Decision Making & Negotiations

This article starts with the premise that while Design Thinking has value, there are yawning gaps in the research components of the process. More disciplined research will enable design thinkers to create better, more human-centered designs.

Qualitative research is often used by marketers to develop new brand positionings. This case illustrates how two sequentially applied qualitative approaches were used to generate positionings for a pet food brand. The methods included psychologically oriented focus groups and anthropologically informed ethnographies. When implemented independently by a single market research company, the two approaches inspired highly distinctive brand positionings.

Although the gender wage gap in the U.S. has narrowed, women's career trajectories diverge from men's after the birth of children, suggesting a potential role for family-friendly policies. We provide new evidence on employer provision of these policies. Using the American Time Use Survey, we find that women are less likely than men to have access to any employer-provided paid leave and this differential is entirely explained by part-time status. Using the NLSY97, we find that young women are more likely to have access to specifically designated paid parental leave, even in part-time jobs.

In a multi-armed bandit (MAB) problem a gambler needs to choose at each round of play one of K arms, each characterized by an unknown reward distribution. Reward realizations are only observed when an arm is selected, and the gambler's objective is to maximize cumulative expected earnings over some planning horizon of length T. To do this, the gambler needs to acquire information about arms (exploration) while simultaneously optimizing immediate rewards (exploitation). The gambler's policy is measured relative to a (static) oracle that knows the identity of the best arm a priori.

Koszegi and Rabin (2006, 2007) develop a model of expectations-based reference-dependent preferences, in which the agent experiences prospect-theory inspired "gain-loss utility" by comparing his actual consumption to all his previously expected consumption outcomes. Koszegi and Rabin (2009) generalize the static model to a dynamic setting by assuming that the agent experiences both contemporaneous gain-loss utility over present consumption and prospective gain-loss utility over changes in expectations about future consumption.

Why do young firms pay less? Using confidential microdata from the US Census Bureau, we find lower earnings among workers at young firms. However, we argue that such measurement is likely subject to worker and firm selection. Exploiting the two-sided panel nature of the data to control for relevant dimensions of worker and firm heterogeneity, we uncover a positive and significant young-firm pay premium. Furthermore, we show that worker selection at firm birth is related to future firm dynamics, including survival and growth.

Over the past decade, data has transformed everyday life. While it has changed the way people shop and businesses operate (Goldfarb and Tucker, 2019), it has only just begun to permeate economists thinking about the aggregate economy. In the early twentieth century, economists like Schultz (1943) analyzed agrarian economies and land-use issues. As agricultural productivity improved, production shifted more to manufacturing. Modern macroeconomics adapted with models featuring capital and labor, markets for goods, and equilibrium wages (Solow, 1956).

After decades of supporting free trade, in 2018 the U.S. raised import tariffs and major trade partners retaliated. We analyze the short-run impact of this return to protectionism on the U.S. economy. Import and retaliatory tariffs caused large declines in imports and exports. Prices of imports targeted by tariffs did not fall, implying complete pass-through of tariffs to duty-inclusive prices. The resulting losses to U.S. consumers and firms who buy imports was $51 billion, or 0.27% of GDP. We embed the estimated trade elasticities in a general-equilibrium model of the U.S. economy.