Intolerable nuisances: some laboratory evidence on survivor curve shapes

Ciril Bosch-Rosa, Christina Aperjis, Daniel Friedman and Bernardo A. Huberman
Additional contact information
Christina Aperjis: Power Auctions
Bernardo A. Huberman: HP Labs

Experimental Economics, 2017, vol. 20, issue 3, No 4, 621 pages

Abstract: Abstract The fraction of a user population willing to tolerate nuisances of size x is summarized in the survivor curve S(x); its shape is crucial in economic decisions such as pricing and advertising. We report a laboratory experiment that, for the first time, estimates the shape of survivor curves in several different settings. Laboratory subjects engage in a series of six desirable activities, e.g., playing a video game, viewing a chosen video clip, or earning money by answering questions. For each activity and each subject we introduce a chosen level $$x \in [x_{\min }, x_{\max }]$$ x ∈ [ x min , x max ] of a particular nuisance, and the subject chooses whether to tolerate the nuisance or to switch to a bland activity for the remaining time. New non-parametric techniques provide bounds on the empirical survivor curves for each activity. Parametric fits of the classic Weibull distribution provide estimates of the survivor curves’ shapes. The fitted shape parameter depends on the activity and nuisance, but overall the estimated survivor curves tend to be log-convex. An implication, given the model of Aperjis and Huberman (SSRN, doi: 10.2139/ssrn.1672820 , 2011), is that introducing nuisances all at once will generally be more profitable than introducing them gradually.

Keywords: Internet monetization; Online advertising; Pricing; Reference points; Adaptation; Laboratory experiment (search for similar items in EconPapers)
JEL-codes: C91 D40 L11 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10683-016-9501-4

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