Our EBPM Seminar Series at the Department of Public Policy brings external academics and practitioners to discuss their ongoing research. This event series prioritizes understanding how data, observations, and ultimately evidence is approached by each researcher.
Abstract
We consider settings such as innovation-oriented R&D where agents must explore across different projects with varying but uncertain payoffs. How does providing partial data on project payoffs affect individual performance and social welfare? While data can typically reduce uncertainty and improve welfare, we present a simple theoretical framework where data provision can decrease group and individual payoffs. In particular, we predict that when data shines a light on sufficiently attractive (but not optimal) projects, it can crowd-out exploration activity, lowering individual and group payoffs as compared to the case where no data is provided. We test our theory in an online lab experiment where we show that data provision on the true value of one project can hurt individual payoffs by 12% and reduce the group's likelihood of discovering the optimal outcome by 48%. Our results provide a theoretical and empirical foundation outlining the conditions under which the streetlight effect emerges, where data leads agents to look under the lamppost rather than engage in individually and socially beneficial exploration.
About the Speaker
Johannes Hoelzemann is an Assistant Professor in the Department of Economics at the University of Vienna. His main research interests are in the field of microeconomic theory, behavioral and experimental economics. More precisely, he is interested in individual and strategic decision making, which he studies using theoretical and experimental tools. He is especially interested in strategic learning in its various settings and in what constitutes rational behavior and how (bounded) rationality can be revealed in various environments.
Prior to moving to Vienna, he was a Postdoctoral Research Fellow in the Department of Economics at the University of Toronto where he was also affiliated with Behaviorally Informed Organizations (BI.Org) - Behavioral Economics in Action (BEAR) based at the Rotman School of Management.