Assessing the deterrent effects of ignition interlock devices Deterrent effects of ignition interlock devices

IntroductionIgnition interlock devices installed after conviction for driving under the influence of alcohol (DUI) have been shown to reduce subsequent DUI arrests (specific deterrence). However, there is little evidence on how interlock-device penalties might affect general deterrence, that is, deterring people from driving after consuming alcohol prior to a DUI conviction.MethodsA discrete choice experiment was conducted and data were analyzed in 2023 with 583 U.S.-based adults who consume alcohol at least once in the past week to assess the deterrent effects of five different penalties (fine, jail time, interlock device, license suspension, alcohol treatment) for alcohol-impaired driving under randomized sequential scenarios of high (20% chance of being caught) and low (1%) police enforcement. Participants resided in 46 states.ResultsDeterrent effects of an interlock penalty, operationalized as having to install an interlock device for 1 year, are large and on par with a 20-fold increase in police enforcement activity (from 1% chance of being caught to 20%), or a $2,000 increase in the DUI fine under the status quo enforcement regime. On average, a 1-year interlock penalty had the same deterrent effect as a 10-day increase in jail time.ConclusionsWider use of interlock devices as a DUI penalty could have large deterrent effects, independent of their ability to physically prevent the motor vehicle of an intoxicated driver from starting. The deterrent effect documented here adds to evidence on interlock devices' overall effectiveness as well as their potential to shift DUI penalties away from criminalization (jail time) and toward immobilization and rehabilitation

Strange Case of Dr. Bidder and Mr. Entrant: Consumer Preference Inconsistencies in Costly Price Offers

Consumers make price offers to sellers in a variety of domains, such as when buying cars or houses or when bidding in auctions for airline upgrades, art, or collectibles. Submitting an offer typically entails administrative, waiting, and opportunity costs. Making such costly price offers involves two intertwined decisions—in addition to determining how much to offer, consumers must also decide whether to make an offer in the first place. We examine the impact of offer-submission costs on consumer behavior using a series of incentive-compatible experiments. Our findings reveal a preference inconsistency, whereby the preferences implied by one of the decisions do not align with the preferences implied by the other. In particular, potential buyers enter more often than their offer amounts would predict based on standard economic models. This preference inconsistency is robust to two interventions designed to help consumers make offer-amount and entry decisions—(1) the provision of interactive-feedback decision aids and (2) the sequencing of the two sub-decisions in the normative order. Neither of these interventions resolves the inconsistency. Instead, the patterns of results suggest that consumers approach the offer-amount and entry decisions as if they were unrelated. We discuss the implications of our findings for the design of offer-submission interfaces, as well as for econometric attempts to infer consumer preferences from offer and bidding data

Pay What You Want as a Marketing Strategy in Monopolistic and Competitive Markets

Pay What You Want (PWYW) can be an attractive marketing strategy to price discriminate between fair-minded and selfish customers, to fully penetrate a market without giving away the product for free, and to undercut competitors that use posted prices. We report on laboratory experiments that identify causal factors determining the willingness of buyers to pay voluntarily under PWYW. Furthermore, to see how competition affects the viability of PWYW, we implement markets in which a PWYW seller competes with a traditional seller. Finally, we endogenize the market structure and let sellers choose their pricing strategy. The experimental results show that outcome-based social preferences and strategic considerations to keep the seller in the market can explain why and how much buyers pay voluntarily to a PWYW seller. We find that PWYW can be viable in isolation, but it is less successful as a competitive strategy because it does not drive traditional posted-price sellers out of the market. Instead, the existence of a posted-price competitor reduces buyers’ payments and prevents the PWYW seller from fully penetrating the market. If given the choice, the majority of sellers opt for setting a posted price rather than a PWYW pricing. We discuss the implications of these results for the use of PWYW as a marketing strategy

Economics, Psychology, and Social Dynamics of Consumer Bidding in Auctions

With increasing numbers of consumers in auction marketplaces, we highlight some recent approaches that bring additional economic, social, and psychological factors to bear on existing economic theory to better understand and explain consumers' behavior in auctions. We also highlight specific research streams that could contribute towards enriching existing economic models of bidding behavior in emerging market mechanisms.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/47034/1/11002_2005_Article_5901.pd

Soft Floors in Auctions

Several of the auction-driven exchanges that facilitate programmatic buying of internet display advertising have recently introduced “soft floors” in addition to standard reserve prices (called “hard floors” in the industry). A soft floor is a bid level below which a winning bidder pays his own bid instead of paying the second-highest bid as in a second-price auction most ad exchanges use by default. This paper characterizes soft floors’ revenue-generating potential as a function of the distribution of bidder independent private values. When bidders are symmetric (identically distributed), soft floors have no effect on revenue, because a symmetric equilibrium always exists in strictly monotonic bidding strategies, and standard revenue-equivalence arguments thus apply. The industry often motivates soft floors as tools for extracting additional expected revenue from an occasional high bidder, for example a bidder retargeting the consumer making the impression. Such asymmetries in the distribution of bidder preferences do not automatically make soft floors profitable. This paper presents two examples of tractable modeling assumptions about such occasional high bidders, with one example implying low soft floors always hurt revenues because of strategic bid-shading by the regular bidders, and the other example implying high soft floors can increase revenues by making the regular bidders bid more aggressively. This paper was accepted by Juanjuan Zhang, marketing. </jats:p