• Augmenting Password Strength Meter Design Using the Elaboration Likelihood Model: Evidence from Randomized Experiments

      Khern-am-nuai, W.; Hashim, M.J.; Pinsonneault, A.; Yang, W.; Li, N.; Eller College of Management, University of Arizona (INFORMS, 2022)
      Password-based authentication is the most commonly used method for gaining access to secured systems. Unfortunately, empirical evidence highlights the fact that most passwords are significantly weak, and encouraging users to create stronger passwords is a significant challenge. In this research, we propose a theoretically augmented password strength meter design that is guided by the elaboration likelihood model of persuasion (ELM). We evaluate our design by leveraging three independent and complementary methods: a survey-based experiment using students to evaluate the saliency of our conceptual design (proof of concept), a controlled laboratory experiment conducted on Amazon Mechanical Turk to test the effectiveness of the proposed design (proof of value), and a randomized field experiment conducted in collaboration with an online forum in Asia to establish proof of use. In each study, we observe the changes in users’ behavior in response to our proposed password strength meter. We find that the ELM-augmented password strength meter is significantly effective at addressing the challenges of password-based authentication. Users exposed to this strength meter are more likely to change their passwords, leading to a new password that is significantly stronger. Our findings suggest that the proposed design of augmented password strength meters is an effective method for promoting secure password behavior among end users.
    • Debt and Bargaining Outcomes: Evidence from U.S. Hospitals

      Towner, Mitch; Univ Arizona, Eller Coll Management (INFORMS, 2020-05)
      Using the healthcare industry as a novel laboratory, I study whether a firm's use of debt enhances its bargaining power during negotiations with nonfinancial stakeholders. I find that reimbursement rates negotiated between a hospital and insurers for two homogeneous procedures are higher when the hospital has more debt. This relation is stronger among hospitals with less bargaining power relative to insurers ex ante. The evidence is consistent with the idea that debt improves a firm's bargaining power.
    • Information Feedback, Targeting, and Coordination: An Experimental Study

      Hashim, Matthew J.; Kannan, Karthik N.; Maximiano, Sandra; University of Arizona; Purdue University; University of Arizona, Tucson, Arizona 85721; Purdue University, West Lafayette, Indiana 47907; Purdue University, West Lafayette, Indiana 47907 (INFORMS, 2017-06)
      There are many contexts where an "everybody else is doing it" attitude is relevant. We evaluate the impact of this attitude in a multi-threshold public goods game. We use a lab experiment to study the role of providing information about contribution behavior to targeted subsets of individuals, and its effect on coordination. Treatments include one in which no information is provided and three others that vary in whom we provide information to: a random sample of subjects; those whose contributions are below the average of their group, and those whose contributions are above the average of their group. We find that the random provision of information is no different than not providing information at all. More importantly, average contributions improve with targeted treatments. Coordination waste is also lower with targeted treatments. The insights from this research are relevant more broadly to contexts including piracy, open innovation, and crowdfunding.
    • Measuring and Managing the Externality of Managerial Responses to Online Customer Reviews

      Chen, Wei; Gu, Bin; Ye, Qiang; Zhu, Kevin Xiaoguo; Univ Arizona, Eller Coll Management (INFORMS, 2019-03)
      Managerial responses to online customer reviews not only affect customers who receive the responses but may also influence subsequent customers who observe the responses. This externality arises because of the public nature of online interactions. However, prior studies were mainly in offline settings where such externality rarely exists. In this study, we assess the magnitude of such externality. Using a difference-in-difference-in-differences framework and matched hotels across two large travel agencies, we find that managerial responses indeed have a significant and positive impact on the volume of subsequent customer reviews. The impact on the review valence is not evident, which can be attributed to the unique design of identity disclosure in our research context. Furthermore, our results suggest nuances that were not known in the prior literature. For example, responding to positive and negative reviews may have different effects on future reviews, and managers should provide detailed responses to negative reviews but brief ones to positive reviews. Our results offer managerial implications to service providers on how to improve customer engagement in the interconnected online environment.
    • Payout Policy Trade-Offs and the Rise of 10b5-1 Preset Repurchase Plans

      Bonaimé, Alice; Harford, Jarrad; Moore, David; Univ Arizona (INFORMS, 2020-06)
      We are the first to document and study the use of Rule 10b5-1 preset repurchase plans. Though the rule's original intent was to clarify conditions for enforcing insider trading laws, generally thought to apply to individuals classified as firm insiders, we find strong use of the rule at the firm level to repurchase company stock. We exploit this new and widespread form of payout to examine an issue at the core of payout decisions-the trade-off between commitment and financial flexibility. Relative to open market repurchases, preset plans provide an expanded repurchase window and increased legal cover, albeit at the cost of reducing repurchase flexibility and the option to time repurchases. These costs and benefits are significantly associated with Rule 10b5-1 adoption: Firms with alternative sources of financial flexibility are more likely to precommit to a repurchase plan, as are firms with a history of poor repurchase timing and firms constrained by blackout windows. Consistent with preset plans signaling commitment, Rule 10b5-1 repurchase announcements are associated with greater and faster completion rates, with more positive market reactions, and with more dividend substitution than open market repurchases. Lastly, we find that preset repurchase plans represent a unique payout tool whose introduction encouraged a different set of firms to buy back stock and significantly altered the payout landscape.
    • Relative Privacy Valuations Under Varying Disclosure Characteristics

      Buckman, Joseph R.; Bockstedt, Jesse C.; Hashim, Matthew J.; Univ Arizona, Eller Coll Management, Dept Management Informat Syst (INFORMS, 2019-04-22)
      We investigate changes to the value that individuals place on the online disclosure of their private information in the presence of multiple privacy factors. We use an incentive-compatible mechanism to capture individuals' willingness-to-accept (WTA) for a privacy disclosure in a series of three randomized experiments. Each experiment manipulates characteristics of a required privacy disclosure by altering the information context, the intended secondary use of the disclosed private information, and the requirement to disclose personally identifying information. We collect data from two populations (college students and Amazon Mechanical Turk workers) to aid with generalizability of our results. As methodological checks to rule out lack of awareness in the participants, we first increase the saliency of the privacy disclosure characteristics in the second experiment and then require participants to watch a video on the potential consequences of disclosing private information in the third experiment. Across the three experiments, we consistently observe null effects for each of the privacy factors, with two population-dependent exceptions in the second study. Our participants do acknowledge the increased risk introduced by the experimental factors, and the increased saliency and awareness do lead to higher privacy valuations on average. However, there is no consistent manifestation as significant main effects for the three privacy factors. This is in contrast to prior research, which has found significant effects for each of these factors when studied separately. The results provide a unique perspective on privacy valuations by showing that results from prior research on simple privacy decisions may not translate to more realistic, complex privacy disclosure decisions that involve multiple factors.
    • Voting Rules in Sequential Search by Committees: Theory and Experiments

      Mak, Vincent; Seale, Darryl A.; Rapoport, Amnon; Gisches, Eyran J.; Univ Arizona, Eller Coll Management (INFORMS, 2019-09)
      We propose a committee extension of the individual sequential search model called the "secretary problem," where collective decisions on when to stop the search are reached via a prespecified voting rule. We offer a game-theoretic analysis of our model and then report two experiments on three-person committees with either uncorrelated or perfectly correlated preferences under three different voting rules followed by a third experiment on single decision makers. Relative to equilibrium predictions, committees with uncorrelated preferences oversearched under minority and majority voting rules but, otherwise, undersearched or approximated equilibrium play. Individually, committee members were often less strategic when their preferences were uncorrelated than when they were perfectly correlated. Collectively, committees' decisions were more strategic than single decision makers' only under the unanimity rule, although still not significantly better in terms of the decision makers' welfare. Finally, across our experiments that involved committee search, the unanimity rule always optimized committee welfare.