• Advertising strategy in the presence of reviews: an empirical analysis.
    • Speaker: Sridhar Moorthy, University of Toronto
    • Date: Wednesday, November 8, 2017. (Unusal Day)
    • Time: 3:30 PM to 5:00 PM. (Unusal Time)
    • Venue:  Auditorium Hall
    • Abstract

      Over the last fifteen years or so, one of the major developments online has been the growth and proliferation of review websites such as TripAdvisor. The ready availability of independent information from past users poses interesting questions for marketing strategy. What role does advertising play in the new environment? How should firms adjust their advertising strategy to the presence of reviews? In this paper we address these questions in the context of the hotel industry. Using a data set of TripAdvisor hotel reviews and another describing hotels’ advertising expenditures, we show, first, that overall ad spending decreased from 2002 to 2015, suggesting that online reviews have had the effect of displacing advertising. Second, in the cross-section, there is a negative causal relationship between TripAdvisor ratings and advertising spending: as ratings go up, ad spending goes down. This suggests that user ratings and advertising are substitutes, not complements. Third, this relationship is stronger for independent hotels than for chains, and stronger in competitive markets than in noncompetitive markets. The former suggests that a strong brand name provides some immunity to reviews, and the latter suggests that when user ratings fail to differentiate, advertising might do so. Finally, we show that the relationship between user ratings and advertising has strengthened over time, as websites such as TripAdvisor have become more influential. This provides further confirmation that the effect of online ratings on advertising operates through the demand side, and not the supply side. Hotels seem to react to reviews if and only if consumers react to them. 
  • Priority Rules in Project Allocation.
    • Speaker: Madhav Raghavan, .
    • Date: Friday, January 12, 2018. 
    • Time: 11:30 AM to 1:00 PM.
    • Venue: Seminar Room No. 2
    • Abstract

      We consider a model in which projects are to be assigned to agents based on their preferences, and where projects have capacities, i.e., can each be assigned to a minimum and maximum number of agents. The extreme cases of our model are the social choice model (the same project is assigned to all agents) and the house allocation model (each project is assigned to at most one agent). We show that, with general capacities, an allocation rule satisfies strategy-proofness, group-non-bossiness, limited influence, unanimity, and neutrality, if and only if it is a strong serial priority rule. A strong serial priority rule is a natural extension of a dictatorial rule (from the social choice model) and a serial priority rule (from the house allocation model). Our result thus provides a bridge between the characterisations in Gibbard (1973, “Manipulation of voting schemes: A general result”, Econometrica, 41, 587-601), Satterthwaite (1975, “Strategy-proofness and Arrow’s Conditions: Existence and correspondence theorems for voting procedures and social welfare functions”, Journal of Economic Theory, 10, 187-216) and Svensson (1999, “Strategy-proof allocation of indivisible goods”, Social Choice and Welfare, 16, 557-567). We will also characterise the larger class of rules formed when the axioms of group-nonbossiness and limited influence are weakened.
  • TBA.
    • Speaker: Randall A. Bluffstone, Portland State University
    • Date: Friday, February 23, 2018. 
    • Time: 11:30 AM to 1:00 PM.
    • Venue:  Seminar Room 2
    • Abstract