19-02-2025
Social Studies: Feeling meh about ChatGPT; when government agencies retaliate; Hollywood blockbusters and the stock market
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This pattern also held in two other experiments. One compared the experience of using traditional Google search and the 'AI Overview' that Google now presents in its search results. The other found that people who read advice written by people who had consulted ChatGPT considered the advice less informative, less trustworthy, and indicative of less effort than advice written by people who had used traditional Google search.
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Melumad, S. & Yun, J., 'Experimental Evidence of the Effects of Large Language Models Versus Web Search on Depth of Learning,' University of Pennsylvania (January 2025).
The deep (contracting) state
If a company loses out on a bid for a federal contract, it can file a protest with the Government Accountability Office — but that might lead to retaliation down the road, according to a new study.
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Researchers used the Freedom of Information Act to get GAO data about bid protests filed between 2005 and 2016. The researchers wanted to assess whether successful protests (ones in which the government agency that wrongly denied a bid was forced to take corrective action) later affected the protesting companies. The researchers managed to isolate the effect by finding incidents in which multiple companies submitted protests over the same contract but at least one of them was hindered by a local power outage around the time of the submission deadline. Because these outages impaired the quality of submissions and reduced the likelihood of a successful protest, the researchers could observe a difference in what happened to the companies that ended up with a successful protest: They suffered for it. In the subsequent years, such companies received fewer and less valuable contracts and experienced more contract cancellations from the agency against which it had lodged the protest. And the odds of the company protesting another agency contract fell to near zero.
Canayaz, M. et al., 'Choose Your Battles Wisely: The Consequences of Protesting Government Procurement Contracts,' Management Science (forthcoming).
Raging bull
If President Trump really wants the stock market to go up, he should make some calls to Hollywood executives. A study finds that from 2000 through 2019, blockbuster movie releases — defined as releases in more than 4,000 theaters — boosted the stock market the following week by an average of half a percentage point, even controlling for month of the year, holidays, and other stock-market and economic factors. Increased online searches using movie and theater-chain terms also predicted stock-market gains. The effect appears to be that such movies boost both people's happiness (as measured by Twitter sentiment) and investor optimism while reducing people's expectations of stock-market volatility and their risk aversion. Whether a movie is upbeat or is in a certain genre doesn't appear to matter. There were, on average, about seven blockbuster releases per year in the time frame studied.
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Hong, S. & Wei, X., 'Blockbuster or Bust? Silver Screen Effect and Stock Returns,' Review of Finance (forthcoming).
Empty calories
Researchers found that people expect poor people to prioritize their basic physical needs over higher-level psychological needs, while rich people are expected to prioritize the latter and to thus enjoy certain products and experiences more. For example, simply telling people that a restaurant 'approaches food as art' leads them to expect that poor people will enjoy it less. But surveys of poor people about their preferences and experiences aren't consistent with these expectations.
Olson, J. et al., 'When and Why Consumers (Erroneously) Believe Income Impacts the Enjoyment of Consumption Experiences,' Journal of Consumer Research (forthcoming).
