Behavioral Economics Commons^™

Impact Of Recessions And The Business Cycle On Altruism, Nicolas De Mello

CMC Senior Theses

I examine how recessions and the business cycle impact the time individuals allocate to altruism, using American Time Use Survey data from 2002-2019. The aim of the paper was to create a measure of altruism to explore changes in attitudes towards charity and altruism instead of the financial ability to do so. Additionally, I want to understand how economic shocks, such as recessions, impact behaviors and habits across the US population. Using ordinary least squares and the Tobit model, I created two models to capture both changes during and after recessionary periods. The first model is a regression of individuals’ …

Playing To Win: The Effects Of Implementing Gamification Strategies In Product Marketing, Sabrina Stone

CMC Senior Theses

Let’s play a game. What effect do you think video games have on twenty-first-century marketing? In this age defined by its nature of digitality, capturing the attention of consumers is an arduous competition. Through market segmentation, research, and the observable variables of consumer behavior, product marketing has turned to video games as a solution to appeal to younger demographics. Gamification is an increasingly applied product marketing strategy employed to increase favorable metrics. Of those key performance indicators (KPIs), boosted measures such as click-through rates, impressions, and engagement rates suggest that gamification is a strategic opportunity to persuade consumers to take …

The Influence Of Political Party Affiliation And Park Accessibility On Covid-19 Case Incidence, Sascha Wolf-Sorokin

CMC Senior Theses

This paper examines the joint effect of political party affiliation and the urban landscape, as measured by access to parks, on case rates during the COVID-19 pandemic in the United States. The 2016 and 2020 U.S. Presidential Election returns are used as a proxy for a county’s political party affiliation prior to and during the COVID-19 pandemic. A county population’s spatial relationship to its parks encapsulates the green open space within an urban environment. The data set controls for features of the built environment, socioeconomic and demographic characteristics (race, gender, income, education), COVID-19 government regulations, and presidential election returns. Using …

The Lure Of Musical Comfort: An Analysis Of How Consumer Preferences In Popular Music Change Depending On The State Of The U.S. Economy Using Billboard Hot 100, Spotify Api, & Economic Data, Lindsey A. Larson

CMC Senior Theses

This paper examines data from Spotify’s Web API for all songs that have been on the Billboard Hot 100 chart from the first chart’s release in August 1958 to May 2021 to determine the relationship between music misery and economic misery. Twelve dependent variables– duration, danceability, energy, key, acousticness, speechiness, mode, loudness, instrumentalness, liveness, valence, and tempo– are used to measure the impact of Arthur Okun’s U.S. economic misery index on each characteristic. Using 12 individual linear regressions– one for each dependent variable– I find that during times of increased economic hardship, consumers are likely to choose to listen to …

Not From My Wallet: Mental Accounting For Peer-To-Peer Digital-Payments, Jason Saltzman

CMC Senior Theses

This paper examined the presence and scope of mental accounting biases for peer- to-peer digital-payment systems (Venmo, PayPal, and Zelle) that have gained popularity in recent years. Payment mechanism related biases have implications for both consumers and retailers. The experimental study in this paper looked at different aspects of biases including how participants evaluate and account for money transferred through peer-to- peer digital-payment, if participants treat this money as completely fungible, and if treatment of this money is affected by demographic variables. Participants in the study were split into two treatments that differed only in regard to the account (peer-to-peer …

Information Prioritization: A Comparison Between Utility Maximizers And Probability Matchers, Yusuf Ismaeel

CMC Senior Theses

This thesis examines the differences between probability matchers and utility maximizers in their preferences for information sources in a lab environment. In this paper, we consider the best source of information to be the most connected one. We conducted several linear probability model type regressions along with logit regressions. Furthermore, we also attempted to control and fix any potential misclassifications in classifying the cognitive strategy by using instrumental variables. The results show that utility maximizers will almost always choose the most informed node. Probability matchers, on the other hand, do not exhibit such a behavior as the probability matching strategy …

A Network Pandemic: Exploring The Effects Of Social Connectedness On The Spread Of Covid-19 In The United States, Mrinalini Bhushan

CMC Senior Theses

Social interactions influence the way we think and act. Recent literature on COVID-19 and social connectedness explores how social interactions influence people’s perceptions of the risk from COVID-19 and their behaviors. This paper seeks to investigate how social connectedness, political ideologies, and physical interaction are associated with local COVID-19 case and death rates at the US county level. Social connectedness, as defined by (Bailey et al, 2018) measures connectedness between US counties based on Facebook friendship links. I examine whether a county’s average social connectedness to other counties, as determined by the Facebook index, has an impact on its own …

The Changing Nature Of Work, Leadership, And Organizational Culture In Future Ready Organizations, Saloni Dhir

CMC Senior Theses

Abstract

The relationship between individual and organizational performance is a key challenge for leaders in modern organizations, especially with the current disruption in technology and innovation. This thesis is a literature review and compilation of the relevant empirical evidence on various processes of industrial groups and organizational characteristics such as the changing nature of work, leadership, and company culture in detail. I investigate the complex challenges that millennials and organizations are facing in the current VUCA work environment as well as their potential responses to these changes. I map out the evolution of the concept of work and compare changes …

Love At First Byte: An Economic Analysis Of The Internet Dating Apocalypse, Hamsa Srikanth

CMC Senior Theses

We’re often warned that the internet will hasten the dating apocalypse. The internet (it is posited) is depriving us of the elusive in-person magic, and modern courtship is now little more than love at first byte.

There remains uncertainty, however, about what the independent impact of the internet on the dating market has been. Similar to the internet, the telephone also changed the way we communicate, but its effect on the dating market was mostly complementary to the 'traditional' ways of meeting – i.e. calling your school crush at home. So the question remains: Is the effect of the …

Counterfactual Conditional Analysis Using The Centipede Game, Ahmed Bilal

CMC Senior Theses

The Backward Induction strategy for the Centipede Game leads us to a counterfactual reasoning paradox, The Centipede Game paradox. The counterfactual reasoning proving the backward induction strategy for the game appears to rely on the players in the game not choosing that very same backward induction strategy. The paradox is a general paradox that applies to backward induction reasoning in sequential, perfect information games. Therefore, the paradox is not only problematic for the Centipede Game, but it also affects counterfactual reasoning solutions in games similar to the Centipede Game. The Centipede Game is a prime illustration of this paradox in …

The Mall Ain’T Dead Yet! An Aristotelian Argument For The Continuation Of Physical Retail Space With The Rise Of Modern Technology, Tarah Gilbreth

CMC Senior Theses

According to Aristotle, for a human being to live their best life, that is a life that flourishes, is to live a political life. A political life is lived best in a polis , or a self - sufficient community, so therefore, the most flourishing human life is one lived in a polis . Also, for a polis to be self - sufficient, its citizens must be flourishing, so there exists a special sort of constitutive relationship between the polis and its citizens. There are certain capacities available to human beings in the polis that promote their flourishing (namely loyalty …

The Effect Of Fast Food Restaurants On Type 2 Diabetes Rates, Grace Bailey

CMC Senior Theses

This paper conducts an analysis of county level data to determine the effect of fast food restaurants on type 2 diabetes rates. Due to endogeneity concerns with respect to the location of fast food restaurants, this paper follows the work of Dunn (2010) and uses the number of interstate exits in a given county to serve as an instrument for fast food restaurants. The strength of the instrument, which is theoretically and empirically tested in this paper, imposes some restraints on the interpretation of the findings. Using the Two-Stage Least Squares estimation method, I find that the presence of fast …

Revenue Incentives And Referee Propensity To Make Foul Calls In The Nba Finals, Daniel Fallon-Cyr

CMC Senior Theses

In this study I examine foul calls by NBA referees alongside the difference in aggressiveness of twelve NBA basketball teams as they compete for the Championship Title. I aim to identify referee biases that increase the likelihood of the NBA Finals ending in a later game due to league revenue incentives. My data consists of 91 individual NBA Finals games played between the 2001 and 2016 NBA Finals. After controlling for changes in play as well as the difference in aggressiveness, I find that NBA referee’s foul calls are more dependent on a call on the opposing team in situations …

Determinants Of Organ Donor Registration Rates Among Young Americans, Syed Umar Farooq

CMC Senior Theses

In this paper I examine the factors that affect the likelihood an individual is a registered organ donor. Unlike many studies which focus on subpopulations in specific regions, I utilize national data to get a broader assessment of individuals from around the country across a number of racial and religious classifications. Using a probit model and controlling for a variety of parameters, I find that some racial and religious variables are negatively and significantly associated with organ donor registration rates, while education and being female are positively associated with organ donor registration rates. I conclude by discussing the implications of …

Is Silence The Answer?, Gator Adams

CMC Senior Theses

This study examines the relationship between company management guidance, and ex-ante crash risk over the duration of 2008(Jan 2006-Dec 2009) financial crisis using the implied volatility skew, which is based upon ex-ante volatility implied by the pricing model developed by Black-Scholes (1973). The study finds that over the duration of this crisis period, management guidance decreases with a rise in ex-ante crash risk. Further, the study provides evidence on the relationship of management guidance and earnings volatility, and how that is affected by a firm's industry product concentration based on the Herfindahl-Hirschman Index (HHI) score.

Nudging Towards Social Change: The Application Of Psychology And Behavioral Economics In Promoting Responsible Consumption, Larissa Chern

CMC Senior Theses

With workplace disasters in developing countries increasingly in the news, a major question is how to encourage consumers to use corporate social responsibility as a criterion in purchasing. Distinct from environmental concerns, social responsibility is defined here with respect to the humanitarian aspects of corporate practice, including fair wages and working conditions, equitable treatment of the disadvantaged, and restriction of child labor. Although the idea of socially responsible consumption (SRC) was first identified over forty years ago, most recent research on changing consumption habits focuses specifically on environmentally responsible consumption (ERC). Combining the psychological concept of social norms with economic …

Who Will Be The First To Buy Autonomous Vehicles? An Application Of Everett Rogers’ Diffusion Of Innovations Theory, Reilly Jackson Umberger

CMC Senior Theses

Autonomous, otherwise known as self-driving, vehicles represent the future of transportation. Vehicles that drive themselves offer far reaching benefits from increased leisure and productivity for individuals to significant improvements in congestion and infrastructure for governments. The autonomous car will radically change the way we look at transportation, and they are right around the corner. However, the question remains: are we ready? Are we, as a society, ready to hand over the steering the wheel and trust autonomous vehicles with our safety? This paper predicts how the autonomous car will spread through society by analyzing and applying the product qualities and …

Consumer Neuroscience: A Multi-Disciplinary Approach To Marketing Leveraging Advances In Neuroscience, Psychology And Economics, Bridget E. Blum

CMC Senior Theses

For decades, neuroscience has greatly contributed to our foundational understanding of human behavior. More recently, the findings and methods of neuroscience have been applied to study the process of decision-making in order to offer advanced insights into the neural mechanisms that influence economic and consumer choices. In this thesis, I will address how customized marketing strategies can be enriched through the integration of consumer neuroscience, an integrative field anchored in the biological, cognitive and affective mechanisms of consumer behavior. By recognizing and utilizing these multidisciplinary interdependencies, marketers can enhance their advertising and promotional mix to elicit desired neural and affective …

Reverse Line Movements In Nfl Gambling: Parallels To Financial Market Biases And The Imitation Of Informed Bettor Strategies, Philip S. Crawford

CMC Senior Theses

Participants in the NFL gambling market can largely be divided into two distinct groups: informed bettors (“Sharps”) and uninformed bettors (“Squares”). Empirical and anecdotal evidence suggest that the dynamic between Sharp and Square bettors is very similar to that between institutional and retail investors. Professionals tend to be far better informed and utilize rational betting/investing strategies while individuals exhibit biases which perpetuate irrational strategies and therefore pricing inefficiencies. This study finds that uninformed participants in financial markets and the NFL betting market do share similar biases, and that these biases can be exploited by informed participants to generate positive excess …

Developing An Efficient High-Trust Model Within Audit Teams, Julian James L. Laguisma

CMC Senior Theses

An examination into dyadic trust relationships within an audit engagement team and development of a model to efficiently optimize trust.

Choking Under Pressure On The Pga Tour, Madison Friedman

CMC Senior Theses

The productivity of individuals can be altered by cognitive environmental factors such as those that induce psychological pressure. The goal of this analysis is to determine the extent to which a selection of variables influences an individual’s perception of pressure and its subsequent effect on productivity. To do so, the performance of golfers under pressure on the PGA TOUR was proxied using the scrambling percentage statistic. Two regressions, one using data from players who were cut at the end of the second round and the other using data from players who were not cut at the end of the second …

Examining The Role Of Immigration In Crime Decline Across United States Cities, Brianna J. Losoya

CMC Senior Theses

Despite previous research in this area, the relationship between immigration and crime in the United States remains ambiguous and surrounded by misconceptions. However, recently, scholars have suggested that, despite the claims of policy-makers and popularized sociological theories, large immigrant concentrations may be linked with lower as opposed to higher crime rates. In the past, research in this area has been imprecise due to it its implementation of cross-sectional analyses for a limited selection of geographic regions. However, through the implementation of time-series procedures and the use of annual data for metropolitan statistical areas during the 2005–2010 periods, the present study …

Finding Profitability Of Technical Trading Rules In Emerging Market Exchange Traded Funds, Austin P. Hallett

CMC Senior Theses

This thesis further investigates the effectiveness of 15 variable moving average strategies that mimic the trading rules used in the study by Brock, Lakonishok, and LeBaron (1992). Instead of applying these strategies to developed markets, unique characteristics of emerging markets offer opportunity to investors that warrant further research. Before transaction costs, all 15 variable moving average strategies outperform the naïve benchmark strategy of buying and holding different emerging market ETF's over the volatile period of 858 trading days. However, the variable moving averages perform poorly in the "bubble" market cycle. In fact, sell signals become more unprofitable than buy signals …

A Study In Market Micromanagement: The Asymmetrical Effects Of The 2008 Short Sale Ban On Stocks With And Without Traded Options, James W. Weyerhaeuser

CMC Senior Theses

This study provides an empirical analysis of the 2008 short sale ban. The evidence suggests that the presence of tradable options plays a crucial role in determining the effect of a short sale ban. Results show that if there are no traded options on a stock, the short sale ban brought abnormal returns of roughly +8%. However if there are traded options on a stock, the market maker exemptions nullify the positive effects of the ban. Furthermore, for the banned stocks that do experience positive abnormal returns during the ban, the lifting of the ban causes a prompt reversal of …

Can Online Sentiment Help Predict Dow Jones Industrial Average Returns?, Aria K. Krumwiede

CMC Senior Theses

In this paper, we explore the relationship between a Global Mood Time Series, provided by Wall Street Birds, and the Dow Jones Industrial Average (DJIA) from April 2011 to December 2011. My econometric results show that there is no long run equilibrium relationship between the level of global mood and the level of the DJIA. These results apply to the whole period, as well as in the six-month subperiods. Furthermore, daily changes in global mood do not Granger cause DJIA returns. However, changes in global mood do appear to be useful in forecasting the volatility of the DJIA, and my …

Aggregated Versus Disaggregated Forward Looking Information: Effects On Risk Taking, Rishabh Parekh

CMC Senior Theses

In previous research, aggregation of returns has been found as a way to counteract the risk averse behavior that is the result of investors' myopia. This paper expands the study of aggregation by analyzing its effect on forward looking probabilities. Namely, through the disaggregation of future information, subjects become myopic and trade with varying risk preferences. In an experimental market, subjects trading securities with disaggregated forward looking information are found to 'buy high and sell low', while subjects trading the same securities, but with aggregated information, trade with more consistent risk preferences.

A Theory Of Mental Credit, Jason Soll

CMC Senior Theses

Many philosophical subjects attempt to analyze the basis of human welfare. Theories of desert, distribution of property, and happiness tend to dominate philosophical discourse. Mental credit, which is the mental acquisition of credit for one’s accomplishments and the satisfaction one derives from this credit, is absent from this discourse despite its underlying role in the way people think about their lives. Mental credit is an eternal cognitive good that deserves thoughtful attention and pious decisions for implementation. The following theory of mental credit seeks to serve as a unifying theory for the mental calculations that guide life’s most imperative decisions, …

A New Experiment On Rational Behavior, Myles R. Macdonald

CMC Senior Theses

Behavioral economics is widely recognized as a rising field in economics, one whose discoveries and implications are not yet completed or understood. At the same time, economic theory plays an enormous role in our governmental and legal system. In particular, the Coase Theorem and its implications have affected nearly every area in the field of law and economics. This paper proposes a experimental test of Coasean bargaining in situations using two competitive players whose payoffs depend on minimizing their costs of mitigating the externality. A rational player’s action can be predicted ahead of time, and the rationality of the game’s …

Alleviating Social Disadvantages Of Rapid Economic Growth: A Case For Conditional Cash Transfer (Cct) Application In Old Siam, Anastasia Kostioukova

CMC Senior Theses

The ongoing conflict between Thailand’s red shirt and yellow shirt parties is not purely political. This tension is rooted in a renewed awareness of regional economic and social inequality, a byproduct of rapid economic growth in the past. This thesis seeks to understand the overall consequences of unequal economic development in Thailand, as the rationale for asserting that a conditional cash transfer (CCT) program is an appropriate policy tool for the ongoing reconciliation efforts.

Cross-Cultural Risk Behavior In Financial Decisions And The Cushion Hypothesis, Jin Tan

CMC Senior Theses

92 students from a Southern California liberal arts college and two Beijing universities participated in an online questionnaire. Their cultural tendencies (i.e. level of collectivism and perception of family support) and responses to hypothetical investment scenarios were observed. Participants were asked to provide the amount they would invest in each scenario as well as a risk safety rating. The Chinese respondents reported higher cushion and collectivism scores than the Americans. Furthermore, the Chinese sample offered more money for the three riskiest scenarios; they also rated three scenarios safer than the Americans did. The cushion and collectivism scores were not found …