benefits than sharing false news. Critically, while participants also expected greater reputational benefits for sharing news favorable to their party, the perceived reputation value of veracity was no smaller for more favorable headlines. We found a similar pattern when analyzing engagement on Twitter: among headlines that were politically favorable to a user’s preferred party, true headlines elicited more approval than false headlines.

Keywords: Political Ideology; Reputation; Communication Intention and Meaning; Social Media; News

Citation

Read Now

Sexual Assault Victims Face a Penalty for Adjacent Consent

By: Jillian J. Jordan and Roseanna Sommers

August 20, 2024 |
Article |
Proceedings of the National Academy of Sciences

Across 11 experimental studies (n = 12,257), we show that female victims of sexual assault are blamed more and seen as less morally virtuous if their assault follows voluntary sexual intimacy, a factor we term “adjacent consent”. Moreover, we illuminate a psychological mechanism contributing to this penalty: When a woman who provided no consent whatsoever is assaulted, people tend to see her as more moral than if she were not victimized (the “Virtuous Victim Effect”)—yet people do not extend the same moral elevation to victims who consented to sex-adjacent activity before they were assaulted. Adjacent consent plays a unique role in undermining the moral elevation of rape victims; respondents continue to elevate victims when, in the absence of adjacent consent, we introduce other information that makes the perpetrator seem less abhorrent or that makes the victim seem promiscuous, reckless, or sexually interested in her perpetrator. Furthermore, adjacent consent disqualifies rape victims from moral elevation in the eyes of a wide swath of respondents—including political liberals and undergraduates who, when no assault occurs, have no moral objection to (or even applaud) the victim’s voluntary sexual intimacy. Our results thus illuminate how sexual assault victims may be penalized for adjacent consent by even progressive or “sex-positive” communities. Finally, we identify a potential real-world consequence of adjacent consent: using field data from over 180,000 students across 33 U.S. universities, we find evidence that victims are less likely to report their sexual assaults in cases involving adjacent consent.

Keywords: Perception; Prejudice and Bias; Moral Sensibility; Crime and Corruption; Social Issues

Citation

Read Now

The Returns to Skills During the Pandemic: Experimental Evidence from Uganda

By: Livia Alfonsi, Vittorio Bassi, Imran Rasul and Elena Spadini

Working Paper |
Faculty Research

The Covid-19 pandemic represents one of the most significant labor market shocks to the world economy in recent times. We present evidence from a field experiment to understand whether and why skilled and unskilled workers were differentially impacted by the shock, in the context of a low-income economy, Uganda. We leverage a panel of workers and firms, tracked from 2012 to 2022, including high frequency surveys over the pandemic. In 2013, workers were randomly assigned to receive six months of sector-specific vocational training, in one of eight high productivity sectors. We document that over the pandemic, employment and earnings margins follow V-shaped dynamics, whereby the outcomes of treated (skilled) workers are more severely impacted by lockdowns, they recover more quickly between lockdowns, and remain resilient to the shock as the economy recovers. Cumulatively over the pandemic, skilled workers spend 61% more time than controls employed in one of our study sectors, and their total earnings are 17% higher. We explore supply- and demand-side mechanisms through which the returns to skills are maintained through the crisis. We document that skilled workers are more exposed to the shock because they are more likely to be laid off during the first lockdown as firms respond to the rapid, severe and uncertain shock by immediately laying off higher earning workers. However, skilled workers recover quickly because of their greater accumulation of sector-specific experience pre-pandemic, and the certifiability of their skills that allows them to switch employers in the same sector during the crisis. Our findings have implications for understanding the returns to skills acquired through vocational training in good economic times and times of crisis.

Keywords: COVID-19 Pandemic; System Shocks; Labor; Competency and Skills; Development Economics; Uganda

Citation

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Negotiating in a Hurricane: John Branca and the Michael Jackson Estate

By: James K. Sebenius and Alex Green

July 2024 |
Case |
Faculty Research

When the "King of Pop," Michael Jackson, unexpectedly died in 2009, he left behind an estate that was over $500 million in debt, with largely illiquid assets, and legions of creditors poised to begin to seize assets in as soon as 60 days. The task of managing Jackson’s estate, in the role of co-executor—bitterly contested by some members of the Jackson family—fell to celebrated entertainment lawyer John Branca, who was re-hired by Jackson just two weeks prior to his death after on-and-off engagements with the entertainer since the mid-1980s. Soon after Jackson’s death, Branca’s closest colleagues and advisors recommended that he begin to sell assets, but he decided to go down a different path. This case explores the intricately executed series of negotiations Branca undertook to revive Jackson’s legacy with many initiatives including a major movie deal, lucrative multi-album recording agreements, two Cirque de Soleil shows, a Tony Award winning Broadway musical, and even more ambitious plans. While Jackson had earned about a billion dollars during his lifetime as a performer, Branca’s stewardship brought the entertainer's estate from the edge of bankruptcy a value of about three billion dollars and rising.

Keywords: Bargaining; Dispute Resolution; Negotiation; Entertainment; Financial Liquidity; Financial Management; Music Industry

Citation

Educators

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How Inflation Expectations De-Anchor: The Role of Selective Memory Cues

By: Nicola Gennaioli, Marta Leva, Raphael Schoenle and Andrei Shleifer

2024 |
Working Paper |
Faculty Research

In a model of memory and selective recall, household inflation expectations remain rigid when inflation is anchored but exhibit sharp instability during inflation surges, as similarity prompts retrieval of forgotten high-inflation experiences. Using data from the New York Fed’s Survey of Consumer Expectations and the University of Michigan’s Consumer Survey, we show that similarity can quantitatively account for the sharp post-pandemic rise in inflation expectations, particularly among the elderly. The memory-based model also accounts for how people estimate future inflation ranges and why they neglect infrequent experiences when forming point expectations. These predictions are likewise supported by the data.

Keywords: Cognition and Thinking; Inflation and Deflation; Personal Finance

Citation

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