Building the Brand

Kevin Lewis

June 23, 2024

Advertising and Content Differentiation: Evidence from YouTube
Anna Kerkhof
Economic Journal, forthcoming

Many media outlets depend on advertising revenue to finance their operations, but the effect of advertising on media outlets' content choice is largely unexplored. This paper exploits two institutional features from YouTube to show that an exogenous increase in the feasible amount of advertising induces YouTubers to differentiate their video content from their competitors. A plausible mechanism is that YouTubers avoid competition: Viewers typically perceive advertising as a nuisance and therefore as an implicit price they have to pay; thus, they could switch to a competitor if a YouTuber increased her advertising quantity. This is less likely, however, if the YouTuber differentiates her content from the mainstream and moves to a niche.

The Price of Short-Term Housing: A Study of Airbnb on 26 Regions in the United States
Wenzhen Lin & Fan Yang
Journal of Housing Economics, September 2024

This study investigates the influence of customer review content and other attributes on Airbnb listing prices, using data from listings across 26 U.S. regions. By integrating sentiment analysis and topic modeling with hedonic and quantile regression models, this paper examines the significant role of electronic word-of-mouth in the short-term rental market, by studying how review sentiments and topics affect pricing strategies. The findings reveal that negative reviews have twice the impact on listing prices as positive reviews; and fourfold for lower-priced listings. Moreover, the results of topic modeling show that both positive and negative reviews related to facilities and location have a larger impact on listing prices. Additionally, the study looks at how the distance of listings from the city center and the timing of reviews affect pricing adjustments. The influence of reviews diminishes for listings located farther from the city center, indicating that Airbnb listing prices near the city center are more sensitive to changes in price determinants. The study also uncovers the existence of a lag effect in how reviews impact prices, showing that Airbnb hosts may not adjust prices as quickly as hotel owners. Overall, the study enriches existing literature by taking into account the review content and type of customer reviews, offering a more comprehensive understanding of short-term rental pricing.

Creativity Has Left the Chat: The Price of Debiasing Language Models
Behnam Mohammadi
Carnegie Mellon University Working Paper, June 2024

Large Language Models (LLMs) have revolutionized natural language processing but can exhibit biases and may generate toxic content. While alignment techniques like Reinforcement Learning from Human Feedback (RLHF) reduce these issues, their impact on creativity, defined as syntactic and semantic diversity, remains unexplored. We investigate the unintended consequences of RLHF on the creativity of LLMs through three experiments focusing on the Llama-2 series. Our findings reveal that aligned models exhibit lower entropy in token predictions, form distinct clusters in the embedding space, and gravitate towards "attractor states", indicating limited output diversity. Our findings have significant implications for marketers who rely on LLMs for creative tasks such as copywriting, ad creation, and customer persona generation. The trade-off between consistency and creativity in aligned models should be carefully considered when selecting the appropriate model for a given application. We also discuss the importance of prompt engineering in harnessing the creative potential of base models.

Forgetful Consumers and Consumption Tracking
Ying Bao, Peter Landry & Mengze Shi
Management Science, forthcoming

We study the market consequences of advances in consumption tracking technologies -- such as mobile banking apps that help consumers monitor their spending and avoid overdrawn accounts -- using a two-period consumption model. In the model, consumers pay a penalty fee if they consume in both periods. In the second period, consumers may be forgetful of their first-period consumption, although the use of consumption tracking can remind them. According to our analysis, the availability of consumption tracking often helps consumers at the expense of the firm; such benefits may be direct, where consumers make use of the technology to avoid penalty fees, or indirect, where the mere availability of consumption tracking forces the firm to lower its penalty fee. If consumers are partially sophisticated regarding their forgetfulness, however, the availability of consumption tracking may instill a false sense of security in that consumers expect to use consumption tracking to avoid penalty fees but ultimately, decide not to bother, making them especially susceptible to penalty fees. In some cases, the availability of consumption tracking may actually compel a firm to impose a penalty fee that would not otherwise be viable, leading to higher profits and lower consumer surplus. As we show, this scenario is attained within an intermediate range of forgetfulness and at a level of (partial) sophistication for which consumers overestimate their demand for the technology.

Estimating Career Benefits from Online Community Leadership: Evidence from Stack Exchange Moderators
Jens Forderer & Gordon Burtch
Management Science, forthcoming

Many IT professionals seek to improve their job prospects by engaging as leaders of online communities, for example, by serving as a moderator or admin. We investigate whether such community leadership leads to (causal) improvements in individuals' careers. We assemble a data set, including job histories of IT professionals who have sought election as moderators (mods) in Stack Exchange question-and-answer communities, between 2010 and 2020. We estimate the career benefits of moderatorship under two complementary identification strategies: difference-in-differences (DID) and regression discontinuity (RD). We observe qualitatively consistent results under each design, finding that election to a moderator role has a significant, causal, positive effect on job mobility. We estimate that moderatorship increases the probability of a job change by between 4.7 and 12.3 percentage points over the two years following the election. We also report a series of secondary analyses that speak to associated salary increases and show evidence consistent with the notion that social capital and signaling play a role. Our findings help us understand the benefits of online community leadership, and they extend our understanding of the motivations for online community engagement.

Waiting for somebody to show up: The effect of applicant waiting on organizational attraction during job interviews
Juseob Lee & Steve Jex
Journal of Personnel Psychology, forthcoming

We investigate the effects of college student job applicants' waiting experience during an employment selection procedure ("applicant waiting") using experimental vignettes. Drawing on the literature on signaling theory, we propose that applicant waiting signals future mistreatment from the organization, resulting in lower organizational attraction. General self-efficacy was examined for its moderating effects. A sample of 171 US undergraduate students with at least one in-person job interview experience (94.4%) participated in the study. Hypotheses were tested by using moderated regression analysis. The results demonstrate that applicant waiting was negatively associated with organizational attraction, and general self-efficacy moderated the relationship. Contrary to our initial expectation, those with higher general self-efficacy reacted more negatively to applicant waiting conditions than those with lower general self-efficacy.


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