competing theories for evaluating sequences of events jason niggley presentation aom 2006
TRANSCRIPT
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Competing Theories for Evaluating Sequences of Events
Jason Niggley
Presentation
AOM 2006
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About My Research
Working with Richard Chase and Sriram Dasu at USC Marshall School of Business
Early proposal development with working title: Three Essays on Applying Psychology to Service Operations
Contributions: Theoretical contribution of cross discipline research with application of theory to service operations
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About My Research
Research Question: Does order of operations change customer evaluation?
Techniques: Behavioral experiment (presented here), survey of customer’s in store and after their experience, secondary data analysis from a casino player’s club card all focused on individuals
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Agenda
Area of Study: EvaluationsCurrent Theory: Weighted AveragingProposed Theory: Discounted IntegrationPreliminary ExperimentResultsResearch DesignManagerial InsightFuture Research
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Area of Study
Evaluation of extended experiences (those with multiple separable parts) after they have happened
Examples: Medical visit, going out to eat, theme park, film
Psychological so no direct way to measureClear application in service operations
because simply changing the order of operations changes the overall evaluation
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Weighted Averaging (Peak/End)
Memory is like a series of snapshots instead of a film
Recency effect Fredrickson and Kahneman 93 (movies)
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Discounted Backwards Integration
Fredrickson and Kahneman’s 1993 study has an alternate hypothesis, discounted backwards integration
Unable to explain 2 cases
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Discounted Backwards Integration
Given the importance of the peak experience has been confirmed by other researchers, its placement in the sequence of events should matter but has not been researched yet
The importance of the peak should be discounted based on how far in the past it occurred
Salience of the peak plays a role also
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Hypothesis
The closer the peak is to the end, the more salient it will be in the memory of the subject and thus have greater effect on their global evaluation
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Investigative Research Design
Participants: 3 studentsIV: Placement of the peak, Between-
subjects, 3 conditions (early, mid, late) Context: Newsvendor problem (Schwitzer
and Cachon 2000)Control for similar profitDV: Subjects feelings
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Relationship between Inventory Outcome and Feelings/Manipulation Check
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Illustration of Data Analysis Procedures
Baseline MeanStandard Deviation
Average difference between Inventory
and Feeling Peak/End Peak Overall
Subject 1 3 2.2 1.75 0.33 (7+2)/2=4.5 Middle 2
Subject 2 5 2.75 1.71 0.92 (6+1)/2=3.5 Beginning 2
Subject 3 4 3.23 1.36 1.42 (5+2)/2=3.5 End 3
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Results: Hypothesis Supported
Showed an effect but could show average is best predictor
Not a large enough sample to find statistically significant results
Somewhat different than predicted but in the right direction
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Areas for refinement
Screen out those that have experience based on extended trial with subject 1
Kahneman and Tversky’s result that losses loom larger than gains
Manipulation check insignificantRandom generation allows for patterns
over small time period
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Proposed Experiment
Participants: MBA Operations Management Class
Same 3 divisions of the IV but a greater controlled variance in value from normal and a greater range possible in order to hopefully control for losses versus gains
Same DVClearer phrasing of the manipulation
check
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Managerial Insight
If a forecaster or inventory manager makes a extremely bad or good decision, immediately removing them would emphasize that decision
Little impact on the next period other than slight revision
Newsvendor equation would not help in this situation (due to the manipulation)
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Future Research
Analyze real world casino data Let the peak vary randomly to find the discount
factor Compare various models such as weighted
average, Bayesian updating, temporal integration, etc. using the same technique
Apply to a service setting with data collected from a chain of wireless cellular telephone stores