Monic Sun studies counter-intuitive market phenomena. Her research suggests that acknowledging that people have different and sophisticated tastes could often deepen our understanding of a puzzle in the market (e.g., a high variance of online ratings may contribute to product sales; people may not follow what their "friends" do on social media; geo-targeting may alleviate price wars; people can derive happiness from both materials and experiences). She also finds that enthusiasm for new technologies and public policies often needs to be treated with caution (e.g., mandatory disclosure of product information may lead to higher prices; sharing ad-revenue with bloggers may push content towards mainstream topics; smart technologies may lead firms to price more aggressively; recycling may lead to wasteful consumption).
Monic uses game theory, causal inferences and experimentation in her research and welcomes interdisciplinary collaboration. Currently she is curious about the essential differences, if any, between artificial and human intelligence. Her work has been published in top marketing journals and mentioned by popular media outlets such as the BBC, Forbes and NPR. She currently serves on the editorial review board of Marketing Science. Monic holds a B.A. from Peking University and a Ph.D. from Boston University, both in economics.
Publications
Peer-to-Peer Markets with Bilateral Ratings, with T. Tony Ke and Baojun Jiang. Marketing Science. Forthcoming. [Slides]
Peer-to-peer (P2P) markets have become a critical aspect of the modern economy. We consider a P2P market where a time-sensitive service is provided through a platform that matches
providers of varying qualities to customers of varying costs. The P2P platform features bilateral ratings, which distinguishes itself from a traditional market: ratings of a provider reveal
his service quality and ratings of a customer reveal her service cost. The existence of a cost
measure in the P2P market leads to novel pricing considerations: a provider can attract low-cost customers by charging a low price, leading to an “endogenous composition effect”. As
a result, equilibrium prices may decrease as customers become more costly to serve or as the
platform’s commission rate gets higher. Under certain conditions, high-quality providers may
even charge a lower equilibrium price than low-quality providers in order to cherrypick low-cost customers. Exploratory analysis reveals that compared with unilateral ratings, bilateral
ratings may soften provider competition and raise equilibrium prices as the providers target
customers in different cost segments.
What Makes People Happy? Decoupling the Experiential-Material Continuum, with Evan Weingarten, Kristen Duke, Wendy Liu, Rebecca W. Hamilton, On Amir, Gil Appel, Moran Cerf, Joseph K. Goodman, Andrea C. Morales, Ed O'Brien and Jordi Quoidbach. 2023. Journal of Consumer Psychology. 33(1): 97-106.
Extant literature suggests that consumers derive more happiness from experiences (e.g., vacations) than from material possessions (e.g., furniture). However, this literature typically pits material against experiential consumption, treating them as a single bipolar construct of their relative dominance: more material or more experiential. This focus on relative dominance leaves unanswered questions regarding how different levels of material and experiential qualities each contribute to happiness. Four preregistered studies (N = 3,288), using hundreds of product categories, measured levels of material and experiential qualities using two unipolar items. These studies investigate recalled, evoked, and anticipated happiness. Results show a more nuanced view of the experiential advantage that is critical for future research and consumer theory: material and experiential qualities both have positive relationships with happiness. Further, there is no inherent tradeoff between experiential and material qualities: consumers can enjoy consumption that is high on both (e.g., swimming pools and home improvements).
Consumers of experience goods typically face some uncertainty about the fit between their
tastes and the features of products being o¤ered. Information technology has given consumers
the ability to conduct research online about their potential fit with products before buying, and
modern sellers the ability to disseminate product information to consumers. This paper investigates
a manufacturer's and retailers' incentives to disclose such product fit information to consumers
when the manufacturer sells to consumers through competing retailers. We show that whether a
manufacturer selling through retailers is more or less likely to disclose fit information compared
to a manufacturer selling directly to consumers depends on the degree of retail competition. If
the disclosure decisions are made before the manufacturer sets its wholesale price, then all channel
members want to disclose fit information for low-quality products, no one wants to disclose it for
medium-quality products, and only the retailers prefer to disclose fit information for high-quality
products. This disclosure conflict for high-quality products can be resolved if the manufacturer
can commit to a wholesale price before the disclosure decisions. The retailers also then prefer to
not disclose fit information for high-quality products. Regardless of whether the wholesale price
is set before or after disclosure decisions, a mandatory product-fit disclosure policy can decrease
consumer welfare and social surplus, depending on the level of product quality and the degree of
retail competition.
U-Shaped Conformity in Online Social Networks, with Xiaoquan (Michael) Zhang and Feng Zhu. 2019. Marketing Science 38(3): 461-480. [Slides]
We explore how people balance their needs to belong and to be different from their friends
by studying their choices of a virtual-house wall color on a leading Chinese socialnetworking
site. The setting enables us to randomize both the popular color and the
adoption rate at the individual level so that our experimental design minimizes
informational social influence, homophily, and group-identity signaling to the general
public. We find that there exists significant social influence within a user’s friend circles.
While learning about the most popular color among a user’s friends generally increases
the likelihood for the user to adopt that color, conformity first decreases and then increases
with the adoption rate of that choice, which ranges from 50% to 100%. In addition, users
who are minority, newer, or of lower social-economic status are more likely to conform
upon learning about the popular choice. Our findings are consistent with optimal
distinctiveness and middle-status conformity theories and have implications for designing
normative marketing campaigns.
Competitive Mobile Geo Targeting, with Yuxin Chen and Xinxin Li. 2017. Marketing Science 36(5): 666-682. [Slides]
We investigate in a competitive setting the consequences of mobile geo targeting,
the practice of firms targeting consumers based on their real-time locations. A distinct
market feature of mobile geo targeting is that a consumer could travel across different
locations for an offer that maximizes his total utility. This mobile-deal seeking opportunity
motivates firms to carefully balance prices across locations to avoid intrafirm cannibalization,
which in turn mitigates interfirm price competition and prevents firms from going
into a prisoner’s dilemma. As a result, a firm’s profit can be higher under mobile geo targeting
than under uniform or traditional targeted pricing. We extend our model in three
different directions: (a) a fraction of consumers are not aware of mobile offers outside
of their permanent locations, (b) mobile offers can be collected when consumers travel
for other reasons, and (c) firms use both permanent and real-time locations when setting
prices. Our findings have important managerial implications for marketers who are
interested in optimizing their mobile geo-targeting strategies.
This article proposes a utilitarian model in which recycling could reduce
consumers’ negative emotions from wasting resources (i.e., taking more
resources than what is being consumed) and increase consumers’ positive
emotions from disposing of consumed resources. The authors provide
evidence for each component of the utility function using a series of
choice problems and formulate hypotheses on the basis of a parsimonious
utilitarian model. Experiments with real disposal behavior support the model
hypotheses. The findings suggest that the positive emotions associated
with recycling can overpower the negative emotions associated with
wasting. As a result, consumers could use a larger amount of resources
when recycling is an option, and more strikingly, this amount could go
beyond the point at which their marginal consumption utility becomes zero.
The authors extend the theoretical model and introduce acquisition utility
and the moderating effect of the costs of recycling (financial, physical, and
mental). From a policy perspective, this research argues for a better
understanding of consumers’ disposal behavior to increase the
effectiveness of environmental policies and campaigns.
Too Much Information? Information Provision and Search Costs, with Fernando Branco and J. Miguel Villas-Boas. 2016. Marketing Science 35(4): 605-618. [Slides]
A seller often needs to determine the amount of product information to provide to consumers. We model
costly consumer information search in the presence of limited information. We derive the consumer’s optimal
stopping rule for the search process. We find that, in general, there is an intermediate amount of information that
maximizes the likelihood of purchase. If too much information is provided, some of it is not as useful for the
purchase decision, the average informativeness per search occasion is too low, and consumers end up choosing not
to purchase the product. If too little information is provided, consumers may end up not having sufficient
information to decide to purchase the product. The optimal amount of information increases with the consumer’s
ex ante valuation of the product, because with greater ex ante valuation by the consumer, the firm wants to offer
sufficient information for the consumer to be less likely to run out of information to check. One can also show that
there is an intermediate amount of information that maximizes the consumer’s expected utility from the search
problem (social welfare under some assumptions). Furthermore, this amount may be smaller than that which
maximizes the probability of purchase; that is, the market outcome may lead to information overload with respect
to the social welfare optimum. This paper can be seen as providing conditions under which too much information
may hurt consumer decision making. Numerical analysis shows also that if consumers can choose to some extent
which attributes to search through (but not perfectly), or if the firm can structure the information searched by
consumers, the amount of information that maximizes the probability of purchase increases, but is close to the
amount of information that maximizes the probability of purchase when the consumer cannot costlessly choose
which attributes to search through.
Many scholars argue that when incentivized by ad revenue, content providers are more likely to tailor their
content to attract “eyeballs,” and as a result, popular content may be excessively supplied. We empirically
test this prediction by taking advantage of the launch of an ad-revenue-sharing program initiated by a major
Chinese portal site in September 2007. Participating bloggers allow the site to run ads on their blogs and
receive 50% of the revenue generated by these ads. After analyzing 4.4 million blog posts, we find that, relative
to nonparticipants, popular content increases by about 13 percentage points on participants’ blogs after the
program takes effect. About 50% of this increase can be attributed to topics shifting toward three domains: the
stock market, salacious content, and celebrities. Meanwhile, relative to nonparticipants, participants’ content
quality increases after the program takes effect. We also find that the program effects are more pronounced for
participants with moderately popular blogs, and seem to persist after participants enroll in the program.
Optimal Search for Product Information, with Fernando Branco and J. Miguel Villas-Boas. 2012. Management Science 58(11): 2037-2056. [Slides]
Consumers often need to search for product information before making purchase decisions. We consider
a tractable (continuous-time) model of gradual learning, in which consumers incur search costs to learn
further product information, and update their expected utility of the product at each search occasion. We characterize
the optimal stopping rules for either purchase, or no purchase, as a function of search costs and of
the importance/informativeness of each attribute. This paper also characterizes how the likelihood of purchase
changes with the ex ante expected utility, search costs, and the importance/informativeness of each attribute.
We discuss optimal pricing, the impact of consumer search on profits and social welfare, and how the seller
chooses its price to strategically affect the extent of the consumers’ search behavior. We show that lower search
costs can hurt the consumer because the seller may then choose to charge higher prices. Discounting creates
asymmetry in the purchase and no-purchase search thresholds, and may lead to lower prices if search occurs in
equilibrium, or higher prices if there is no search in equilibrium. This paper also considers searching for signals
of the value of the product, heterogeneous importance of attributes, endogenous intensity of search, and social
learning.
This paper examines the informational role of product ratings. We build a theoretical model in which ratings
can help consumers figure out how much they would enjoy the product. In our model, a high average rating
indicates a high product quality, whereas a high variance of ratings is associated with a niche product, one that
some consumers love and others hate. Based on its informational role, a higher variance would correspond to a
higher subsequent demand if and only if the average rating is low. We find empirical evidence that is consistent
with the theoretical predictions with book data from Amazon.com and BN.com. A higher standard deviation of
ratings on Amazon improves a book’s relative sales rank when the average rating is lower than 4.1 stars, which
is true for 35% of all the books in our sample.
A Reflection on Analytical Work in Marketing: Three Points of Consensus, with Raphael Thomadsen, Robert Zeithammer, Dina Mayzlin, Yesim Orhun, Amit Pazgal, Devavrat Purohit, Ram Rao, Michael Riordan, Jiwoong Shin and J. Miguel Villas-Boas. 2012. Marketing Letters 23(2): 381-389.
This article presents three points of consensus about game-theoretic work
in marketing: First, equilibrium analysis is necessary for studying situations that have
strategic interactions. In many cases, empirical examination of these strategic scenarios
is difficult or impossible, at least without the guidance of an equilibrium model. Second, more general models are not necessarily “better,” because institutional details
matter. Thus, the appropriate compromise between generality and specificity depends
on the scope of the research question. Finally, there should be a two-way road
between theory and empirics—theory is necessary to interpret empirical results, while
empirical findings should guide theoretical modeling choices.
In many developing countries, public patients offer payments to their doctors outside the
official payment channels. We argue that the fundamental reason for these informal payments is that
formal prices cannot fully differentiate patients’ various needs. We compare patient welfare and
social efficiency when informal payments are allowed with the scenario when they are banned.
Patient heterogeneity plays a central role in the comparison. Contrary to conventional wisdom,
allowing informal payments always improves social efficiency when patients do not face income
constraints. Moreover, allowing informal payments improves patient welfare if patients’ willingness
to pay differs significantly.
Disclosing Multiple Product Attributes. 2011. Journal of Economics & Management Strategy 20(1): 195-224. [Slides]
How do multiple attributes of a product jointly determine a seller’s disclosure
incentives? I model a monopolist whose product is characterized by vertical
quality and a horizontal attribute. Contrary to the unraveling theory, the
monopolist in equilibrium does not always choose disclosure. When the
product’s quality is common knowledge, a monopolist with higher quality
is less likely to disclose the horizontal attribute. Notably, the monopolist may
choose nondisclosure when his product has the highest quality. The results shed
light on governments’ mandatory disclosure policies and companies’ marketing
strategies.
Working Papers
A Model of Smart Technologies, with Yuxin Chen and Xinxin Li
|
