Research

“I’m Moral But I Won’t Help You” – The Distinct Roles of Empathy and Justice in Donations

Posted on by Melissa Ferrigno

Journal of Consumer Research, (forthcoming)

William T. Ross, Jr. Co-Authors: Saerom Lee, Karen Page Winterich

Americans tend to think of donating to charitable causes as a moral, prosocial behavior, but understanding what makes people donate is not well understood. Professor Bill Ross and his colleagues examine how moral identity, defined as “how important being a moral person is” affects prosocial behaviors. Usually having a strong moral identity increases how much prosocial behavior the person engages in. However, sometimes individuals with a strong moral identity make lower donations to charitable causes. Four studies demonstrate that someone high in moral identity gives less when those whom they would be helping, the recipients, are seen by the potential donor as personally responsible for their plight, for example if they have AIDS because they shared hypodermic needles while taking illegal drugs.

Further analyses reveal that empathy and justice underlie these effects. Specifically, people high in moral identity increase donations to recipients who they view as not responsible for their plight out of empathy and decrease donations to recipients who they see as responsible for their plight because of justice concerns. Additionally and interestingly, people who are high in moral identity will donate to recipients who are responsible for their plight if donors are made aware of their own immorality, as it causes them have greater fellow-feeling, or empathy, for these recipients. Study results indicate that moral identity, empathy, and justice in communication programs are likely to affect donations.

The Relationship between Consumer Characteristics and Willingness to Pay for General Online Content: Implications for Content Providers Considering Subscription-based Business Models

Posted on by Nancy White

Marketing Letters (forthcoming)

Girish N. Punj.

“People hate, hate, hate to subscribe to things on the Internet” (Bill Gates, 2005)

Over the past decade, there has been a substantial increase in the demand for online content, but there has been little change in consumers’ willingness to pay for it.Continue Reading

The Impact of Local Knowledge on Banking

Posted on by Melissa Ferrigno

Journal of Financial Services Research (forthcoming)

Robert Bird. Co-author: John Knopf

Do geographic factors influence the performance and behavior of modern banks? Advances in technology and global information sharing have seemingly made geographic characteristics irrelevant, but a bank with geographic advantages can have a positive impact on bank performance. A key factor influencing the geographic literature is the concept of local knowledge, i.e., information that influences bank decision making but is not readily transmittable beyond a limited geographic boundary. Banks possessing local knowledge can offer products and services to qualified local borrowers that other less informed banks might overlook, including for example a more diverse portfolio of products and services to start-ups and small businesses.

Using a combination of bank performance data, and differences in state laws allowing employers to require and enforce non-compete agreements, Professor Bird and his co-author find that strong not-to-compete laws restricting employee mobility in a state negatively impact the incidence of new bank charters while benefiting incumbent employers. Restrictions on the mobility of local knowledge decrease labor expenses because workers lack the bargaining power of being able to take a job with a local rival. Results indicate that increases in labor restrictions are positively correlated with profitability for established banks.  Thus, geographically-specific human capital remains an important differentiating factor that influences bank behavior and competition counter to standard theoretical accounts that might imply otherwise.

Targeted Social Transparency as Global Corporate Strategy

Posted on by Melissa Ferrigno

Northwestern Journal of International Law & Business (forthcoming)

Stephen Park.

Multinational enterprises (MNEs) are subject to a variety of U.S. laws that require public disclosure of their global activities, including adverse social and environmental impacts. In this article, Professor Stephen Park examines the recent emergence of mandatory disclosure requirements under U.S. federal securities law that require MNEs to disclose certain social impacts in order to address geographically-defined and/or issue-specific public policy objectives, collectively referred to as “targeted social transparency” (or “TST”). Compared to other social transparency laws, TST regimes target a set of intertwined social risks specific to an individual country, region, or industry.Continue Reading

Mark Schneider Wins Award for Solo-Authored Paper

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UConn School of Business doctoral student Mark Schneider has won the 2014 Decision Analysis Society Student Paper Award for a work he solo authored. His paper is titled, “Frame Dependent Utility Theory” and it presents a model of decisions under risk which is based on emerging evidence from the neuroscience of decision making. The model generalizes expected utility theory by explicitly modeling how choices are framed and how different frames systematically elicit different preferences. A simple preference foundation for the model is provided, and it is demonstrated that the model resolves important empirical violations of rational choice theory. Schneider, a resident of Mansfield, will receive his award at a meeting in San Francisco in November.

Professors Gilson, Mathieu Win Best Paper Awards

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Faculty and Ph.D. students in the School of Business’ management department have been selected for two prestigious awards in recent weeks.

Gilson, MathieuThe Journal of Occupational and Organizational Psychology (JOOP) recently recognized a paper titled “Unpacking the Cross-level Effects of Tenure Diversity, Explicit Knowledge, and Knowledge Sharing on Individual Creativity,” as Best Paper for 2013. The paper was co-authored by UConn graduate students Margaret Luciano and Hyoun Sook Lim and Professor of Management Lucy Gilson. Continue Reading

David Bergman Receives Prestigious Association for Constraint Programming Doctoral Thesis Award

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David BergmanDavid Bergman, an assistant professor of Operations and Information Management in the School of Business, has been selected as the winner of this year’s Association for Constraint Programming Doctoral Thesis Award.
The annual award is given to a researcher who has completed his/her thesis in the area of constraint programming. Bergman will present his thesis at this year’s 20th International Conference on Principles and Practices of Constraint Programming in Lyon, France, in September.

Bergman’s thesis is titled, “New Techniques for Discrete Optimization,” and it explores new methodological approaches to discrete optimization problems, an area of operations research which finds an increasing number of applications in fields such as finance, healthcare, and logistics, to name just a few. His thesis provides both theoretical insights and important algorithmic discoveries which together improve upon existing state-of-the-art technology.

He completed his Ph.D. in 2013 at Carnegie Mellon University in Algorithms, Combinatorics, and Optimization, a joint program administered by the Tepper School of Business, the Department of Mathematical Sciences, and the Computer Science Department. Bergman’s thesis advisors were John N. Hooker and Willem-Jan van Hoeve.

An abstract of “New Techniques for Discrete Optimization” is available here.

Research Study by Professor Bill Ross Finds Charitable Giving Hinges on Perception of ‘Worthiness’

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Charities assisting people perceived as responsible for their plight may have a difficult time attracting donations, says a new study.

With more than $200 billion donated to causes each year in the United States alone, consumers are inundated with donation requests from charities supporting an array of recipients. Contrary to the idea that people who fit the profile of “givers” are uniformly charitable, their donations may be based on information or preconceived notions about the beneficiaries.

“As consumers have limited financial resources to allocate to charitable giving, they may evaluate how ‘deserving’ the recipients are before making donations,” according to William T. Ross, Jr., ING Global chair and professor of marketing at University of Connecticut and the paper’s co-author. “It’s not only the characteristics of the giver that determine their likelihood of donating, but of characteristics they perceive in the recipient.”

The finding contradicts previous studies that have focused on characteristics of people with the option to give suggesting an important boundary particularly among the most charitable—those defined as having a strong moral identity.
Ross was part of a team of researchers led by Saerom Lee, a doctoral student, and Karen Page Winterich, assisting professor of marketing at the Pennsylvania State University. Their findings are published in the latest Journal of Consumer Research.

The team looked at the responses of 600 participants studied in four scenarios.

In one, researchers examined the response of participants who were given an amount of cash to donate to a real nonprofit organization, the Pennsylvania Association of Community Health Centers.

Participants were asked to choose between donating to medical patients described alternately as having a low-level of responsibility for their situations and those having a high-level of responsibility. The recipients were described either as unable to pay for medical treatment because of “low-wage jobs with poor benefits due to economic conditions” or unable to pay for treatment because of inability “to hold a steady job due to their drug and alcohol abuse or gambling addiction.”

The findings indicate that charitable organizations marketing their causes need to be cautious when describing the beneficiaries that they support, particularly if the recipient could be perceived as responsible for their plight and, by extension, undeserving.

According to the researchers, even when charities do not specifically highlight the responsibility of their recipients, consumers tend to assign their own preconceived notions about beneficiaries in stigmatized groups. For example, the plight of the homeless or drug addicts is often attributed to their own behaviors.

The study was funded by a Smeal Small Research Grant from the Smeal College of Business, Pennsylvania State University and is based on the dissertation by author Saerom Lee, which was the winner or the 2013 Society for Consumer Psychology Dissertation Proposal Competition.

Students Engaged in Academic Leadership (SEAL) Cultivates Academic Success, Professional Development

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SEALHasudin Pehratovic ’15 (BUS) says that the SEAL program has taught him to, “Never take anything for granted and always give back.” And if that’s not enough, the accounting major adds that the program has helped him with everything from questions of dining etiquette—’The bread plate goes on the upper left, the water glass on the upper right,’ he says with a smile—to introducing him to key UConn faculty and administrators as he explores career opportunities in his chosen field.

Pehratovic, who was born in Bosnia and came to Connecticut with his family in 2000, is one of 21 juniors and 13 sophomores who make up the first two cohorts enrolled in Students Engaged in Academic Leadership (SEAL), developed through UConn’s Office of Diversity.

Aimed at students who are the first in their families to attend college, admission to SEAL is through a competitive application process offered to first semester sophomores. Those accepted stay in the program from the second semester of their sophomore year through their senior year providing they maintain GPA requirements and are actively engaged in required activities. During this time, they receive stipends of approximately $500 per semester as they are exposed to networking and mentoring opportunities, internships, and organized team-building exercises.

Jeffrey Ogbar, vice provost for diversity, explains the genesis of the program at UConn this way: “The University does a great job of providing support for various groups of students: The Honors Program, Leadership Legacy through the Office of Student Activities, opportunities such as Upward Bound, Upward Bound-STEM, and McNair Scholars, that are federally-sponsored initiatives for individuals from disadvantaged backgrounds. We reach out to a wide variety of students.”

“But we found we were missing an important group – and that’s students who are the first in their families to attend college. This group, which we refer to informally as First Gen, has a disproportionately high dropout rate, particularly between their sophomore and junior years. We wanted to do something positive to reverse that trend.”

Ogbar explains that this is not a situation unique to UConn. Although overall our graduation rates are significantly better than the national average—with an 83% six year retention rate—on a national level only 26% of First Gen students graduate with a bachelor’s degree within eight years.

Reasons given for a high attrition rate include the fact that these individuals may lack a support system that includes parents who have experienced college and who support the idea of higher education. These students tend to be older with additional work and family responsibilities. And in some cases they come from a lower socio-economic status which makes paying for higher education more difficult.

“UConn’s SEAL program is aimed exclusively at first generation college students regardless of their race, ethnicity, or economic status,” says Ogbar. “As long as applicants have a GPA of at least 2.5 and are committed to developing their leadership and academic skills, they are welcome to apply.”

Kelly Sanchez ’15 (CLAS) and Shantel Honeyghan ’15 (CLAS), both members of the first cohort chosen last year, agree with Pehratovic that SEAL has provided a variety of important opportunities.

A native of Jamaica who lives in Hartford, Honeyghan was first introduced to UConn through the Teacher Preparatory Studies Program at Bulkeley High School. This initiative, which partners high schools with the Neag School of Education, is designed to encourage talented students, particularly from minority groups, to become teachers.

She says, “When I first came to UConn I thought I wanted to major in education because I had so many positive experiences with faculty from Neag when I was in high school. But, somehow I wasn’t confident in my choice. I took a close look at myself and evaluated my interests and now I have a double major in English and Human Development & Family Studies. I’ve decided that I want to get a master’s degree—and eventually a Ph.D.—in higher education and student affairs.

“Part of my decision is the example set by Dr. Ogbar, by Dr. Price in the African-American Cultural Center, and by others I’ve met through SEAL and my exposure to leadership activities. Diversity and multi-culturalism are very important to me and I hope I can give back by eventually working in an office of diversity initiatives or an office of civic engagement.”

Like her peers in the program, Sanchez who hails from New Haven, gives SEAL high marks for exposing her to leadership opportunities and introducing her to individuals on campus who serve as mentors and role models.

“I knew from the time I was in high school that I wanted to major in psychology and when I went for my interview [for the SEAL program] I met Michelle Williams and she has been a wonderful mentor for me – being there when I need her and encouraging me to every step of the way. What I didn’t anticipate was how much I would be inspired by Professor [Guillermo] Irizarry‘s course in Puerto Rican & Latin American studies. As a result, I now have a double major in Psychology and Latin American Studies and I hope, someday, to work as a clinical psychologist.

Williams, associate vice president for research and associate professor in the Department of Psychology, and Irizarry, associate professor of Literatures, Cultures & Language, are examples of the types of relationships forged between students and campus leaders envisioned by Ogbar and SEAL program administrator Seanice DeShields, director of diversity initiatives in the School of Business.

“We’re really encouraged by the progress of this program,” says DeShields. “We have only lost one student so far—and that’s because of a transfer to another school—and the collective GPA of students in the program is over 3.3 and on the rise. We’re really excited about the future and the number of First Gen students who will be graduating from UConn in years to come.”

SEAL is currently funded by a five-year grant from the Coca-Cola Foundation.

Pictured: Jeffrey Ogbar, vice provost for diversity, left, Shantel Honeyghan ’15 (CLAS), and Hasudin Pehratovic ’15 (BUS). (Peter Morenus/UConn Photo)

UConn Finance Professors Propose New Method to Estimate the Full Value-Effect of an Event

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PPACA Passage EventStorrs, Conn. – Paul Borochin, assistant professor of finance at UConn School of Business, together with finance professor Joseph Golec, propose an event study method using stock and option prices to account for the degree of investor anticipation to more accurately measure the full value effect of an event.

Finance researchers and practitioners both use the event study method to measure whether the announcement of new information has a statistically significant effect on a firm’s stock market value. Paul Borochin and Joseph Golec, professors of finance at the University of Connecticut, recently proposed a method that uses stock and option prices to account for the degree of investor anticipation of an event to therefore more accurately measure the full value effect of that event.

“The purpose of our study is to introduce a general method of estimating the degree of investor anticipation applicable to all significant events that affect firms with traded options,” says Borochin. “We apply this more general method to estimate probabilities to a complex event: U.S. House of Representatives passage of the healthcare reform law, the Patient Protection and Affordable Care Act of 2010 (PPACA). We also examine a related event with different potential for investor anticipation: the subsequent 2012 Supreme Court ruling on PPACA constitutionality, which was potentially a greater surprise due to the Court’s higher opacity.”

Borochin and Golec essentially interpret the financial market as a betting market. “…we get the same information from options prices that we could obtain from looking at the Intrade [or other betting market] website,” says Borochin.

“Indeed, one reason that we select PPACA passage to illustrate our method is that it also had event securities traded on Intrade, the leading prediction market at the time,” he says. “We compare the Intrade-generated probabilities for the 2010 and 2012 events to those we generate from options and stock prices as a robustness check. Our financial market-generated probabilities have two advantages over prediction market-generated probabilities: (1) they are derived from assets with much larger dollar volumes of trades,1 and (2), they can be estimated for any event that impacts companies with traded stock options.”

Borochin and Golec believe that their method could be useful for ex ante as well as ex post public policy analysis, citing legislation that often contains offsetting provisions negotiated among different political factions—in this case, the PPACA fee (tax) on brand name pharmaceutical sales.

They measure the effects ex post, but the method could be used for ex ante analysis by government or industry officials. “For example, Congress could publicly release a bill and a vote date. Based on the option market reaction to the vote announcement, both government and industry officials could determine investors’ estimates of the net effect of the bill’s provisions,” says Borochin.

“Our method could also be used to better estimate public or private damages associated with an event,” he adds. “The Securities and Exchange Commission often estimates damages from corporate fraud and the Federal Trade Commission estimates damages from illegal business practices. As long as some of the firms involved have traded stock and options, our method can give a more accurate estimate of total damages.”

Many event studies do not adjust for the fact that their events are partly anticipated, and in many cases, the degree of anticipation is difficult to measure. For the PPACA House vote event Borochin and Golec consider, the adjustment triples the measured effect of the event on the market value of the affected firms.

“We believe that [our method] is likely to be more precise than alternative methods such as using public data on firm-specific attributes to estimate event probabilities, or using event securities from relatively small prediction markets, because our method employs high-volume assets whose prices may partly reflect nonpublic information. For an event with substantial public information available (House passage), we find our probability estimate and that of a prediction market are quite close. But for an event with little public information (Supreme Court constitutionality), the estimates differ considerably,” said Borochin.

The working paper, “Using Options to Measure the Full Value-Effect of an Event: Application to the Healthcare Reform Act,” can be downloaded here.

>>More about this research

1The daily value of PPACA contracts on Intrade averaged about $90,000 around the 2010 House vote event, while the average daily dollar value of stock ($277 million) and notional value of options ($397 million) traded for each company in our model totaled $674 million. The daily Intrade value was $35,000 during the 2012 Supreme Court event, while the average dollar stock and notional options trade value was $640 million.

Figure 1 –
The model-generated probability of PPACA passage compared to the Intrade-generated probability.
This figure plots the model-generated probability of PPACA passage by the U.S. House of Representatives, which is the probability implied by the stock and options prices of six hospital firms and six insurance firms. The Intrade-generated probability of PPACA passage is the price of an event security traded on the Intrade prediction market. Probabilities are shown for three weeks of trading before the event, the event day (March 22, 2010), and the day following the event.