Faculty

Rady School of Management professor Wendy Liu recruited a team of Rady School students to help with a market research project aimed at understanding consumer behavior in mobile banking. The research was commissioned by Mitek Systems, a B2B company that provides the core mobile deposit technology to over 95% of all U.S. banks. Mitek sought to gain a deeper understanding of why consumers adopt or do not adopt mobile deposit, and how they interact with the technology. When Mitek looked to the Rady School for expertise and help, they found a connection with professor Wendy Liu, who specializes in consumer behavior research.

The researchers conducted an in-depth behavioral study for Mitek involving a “training experiment.” Specifically, the researchers conducted face-to-face training sessions with consumers to teach them how to install and use mobile deposit on their smartphone. Consumers were tracked over a five-month period, including before and after the training session.

“The key to the study is a training intervention we instituted in the middle of this five months period, so that we can learn about consumers’ behavior before and after our training intervention,” Liu said.

Rady School students Tyler Church, Keshav Prabhu, Kamini Patel, Somashubhra Bhattacharya, Luis Rodriguez-martin, Farrah Zhao and Celine Li  participated in the research with Professor Wendy Liu. Prabhu was interested in getting involved with the study to apply the knowledge he learned in his Rady School coursework to real-world research.

“After taking Professor Liu’s consumer behavior course, I felt I would enjoy the opportunity to get a deeper understanding of how consumers make decisions,” said Keshav Prabhu (MBA ’17). “I also had found marketing courses to be the most interesting topics during the course of my MBA so decided to take additional electives in marketing.”

The MBA students involved with the study collected data from subjects by survey and interviews and analyzed the data the team generated. Once the data was collected and analyzed, students created a presentation and presented the findings and insights to the Mitek executive team, including the product manager for mobile deposit, the general manager for payments, and Mitek’s CMO.

Research insights

After working with about 70 consumers and giving them training sessions to use mobile banking, the team was able to identify some of the greatest impediments that discourage consumers from adopting mobile deposit, including inaccurate perceptions of security risk and usage cost. Further, the study showed that an in-person training session is highly effective in helping consumers overcome these concerns.

“This project for a banking client gave students an opportunity to practice market research in an important field with high stakes,” Liu said, “They gained experience in designing a study, collecting and analyzing in-depth behavioral data, and interpreting and presenting the insights from the study.”

While the study has not been published yet, the team believes their findings could be used for future studies and analyses.

“I believe Mitek can use our project as a basis for future study on mobile deposit use behavior,” Prabhu said. “Our data was not representative of the larger population; however it does provide a good starting point to direct Mitek in partnering with banks to run additional experiments in the field to gather more data.”

Prabhu believed participating in the study was extremely beneficial for both his academic and professional careers.

“I deepened my basic understanding of preparing surveys to ask the right questions and collect data, as well as analyzing that data within the context of a marketing problem,” Prabhu said. “As someone that’s worked as an engineer in electronics and manufacturing, I was able to gain practical experience that I can show potential future employers of my accomplishments in marketing and business.”

“Our study helped Mitek gain valuable deeper insights into why people adopt or do not adopt mobile deposit, and further, to what extent an in-person training session of the technology could be helpful,” Liu said. “Our study paradigm can also be adapted to help other technology sectors to understand technology adoption by consumers in general.”

About Wendy Liu

Wendy Liu specializes in consumer judgment and decision making, focusing on the cognitive and emotional basis of consumer choice, social interactions, and well-being. Her recent research topics include decision making under complexity, such as shortlist formation, decisions involving risk, self control decisions, the role of complex emotions, contextualized motivations and values, and consumer behavior in medical and health domains.

Liu’s research has been published in leading marketing and management journals such as the Journal of Consumer Research and Organizational Behavior and Human Decision Processes. Her work has also been featured in the national media, such as Businessweek and Time Magazine.

Liu received her Ph.D. in Marketing from the Stanford Graduate School of Business. She is currently an Associate Professor of Marketing at the UCSD Rady School of Management, and teaches Consumer Behavior to MBA students.

Television advertisements lead to spikes in internet searches for the brand advertised as well as competitors, according to a study by Rady School Associate Professor Kenneth Wilbur and colleagues, Linli Xiu from the University of Minnesota and Rex Du from the University of Houston.

“Marketers are slowly figuring out that what you say in TV affects what people do on Facebook, Google, Twitter and other digital platforms,” said Wilbur. “Historically, communication efforts have lived within separate silos. Today, some organizations are figuring out that these things need to be managed holistically.”

Researchers studied the relationship between television advertisements and internet search spikes in fantasy sports brands and pickup truck brands. In the fantasy sports brands study, researchers found that advertisement content and media factors explained an incremental 54 percent of the variation in post-ad search spikes.

In the pickup truck brands study, which analyzed brand search data from 500,000 minutes and audience data for 40,000 national television advertisements, 75 percent of the incremental search occurs in the two minutes following an advertisement.

Both studies showed that brand-focused ads produced larger search spikes than price-focused ads, and that less informative ads produced larger spikes than more informative ads. Spikes also varied based on the network on which the ad aired and the genre of programming.

Overall, the studies suggest that television advertisements with small audiences produce significant search spokes in the two minutes after the ad airs. As such, post-ad search spikes are important for marketers to consider in conjunction with other metrics.

“The field has shown great interest in the paper. I recently presented results at the Advertising Research Foundation annual conference, a Marketing Science Institute conference, Cornell and Berkeley. Next week I will give the talk at Emory and Google, and then at Kaiser Permanente in May. Google and Kaiser both are discussing the possibility of follow-up research,” said Wilbur.

For decades, insufficient physical activity has been identified as a leading cause of many non-communicable diseases, including strokes, diabetes, heart disease and some kinds of cancer. Still, according to objective measurement approximately 96 percent of adults 20 to 59 in the U.S. do not meet the guidelines of 150 minutes of moderate physical activity and 75 minutes of vigorous physical activity per week.

On Amir, associate professor of Marketing at the Rady School of Management, recently co-authored a paper, Physical Activity Counseling in Primary Care: Insights From Public Health and Behavioral Economics, which helps address this issue. The paper uses principles of behavioral economics to apply an existing method of advising, the 5A framework, to the integration of physical activity counseling into primary care as a preventative medicine measure.

The 5A Framework involves a five-step plan to addressing an insufficient amount of physical activity in a patient’s life. The five steps are assess current physical activity levels, advise on increasing activity levels in relation to patient’s lab reports, agree on a physical activity plan with attainable goals and specific information on frequency and intensity, assist in creating strategies to overcome impediments to meeting goals, and arrange follow-up visits and reminders.

Overall, the paper uses principles of behavioral economics to analyze the reasons for decisions to engage in physical activity. Using these principles, the paper suggests the most effective methods of physical activity counseling for primary care physicians. It also notes the necessity for future research in determining the efficacy of these strategies in a clinical setting.

On the surface, it may seem that baseball cards and stock market trends are completely unrelated – but a recent study by Rady School professor Joseph Engelberg along with Linh Le and Jared Williams from the University of Florida found that the market for baseball cards shares many of the same anomalies that have been documented in financial markets.

In a study of the value of approximately 38,000 baseball cards issued from 1948 to 1996, researchers found that the market for baseball cards featured momentum, price drift in the direction of previous performance and IPO underperformance, much like studies of the stock market.

The findings regarding momentum support the idea that momentum arises because information gradually diffuses across a market. Engelberg, Le and Williams correctly predicted that because of less sophistication in traders of baseball cards (who are mostly younger), momentum would be greater. The researchers concluded that holding outperforming cards for a three-month period generated a 5.6 percent monthly return, compared to the less than 1 percent earned by momentum strategies in the stock market.

Like stocks, price drift in baseball cards occurs in the direction of previous performance. Researchers found that cards that had previously performed well continued to perform better than cards that had previously performed more poorly.

A parallel for IPO underperformance can be seen in newly issued cards and those of rookies. Both Initial Public Offerings of stocks in the stock market and these new cards in the market for baseball cards tend to underperform for a sustained amount of time.

Engelberg, Le and Williams’ research is significant because it supports the idea that financial theories of momentum, price drift, and IPO performance can exist naturally in markets, which do not include factors like dynamic growth rates, dividends or mutual funds.

Colorectal cancer is the second leading cause of cancer death in the U.S. However, motivating individuals to be screened for colorectal cancer, especially those with financial barriers or a fear of screening methods, has proved challenging.

Principles of behavioral economics show that financial incentives can be used to alter behavior. As such, offering a small financial incentive to vulnerable populations has been suggested as a solution to insufficient colorectal cancer screening rates. Rady School Associate Professor Ayelet Gneezy recently conducted and published a study in which primary care patients were mailed colorectal test outreach, outreach plus a $5 incentive, or outreach plus a $10 incentive.

The necessary screening completion rates of the groups were 36.9 percent with a financial incentive, compared to 36.2 percent with no financial incentive. These results did not vary significantly based on age, sex, ethnicity, or neighborhood poverty rate. As a result, the study concludes that financial incentives in the amount of $5 or $10 do not have any significant effect on completion of colorectal cancer screening.

The study was conducted in Fort Worth, Texas on a sample of 10,000 uninsured individuals aged 50 to 64 who had visited their primary care physician at least once in the previous year. Individuals were randomly assigned to be in either the control group with no financial incentive, in the $5 compensation group, or in the $10 compensation group.

These findings are some of the first regarding small financial incentives and cancer screening. Although they cannot be applied to other types of cancer screening or larger financial incentives, the findings are important in understanding the applications of behavioral economics.

U.S. companies examine many elements in deciding where to locate their businesses – everything from the cost of labor, taxes, real estate prices and utilities to non-cost factors like workforce skill level, infrastructure, regulations, cost of living and quality of life. But, is there a way to determine which city has the most reliable, scrupulous employees? New research from Associate Professor Christopher Parsons at the Rady School of Management examines how the culture of a city contributes to the trustworthiness of employees.

Financial misconduct rates differ widely between major U.S. cities, about as much as between industries. Using a dataset of financial misconduct collected since 1970, Parsons and his fellow researchers found that financial mismanagement disproportionately clusters in certain cities. They also determined that city-level culture, rather than differences in enforcement or company characteristics, best accounts for these patterns.

Parsons examined the culture of the cities by using the behavior of its residents, such as spousal infidelity, rather than the population attributes like age, wealth or religious background. For example, financial misconduct rates are strongly related to other unethical behavior in the city, involving its politicians, doctors, and (potentially unfaithful) spouses. The unethical behavior was measured by data on federal convictions for corruption-related crimes by elected officials, information on doctors who receive payments from drug companies and their subsequent prescriptions, and data on registered users of the extramarital affair website Ashley Madison.

The research found that Miami, St. Louis, Dallas, Houston, New York, Los Angeles, Washington, D.C., Denver, Chicago and San Francisco are cities where financial misconduct is most prevalent. Indianapolis, Seattle, Minneapolis, Cleveland, Atlanta, Boston, Orlando, Phoenix, Philadelphia and Detroit had the least amount of financial misconduct. The research suggests that city-specific culture factors play a role in the trustworthiness of employees – a valuable lesson for companies when determining where to locate.

About Professor Christopher Parsons

Prior to coming to the Rady School, Parsons was an Assistant Professor of Finance at the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill. Before his position at the Kenan-Flagler School, Parsons was an Assistant Professor of Finance at the Desautels Faculty of Management at McGill University, Montreal. Parsons earned his Ph.D. in Finance at the McCombs School of Business at the University of Texas at Austin. He earned his B.S. with Highest Honors in Chemical Engineering.

The issue of racial inequality is pervasive in American culture, but new research has found that the problem exists in a realm that was previously believed to be a safe haven from the issue – higher education.

A recent study conducted by faculty from the Rady School of Management at UC San Diego, Drexel University, the University of Notre Dame and Duke University finds that historically black colleges end up paying more than predominantly white colleges on similar financial footing to issue the same value of bonds.

The study, published by the Social Science Research Network, demonstrated that this is not the case for historically black colleges even though they have comparable financial strength, as verified by outside evaluations.

The researchers collected a 23-year sample of more than 4,000 tax-exempt municipal bond that were issued by 965 four-year universities, totaling approximately $150 billion. One hundred and twelve of the colleges sampled were issued by historically black colleges and universities (HBCUs).

The average cost of issuing a $30 million bond was $290,000 for historically black colleges, compared to $242,000 for other institutions. The black institutions studied spent about $5.1 million more, collectively, than comparable predominantly white institutions. This gap was greater in the Deep South than elsewhere.

Colleges typically have their finances and institutional strength reviewed by rating agencies before seeking to issue bonds.  The varying ratings theoretically provide investors with a sense of relative risks associated with bonds from different colleges. Institutions with the same financial strength should be able to issue bonds at the same costs.

Moving forward

The researchers hope to use the insights obtained from the study to make positive changes to the status quo.

Parsons and his team suggested remedies to alleviate the issue, such as seeking investors from outside local HBCU areas, federal intervention and eliminating the incentive of investors to hold bonds of local issuers.

About Professor Christopher Parsons

Prior to coming to the Rady School, Parsons was an Assistant Professor of Finance at the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill. Before his position at the Kenan-Flagler School, Parsons was an Assistant Professor of Finance at the Desautels Faculty of Management at McGill University, Montreal. Parsons earned his Ph.D. in Finance at the McCombs School of Business at the University of Texas at Austin. He earned his B.S. with Highest Honors in Chemical Engineering.