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UCR Scholar Reimagines Student Engagement

ilseu — Tue, 08 Jul 2025 21:21:04 +0000

UCR Scholar Reimagines Student Engagement ilseu Tue, 07/08/2025 - 14:21 More News David Danelski (david.danelski@ucr.edu) | UCR News July 07, 2025

Prof. Kyle Ingram

One way to really learn a topic is to try to master it well enough to explain it to others.

Kyle Ingram, an assistant professor of teaching in the School of Business at UC Riverside, takes this strategy to new heights with a college teaching method he developed called “Carry the Class.” It empowers students by having them lead class discussions, explain reading assignments, or contribute critical perspectives, among other leadership roles.

The results go well beyond student presenters mastering a particular concept. Ingram found that involving students in instruction changed classroom dynamics by fostering a sense of ownership and encouraging more meaningful social interactions among students and faculty.

What’s more, the instruction is structured in ways that allow all students to be heard, validated, and valued—creating a sense of community and shared purpose, Ingram has found. These methods are detailed in a paper titled “Carry the Class: A Strategic Approach to Designing Engagement Around Student Needs,” published in the journal Management Teaching Review.

Ingram’s approach is rooted in a methodology that blends theory, reflective practice, and attention to equity. He draws not only on established scholarship but also on patterns he’s observed firsthand over years of teaching and course redesign.

For example, he noticed years ago that small groups of students often helped teach the class—though unintentionally. They’re the ones who speak up regularly, keep discussions moving, and answer the instructor’s questions. While these discussions are helpful, the social dynamic is inequitable. The students who stay silent may be doing so because they are new to college, managing outside responsibilities, or unsure if they’re welcome in the conversation. Many who opt out do so not out of apathy but because of caution.

“The students who are struggling the most are often the ones whose silence is interpreted as disengagement,” he said.

Students engaging in Kyle Ingram's class

His student-centered model strives to address the dynamic, diverse, and often different needs of undergraduates. Classes can be structured for equity by identifying which students tend to carry the burden of classroom engagement—and then redistributing that load thoughtfully to all students.

“When instructors know which students are most likely to carry the class, they can decide whether to support them or reduce their load,” Ingram explained. “When instructors know who is least likely to engage, they can design ways to activate that group.”

Professors using the Carry the Class method assign each student specific dates to lead class discussions, using a shared spreadsheet so all students can see who is responsible for which segment of the course content. Students receive clear instructions that outline expectations for their facilitation, which is limited to roughly one-fourth of the class time. The professor helps prepare the students by providing readings, discussion prompts, and examples of effective facilitation. Each student is expected to critically analyze the material, identify key themes, and guide a class discussion that promotes peer interaction and critical thinking.

During the discussion, the professor observes and evaluates student performance using a detailed rubric, offering feedback to support improvement. Weekly support and check-ins are offered to ensure preparedness and uphold the reciprocal nature of the method. Ultimately, Ingram’s work points to a profound shift in how we view student success.

“Students oftentimes don’t have the opportunity to say exactly what they want,” Ingram said. “Carry the Class gives them ownership of their contribution.

“They are also coming out of it with a good feeling and gaining some skills that aren’t really part of the class, like public speaking. It’s such a simple way to instill a skill that will aid in their career path, regardless of what they’re studying.”

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UCR's NotebookLM Implementation on KTLA 5

ilseu — Wed, 30 Apr 2025 21:16:53 +0000

UCR's NotebookLM Implementation on KTLA 5 ilseu Wed, 04/30/2025 - 14:16 More News Alexandra Chrystal | UCR ITS April 30, 2025

UC Riverside’s innovative spirit and strategic investments in technology took center stage this week as KTLA 5's tech reporter, Rich DeMuro, visited our campus to learn how our faculty and students are applying Google’s NotebookLM to academic work. DeMuro interviewed Rich Yueh, assistant professor of teaching in information systems, and several undergraduate Business students in the state-of-the-art computer lab located within the university's new School of Business building. The segment focused on their experiences using Google's NotebookLM to enhance academic work.

Dr. Yueh, who also advises the UCR student chapter of the Association for Information Systems (AIS), demonstrated how NotebookLM can analyze course materials and automatically generate study aids like text summaries and podcasts produced from the notebook’s source documents. This practical application of AI underscores UCR's commitment to exploring and implementing cutting-edge technologies to benefit its students.

KTLA Reporter Rich DeMuro interviewing business administration student Jessica Covarrubias

UCR's strategic investment in enterprise solutions like Google's Cloud Platform and its AI offerings, including NotebookLM, reflects a broader vision within the university's central IT leadership.

“We're focused on providing cutting-edge tools like NotebookLM to enhance teaching and learning, while simultaneously exploring AI's potential to streamline administrative processes and drive innovation across the university,” said Chief Information Officer Matthew Gunkel. “Our goal is to equip our students, faculty, and staff with the resources they need to excel in an increasingly AI-driven world, ensuring UCR remains at the forefront of academic and research excellence.”

ITS recognizes the potential of AI tools to provide significant value not only to students in their academic pursuits but also to researchers driving innovation and addressing critical global challenges. This has led to collaborative efforts with staff and faculty, including Professor Yueh, to identify and implement effective ways to leverage these technologies for enhanced teaching and learning.

“When I look at AI’s role in higher education, I see it as augmented intelligence—technology used intentionally to deepen learning and sharpen thinking. I teach students to ask the right questions, not just push buttons. When AI is everywhere, curiosity, critical thinking, and human insight become the real competitive edge, positioning students to thrive and lead in an AI-forward future,” said Yueh.

The recent KTLA interview was a result of a partnership between ITS, the School of Business, and Google, which recommended UCR as an exemplary use case for NotebookLM in a university setting. Special recognition goes to Dr. Rich Yueh for showcasing his innovative application of the tool in his Information Systems courses and for inviting his students to share their firsthand experiences.

The news segment–which aired on KTLA 5 on Wednesday morning–offers a glimpse into how UCR is embracing technological advancements to empower its students and faculty. Reporter Rich DeMuro’s news article on UCR’s use of NotebookLM can also be viewed on the KTLA 5 website.

Professor Rich Yueh (center) with students from his course using Google's NotebookLM

NotebookLM KTLA 5 Feature participants (from left to right): Justin Lamy, undergraduate business student (information systems), chairman of the AIS student organization, captain of UCR men's tennis team | Jason Wang, undergraduate business student (finance) | Dr. Rich Yueh, UCR assistant professor of teaching in information systems | Lance Santana, undergraduate business student (information systems), student instructor for a one-credit R'Course on using AI | Jessica Covarrubias (seated), undergraduate business student (management). | Gina Huang (standing) , undergraduate business student (business analytics), marketing specialist in the AIS student organization.

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Is It Good To Know How Much Your Co-workers Make?

cfabi002 — Tue, 08 Apr 2025 18:52:31 +0000

Is It Good To Know How Much Your Co-workers Make? cfabi002 Tue, 04/08/2025 - 11:52 More News David Danelski (david.danelski@ucr.edu) | UCR News April 07, 2025

Associate Professor of Management Boris Maciejovsky

Many companies keep employee pay shrouded in secrecy while other employers make such information known to their workers. So, what are the impacts of compensation transparency?

A study led by UC Riverside School of Business professor Boris Maciejovsky published in the Journal of Business Ethics found that revealing employee pay unexpectedly influences workplace dynamics in ways never demonstrated before.

When employees learn how their pay stacks up against their peers, their feelings of entitlement—and the salary they believe they deserve—can rise or fall depending on how close they are to the top of performance ranking lists, the study found.

Those with top performance rankings felt entitled to significantly higher compensation than those ranked lower, even when comparing themselves to peers with similar rankings, and were more likely to demand significant raises.

Conversely, those at the bottom of the rankings felt more demoralized and were less likely to ask for a raise, and sometimes felt they didn’t deserve one at all. They thus may have little incentive to do better or collaborate with their co-workers.

The study raises ethical questions about how performance measurement systems might impact employee motivation, collaboration, and perceptions of fairness--especially for those not at the top of the rankings.

"Organizations should carefully consider the type of information shared with employees, as the appropriateness of this information may depend on the employees' relative performance," Maciejovsky said.

Maciejovsky, an associate professor of management, and his coauthors conducted four experiments exploring a phenomenon they call "standard-based entitlement." They demonstrated that an employee's position in company rankings significantly influences how much they feel entitled to compensation they believe they deserve.

Top rankings spur a sense of entitlement to demand more compensation, while lower rankings dampen such a sense of entitlement. These findings have important implications as organizations increasingly adopt pay transparency policies. While transparency aims to promote fairness and reduce inequities, it may create unexpected consequences by reinforcing status differences between high and low performers which impeded teamwork and collaboration, Maciejovsky said.

The research challenges the assumption that transparency always leads to better outcomes in fairness and morale. Instead, it highlights a complex interplay between social comparison and individual perceptions of worth. Employees, the study found, don’t simply respond to how much others make—but rather, how close they are to being the top performer. That nearness to a high-status benchmark, not just the numbers, drives feelings of deservingness.

In one experiment, participants were asked to imagine applying for a new job after learning their performance rank in a previous company. Those told they ranked third out of 500 asked for significantly more than those ranked in the middle or at the bottom—despite receiving identical information about a peer’s salary offer.

Another experiment found that feelings of entitlement acted as the psychological link between rank and requested pay. Those closer to the top felt more deserving, and this translated directly into higher salary demands.

The study’s findings are timely, as more states—including California—enact “right-to-know” laws requiring pay disclosures in job postings. Meanwhile, websites like Glassdoor and Levels.fyi make salary information easier than ever to access.

The study’s title is “Standard-Based Entitlement: How Relative Performance Disclosure Affects Pay Requests.” In addition to Maciejovsky, its authors are Gunyawee Teekathananont of the Imperial College London; Patricia Chen of the University of Texas at Austin; and Stephen M. Garcia of UC Davis.

The researchers emphasize that transparency still has value. It can uncover unfair disparities and help reduce systemic biases. But their findings suggest that employers should also invest in supporting a workplace culture that values growth and contribution across all levels—not just those near the top.

“Transparency is a powerful tool,” Maciejovsky said. “But like any tool, it can have unintended consequences if we don’t use it wisely.”

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Method Predicts Optimal Prices in Uncertain Times

ilseu — Tue, 07 Jan 2025 17:26:29 +0000

Method Predicts Optimal Prices in Uncertain Times ilseu Tue, 01/07/2025 - 09:26 More News David Danelski | UCR News January 03, 2025

Setting the right price for goods or services is essential for just about any business. Prices that are too low can reduce profits. Prices that are too high can drive away customers and lead to losses.

Artificial intelligence (AI) deep learning models can help businesses find the elusive sweet spot by extrapolating prices from historical sales data, which generally show that sales go down as prices go up. But these predictions become unreliable when circumstances differ from the time the source data was generated, such as when the COVID-19 pandemic disrupted manufacturing supply chains and drastically altered consumer demands.

Mingyu “Max” Joo and Hai Che

In a recent study, UC Riverside School of Business professors Mingyu “Max” Joo and Hai Che and their collaborators from Baruch College and Ohio State University have solved this problem by developing a deep learning model that considers both historical sales data and the economic theory of demand. Economic theory of demand accounts for factors such as income levels, consumer preferences, and consumption patterns under various circumstances such as holidays or extreme events like pandemics and natural disasters.

Such a combination allows AI to quantify the unpredictable aspects of how prices affect consumer behavior during unprecedented circumstances, explained Joo, an associate professor of marketing.

“With the help of economic theory, we could better identify demand fluctuations driven by external factors, like a pandemic or holiday fever, versus pure price responses,” Joo said. “This differentiation is crucial for making more reliable predictions.”

For example, traveler demands for hotel rooms are higher during the peak summer months despite higher rates. A standard AI model may mis-predict that higher prices are associated only with higher demands. However, the higher demands are driven by better weather or work schedule constraints, and consumers’ affordability limitations and sense of price fairness will still limit how much they are willing to pay. Such factors are difficult to gauge during uncertain times, Joo said.

The new model bridges a gap between standard AI models and the real-world complexities that businesses face when setting prices, particularly in unprecedented scenarios such as economic shocks and extreme price fluctuations.

To validate their model, the researchers analyzed pre- and post-COVID-19 retail data for breakfast cereals, which had a sales surge during the beginning of the pandemic, but later returned to a pattern of historic sales declines. They compared their new model combining economic theory with standard deep learning and log-linear models and evaluated their ability to predict demand changes as prices fluctuated beyond historical ranges.

The results were compelling. While standard models performed well with data within the known range, their predictions deviated when confronted with post-pandemic price levels. The researchers’ model, however, retained high accuracy, demonstrating a substantial improvement over other methods by reducing generalization errors by up to 50% in some cases. Such errors occur when a model trained on a specific dataset does not perfectly capture the underlying patterns or relationships that hold in different contexts.

“The pandemic was a perfect stress test for our model,” Joo said. “The price and demand patterns during COVID-19 differed significantly from any prior period. This was exactly the type of scenario where typical AI models would struggle to produce accurate forecasts.”

While most AI models that rely heavily on past price data falter when circumstances change, the new model’s ability to utilize economic theory gave it an edge, Joo said.

“We’re combining the best of both worlds—advanced AI techniques and established economic principles—to create a system that’s both intelligent and adaptable,” Joo said. “The future of AI in business isn’t just about exploiting more data; it’s also about leveraging human knowledge from various domains to build smarter, more reliable tools.”

The model is detailed in a paper titled “Theory-Regularized Deep Learning for Demand-Curve Estimation and Prediction.” In addition to Joo and Che, the authors are Chul Kim of the Zicklin School of Business at Baruch College, CUNY; and Dong Soo Kim of the Fisher College of Business at Ohio State University.

It was presented last year at the Proceedings of the IEEE International Conference on AI for Business in Laguna Hills.

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Manliness Concerns Impede Coworkers' Forgiveness

ilseu — Mon, 28 Oct 2024 17:06:32 +0000

Manliness Concerns Impede Coworkers' Forgiveness ilseu Mon, 10/28/2024 - 10:06 More News David Danelski (david.danelski@ucr.edu) | UCR News October 28, 2024

To forgive is to move on and set a foundation for a brighter future. In the workplace, forgiveness makes for healthier and more effective workgroups, especially when co-worker transgressions are minor and the need for effective collaboration is essential.

Michael Haselhuhn

One's sense of masculinity, however, can impede an ability to forgive, a study led by UC Riverside associate professor of management Michael Haselhuhn has found.

The more men are concerned about appearing masculine, the less likely they will forgive a co-worker for a transgression such as missing an important meeting, because they view forgiveness as a feminine trait, Haselhuhn and his co-author, Margaret E. Ormiston of George Washington University, found.

What’s more, men who are not inclined to forgive are also more likely seek revenge or avoid the transgressor, which contributes to an unhealthy and less effective work environment, the research found. They also view men who forgive as unmanly.

Haselhuhn and Ormiston, however, also found that a simple intervention can reduce unforgiving impacts of masculinity concerns. Study participants who were sensitive about their masculinity became more willing to forgive after they had a chance to describe a couple experiences in which they felt they acted as real men.

The researchers went into the study knowing that men tend to be less forgiving than women, and that those who forgive tend to be warmer, and more communal and nurturing, which are stereotypically feminine traits, said Haselhuhn of UCR’s School of Business.

"So, we hypothesized that forgiveness carries some gendered implications, and perhaps people who forgive are perceived as more feminine and less masculine," Haselhuhn said. "And if that's the case, men who are really concerned about appearing like real men should be the people who are least likely to forgive."

The study was based on tasks performed by more than 800 participants. The researchers determined men’s sense of masculinity by having them score the stress levels of situations that could challenge their manhood. Examples included having their wife earn more money than they do, losing a sports competition, or having their child see them cry.

The participants then played out scenarios in which a co-worker committed a transgression, such as missing an important meeting with a client that compelled the client to go elsewhere and were asked if they would forgive the co-worker. As hypothesized, the men who were worried about maintaining their masculinity were less likely to forgive.

“The more concerned they were about maintaining their masculinity,” Haselhuhn said, “the more they wanted to take revenge against the coworker, which you can imagine in the workplace is not such a good thing, and the more they want to avoid the coworker.”

Yet, men concerned about their manhood become more forgiving when first given the opportunity to describe two experiences that made them feel like real men. Out came tales of scoring touchdowns, outdoing competitors, and sexual prowess.

Interestingly, the men who were asked to describe 10 such manly memories had trouble recalling that many, became a bit frustrated – and remained less forgiving than those asked to describe just two, the researchers found.

The study -- "Fragility and Forgiveness: Masculinity Concerns Affect Men's Willingness to Forgive" – was published in the Journal of Experimental Social Psychology. It adds to a body of research that can help us better get along with each other, Haselhuhn said.

“When you forgive, it improves your mental health,” Haselhuhn said. “It improves your physical health. Obviously, it improves your relationships with others as opposed to trying to take revenge on the person who wronged you, or just ignoring them and avoiding them, and things like that. Forgiveness has a ton of benefits.”

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Header illustration by Robert Almanzar/UCR

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Expert Insights on Herd Instinct

cfabi002 — Tue, 06 Aug 2024 17:34:08 +0000

Expert Insights on Herd Instinct cfabi002 Tue, 08/06/2024 - 10:34 More News Nathan Paulus | MoneyGeek August 01, 2024

UCR School of Business Associate Professor of Management Ye Li was asked to provide expert insights on Herd Instinct for an article recently published on MoneyGeek.

Ye Li, Associate Professor of Management

MG: What are some questions that consumers can ask themselves to identify if they’re making a decision based on herd behavior?

Ye Li: Herd instinct is the tendency of individuals to follow the behavior of others, often without independent analysis or decision-making. This behavior is driven by the belief that the collective actions of a group are more likely to be correct or beneficial, leading individuals to conform. Another term for this is following social norms.

That said, here are some questions to ask:

Am I making this decision because others are doing it?
Do I feel pressured to conform to the group?
Would I make the same decision if I were alone?
Have I thoroughly researched and considered the alternatives?
Does this choice align with my personal goals and values?

MG: How can consumers best avoid herd behavior?

Ye Li: Other than noticing when they're just following the herd by asking the questions above, the best way is to make your own decision before you know what others are doing. If you already know, do your own research and clarify your goals and values rather than lean on what the crowd values. And finally, embrace being a contrarian; it can be a great way to stand out as an individual.

What Is Herd Instinct?

As a collective, we are social beings. Oftentimes, this means we are influenced by the opinions and decisions of others. When we make decisions based on what others believe or do, we are falling into herd instinct or herding. The concept, “if everyone is doing it, it must be a good thing” is how so many of us go with the crowd and make choices we perceive as the best, safe or good. Some common herding examples are selecting a restaurant based on its positive reviews or making investments based on other investors’ without analyzing our options for ourselves.

Why Do People Follow the Crowd?

Humans are social creatures and because of this, we are easily affected by others. We tend to fall into herd instinct and seek acceptance and inclusion from others who hold the same views and values as we do to shape our beliefs and decisions.

In general, following the crowd is also far simpler, which is why so many of us do it. After all, it’s difficult to make informed decisions by gathering pertinent information on all interesting products and services. It’s far easier to follow others’ decisions, especially if you believe they have done their research or know best. While this can help in the case of buying a product or getting a service, this mindset is not ideal when it comes to big life decisions, such as your career path or your finances.

Understanding Herd Instinct

Herd instinct or herd behavior is defined by a lack of independent decision-making, causing one to think and behave similarly to everyone else. This can manifest in what we buy or how we think and is present in many parts of our lives, such as choosing services, food options, purchasing products and investing our money.

To clarify, herd instinct in finance happens when investors follow in the footsteps of others. By doing so, they are being influenced by emotion and instinct instead of relying on their own independent analysis, which is an essential step before investing in any product.

Herd instinct and influence is all around us. The following are some common examples of where herding can show up in our everyday lives.

Herd Instinct Example: Choosing Where to Eat

Even the simplest decisions, such as where to eat or what to order, can be influenced by herd instinct. Imagine you’re out for the evening with your friends, you’re hungry and have two restaurants nearby. The first one has a crowd lined up around the corner and the other one barely has any patrons. If you were following the herd instinct, you may end up choosing the one with a crowd because you presume it likely has better food and is popular for a reason.

Key Takeaway

Rash decisions like choosing a restaurant based on the crowd can be harmful, even on a small scale. For instance, you may end up spending more per dish at the restaurant than you intended and justify it because the restaurant is popular. In turn, your choice may have you going over your spending budget.

Herd Instinct Example: Avoiding the Fear of Missing Out (FOMO)

The fear of missing out (FOMO) can easily cause us to make hasty decisions. For example, a subset of traders drove up the price of Bed Bath & Beyond’s stocks by more than 60%. This happened in line with the rise of “meme stocks,” which are stocks that have a following from online communities and rise and fall based on their narratives and conversations.

Key Takeaway

Bed Bath & Beyond and its stock increase demonstrate how herd behavior and overconfidence can impact the market. The rise in price didn’t occur because the company made strong financial moves. Rather, it rose due to retail trader interest and their fear of missing out (FOMO) on trends. In reality, good investment decisions should be made based on ample research on the company.

The graph below shows how Bed Bath & Beyond's stocks spiked in June 2021 compared to the rest of the year.

Herd Instinct Example: Making Purchases

Everyday purchases are also affected by herding. We may end up buying a popular product we see online simply because it’s trending, but later discover it’s not that great or that it doesn’t really fit our needs or lifestyle. For instance, if you’re shopping for a particular type of sunscreen but haven’t done your research, you may gravitate towards popular name brands you recognize.

Key Takeaway

In the long run, basing your decisions on what others buy can impact your pocketbook, provide you with an item that doesn’t match your needs and result in you having to buy another product because you didn’t do your research prior to shopping.

For instance, reviews and star ratings can influence people's purchasing decisions. The more stars an item has, the more you are likely to think the product is exceptional, which may not be the case. Stars ratings and reviews are examples of herd instinct.

Another example would be how we view a company or brand online. In a 2013 study, having a prior positive and negative social influence affects the way we rate the company or brand. The study concluded that when the initial rating is a positive one, there is a 25% chance that the ratings after would also be positive.

Herd Instinct Example: Buying Stocks

First time investors can be easily influenced by the herd instinct and make poor financial decisions. For example, they may end up buying certain stocks or selling them based on societal influences and market chatter.

Key Takeaway

For instance, if you learn some of your coworkers are making gains from a certain stock or cryptocurrency, you may end up buying the same in order to reap the same benefits. However, without proper research, you can’t guarantee the same benefits and may end up buying at a price that’s too high, which can ultimately result in losses.

How to Escape Herd Instinct

Blindly giving into the herd mentality bias can be damaging for your finances. While it is challenging to curb your impulse to join the crowd, there are steps you can take to avoid following the herd.

1. Learn to identify herd behavior
When you understand the concept of herd instinct, it can be easier to identify when it’s occurring. Remember, the herd doesn’t know something you don’t; rather, the herd trusts the popular opinion as the most optimal choice, and some may be simply afraid of missing out.

2. Know that you have options
Try not to take things at face value. By doing your research, you can better understand the choices you have.

3. Don’t factor in the crowd
It’s easy to get caught up in the crowd’s opinions and choices. It’s also worth noting that the crowd does make some wise choices. However, it’s better to remove outside influence from your purchasing decisions. This way, you’re using logic, reason and value of your needs to drive choice versus those of others.

4. Evaluate your decisions rationally
Stress, fear and emotions can impact you from rational decision making. If others are rushing to do or buy a certain thing, don’t follow them. Take a step back and examine the merits and drawbacks of the situation.

5. Stick to a budget
Determine how much money to set aside per paycheck for savings and other necessities by creating and sticking to a budget. This can help you be more mindful of your purchases and avoid overspending or splurging situations that herd mentality can create.

Herding Behavior and Investment Decision

When it comes to investing, friends, neighbors and acquaintances can easily sway purchasing decisions. Imagine some of your friends invested in a stock that is continuously increasing in value and you haven’t yet taken the leap to invest, too. They poke fun at you for not jumping on this amazing opportunity and pressure you to act on investing quickly. You end up buying the stock because of their comments and influence and hope you’ll be as successful as they have been by reaping the same benefits. While this may work out on occasion, this strategy is not fruitful for an investor in the long run.

The herd effect or following the crowd can lead to trends amplifying beyond the fundamental rules of trading. People can drive up prices when they pile into investments because of FOMO or because they heard something positive but have not done their own due diligence to investigate its validity. As a result, this irrational exuberance is an unstable asset bubble that ultimately bursts causing prices to drop and not rise again, possibly ever.

5 Rules For Avoiding Herding in Investing

While there can be some benefits to herding, such as passive index investing that follows a herd-type strategy, it’s best for inexperienced traders to avoid it altogether. Prior to investing, review the tips below to avoid falling prey to the herd mentality.

Keep your financial goals in mind. While risky investments initially seem like a potential jackpot, remember that you’re more likely to lose your money than to gain from it. If this doesn’t support your future goals or can hinder them, then it’s best to avoid that investment. Hold yourself accountable with your money and live with financial intention.
Do your research. The herd mentality keeps you from doing your own research, which is essential before you invest funds into any product. Make a conscious effort to form your own opinion through research and understanding of the investment you’re about to make.
Go at it alone. It can be nerve-wracking to invest in something when no one else you know is doing it. However, to avoid the herd instinct, you need to be okay with investing in new things, especially if your research shows it may be a wise investment.
Consult a professional. If you’re new to the market and you need some guidance, look into finding a professional advisor. Gaining professional input on your research, analysis and preferences can help you determine if a particular investment is a good option for you.
Take your time. Don’t rush into a market purely because others are. Remember that investing wisely is one of the key ways to start saving money and reach your goals. This should be the driving force behind your investment decisions.

____________________________________
All images courtesy of MoneyGeek

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Expert Insights on Rational Choice Theory

cfabi002 — Tue, 06 Aug 2024 17:21:58 +0000

Expert Insights on Rational Choice Theory cfabi002 Tue, 08/06/2024 - 10:21 More News Nathan Paulus | MoneyGeek August 05, 2024

UCR School of Business Associate Professor of Management Ye Li was asked to provide expert insights on Rational Choice Theory for an article recently published on MoneyGeek.

Ye Li, Associate Professor of Management

MG: What is the best way for individuals to apply rational choice theory and use it to their advantage?

Ye Li: Rational Choice Theory is a normative (i.e., what should happen) theory for how people should behave across all kinds of situations. It assumes that individuals decide by comparing the costs and benefits of various options and choosing the one that maximizes their personal advantage. This theory is based on the idea that individuals act rationally, which lots of research suggests isn't always true.

MG: How does rational choice theory impact people’s daily lives when it comes to finances?

Ye Li: Rational Choice Theory impacts financial decisions by suggesting that people should make choices that maximize their financial well-being, not just in the present but throughout their lives. For example, when deciding whether to save or spend money, individuals should weigh the immediate gratification of spending against the long-term benefits of saving. This impacts financial decisions like investing in education, saving for retirement or purchasing cost-effective products and services.

MG: How can people make more rational financial decisions? What are some tips?

Ye Li: This will tend to depend on people's individual financial situations, but here are some general tips:

Set Clear Financial Goals: Short-term goals such as saving for a vacation, building an emergency fund or paying off credit card debt can help you stay focused and motivated. Long-term goals such as saving for retirement, buying a home or funding your children's education are important as well, but they require more planning and discipline.
Create and Stick to a Budget: Use budgeting tools or apps to monitor where your money is going. This helps you identify areas where you can cut back. Make sure that your spending aligns with your financial goals. Consider allocating a portion of your income to savings and investments before spending on non-essentials.
Automate Savings and Investments: Set up automatic transfers to your savings and investment accounts. This ensures that you consistently save and invest without having to think about it. Definitely make sure to take advantage of employer-sponsored retirement plans (401(k)), especially if they offer matching contributions.
Avoid Impulse Buying: Implement a waiting period for non-essential purchases, especially big-ticket items. This helps you determine if you really need the item or if it’s just an impulse. When doing daily shopping, make a shopping list and stick to it to avoid buying unnecessary items.
Practice Mindful Spending: Spend money on things that truly matter to you and bring value to your life. This helps you avoid unnecessary expenses and focus on what’s important. After making a purchase, reflect on whether it was worth it and if it aligns with your financial goals.

What Is Rational Choice Theory (RCT)?

In economics, rational choice theory (RCT) is a school of thought stating people’s decisions are based on rational analysis to achieve favorable outcomes. Individuals are calculating costs and benefits to determine which choices can maximize self-interest or are aligned with their beliefs.

Understanding Rational Choice Theory

RCT is a framework used in economics that assumes people are rational. Rationality refers to making efficient decisions to achieve the greatest benefit: If a person faces different choices, they will opt for the one that will provide the most benefit.

Now that we’ve identified rational choice theory, let’s dive deeper into its existence and how it works.

History of RCT: Rational Actors, Self-Interest and the Invisible Hand

The rational choice theory was first introduced in 1776. Well-known economist, Adam Smith, proposed the theory in his book, “An Inquiry into the Nature and Causes of the Wealth of Nations.” Smith also helped developed the theory’s underlying principles. He used the metaphor, “invisible hand.”

The invisible hand explains how unseen forces influence free market economy. Under this, negative connotations of self-interest are refuted.

The theory believes that while rational actors consider their self-interest, they still create benefits for the economy and society as a whole. Thus, RCT has been used to understand behaviors of individuals and the society.

Rational Choice Theory’s Role in Society: Strengths & Discrepancies

There are various theories created to try to explain and understand human behavior. One of these is RCT. It’s used as a predictor of people’s choices. It also assumes quite a bit about the way people choose preferences and goals.

That said, many are disputing its relevance and role in society. Dissenters point out that rationality is not always the basis of decisions. Individuals are often affected by emotions and other external factors like status quo.

Rational Choice Theory’s Strengths and Discrepancies

Strengths of RCT

It helps make assumptions about a rational actor’s behavior in a certain circumstance and predicts an outcomes.
It can help explain an individual’s or a group’s behavior.
It explains rational and irrational decisions.
RCT is a versatile theory applied in various fields.

Discrepancies of RCT

The theory assumes that the actor is always rational. That means emotions, innate practical sense and any unconscious behavior are not considered.
RCT does not take into account the complexity of interactions and human action. It human behavior and assumes logic can explain everything.
RCT focuses on how individuals ought to behave and make decisions. However, it does not provide cultural context or nuance on possible differences and biases.

How Is Rational Choice Theory Applied in Society?

Among the fields that typically apply rational choice theory is economics. This theory is used to determine buying patterns and can help understand prices, demand and supply.

A good application can be seen in expected utility theory, which states that consumers make purchase decisions based on perceived utility or the satisfaction a product or service provides.

However, economics is only a primary application. Various fields have also adopted this framework to attempt to better understand and predict human behavior.

Game theory: RCT is considered a fundamental element in game theory, which is used to provide a mathematical framework for the analysis of people’s mutually interdependent interactions. It studies social institutions that have set rules related to the actions of individuals to outcomes.
Prospect theory: Prospect theory aims to incorporate observed violations to create a more descriptively valid framework when an individual makes decisions under risk. It involves two phases: The editing phase, where an individual edits prospects, and the evaluation phase, where a decision is made.
Routine activities theory: A subsidiary of RCT, this theory gives a macro perspective on crime. It shows how changing conditions, both social and economic, can influence victimization and the overall crime rate.
Politics: There are many ways RCT is applied in politics. Politicians may use it to determine the wants of their constituents. Governing bodies and agencies can determine prioritization of projects and policies based on the best interest of society. Additionally, politicians can use it to predict the actions of other leaders.
Sociology: The application of RCT in sociology focuses on understanding what affects people’s decisions and the impact of these choices on others.

Examples of How RCT Affects Decision-Making in Finances

Among the aspects of life that highly involve decision-making is one’s finances. While behavioral finance believes that a person’s biases, rationales and emotions influence their financial decisions, RCT states that people are rational and unbiased.

The following examples of RCT violations can help you better understand its role in financial decision-making. This knowledge can help you gauge choices when making financial decisions and achieve the best results possible.

RCT Example: Buying Familiar Stocks

Professional managers often advise diversifying investments by buying from different sectors to hedge the risk. However, many investors tend to buy familiar stocks. A study by Gur Huberman (2001) shows familiarity bias amongst investors, where they buy stocks from local companies. For example, a U.S. citizen is much more likely to invest in a U.S. company, not because it’s a better bet, but because of the company's location.

This shows irrational decision-making. Instead of looking at one’s best interest by diversifying portfolios and buying global stocks, the investor decides based on bias. That means it’s a violation of RCT.

RCT Example: Paying Off Small Loans First

When it comes to loans, individuals tend to pay off smaller loans with low interest rates first before paying off larger loans with high interest rates. In a study, Dan Ariely and his team found that people would rather have fewer accounts than reduce their interest payments.

For example, an individual would rather pay off three small loans of $1,000 each and a 5% interest rate than a $50,000 loan with a 10% interest rate. In the three small loans, the borrower pays $150 interest annually but in the larger loan, they pay $5,000 in interest annually.

Having the desire to take care of small loans first is known as debt account aversion (DAA), which is a form of mental accounting.

This scenario is in violation of RCT. It shows irrationality because paying off larger loans first or starting with those with the highest interest rate and working to the lowest, as in the debt avalanche method, would help the individual save more money. The graph below shows how DAA increases as the interest rate of a debt increases.

RCT Example: Borrowing Money for No Reason

Borrowing money can help businesses. However, taking out a loan is not always a great solution. In some cases, it may not even be a good option.

Despite this, many entrepreneurs and business professionals take out high-interest loans without having liquid cash in the bank. This is an irrational move and a violation of RCT.

For example, taking out a loan at 10% interest while liquid cash sits in your bank earning less than 1% interest hurts your wallet. That is why it’s important to compare a loan’s interest rate to your bank’s saving rate.

RCT Example: Having Inconsistent Preferences

Having inconsistent preferences is not unusual. In fact, 73% of Americans said “they had regrets about their 2021 financial behaviors and decisions.”

Seasonal trends show the correlation between increasing household debt and holiday spending. Americans spent an average of $1,131 during the holiday season in 2021. That led to outstanding debt. In the chart below, you can see higher spending around the fourth quarter.

Credit card use also varies based on credit scores. For instance, people with exceptional credit were seen to put their largest spending on their credit cards. Additionally, only 17% of respondents had not paid off their holiday debts yet.

RCT Example: Stock Purchase Price Affects Judgment

Many investors choose to sell profitable stocks to avoid losing stocks because they are afraid of recognizing loss and want to maximize benefits. That said, many also irrationally assume that stocks will increase back to the purchased price even if there is little evidence proving it.

Ritter (2003) provided the example of someone buying a stock at $30, which then drops to $22 before rising to $28. In such a case, most people don’t want to sell until the stock gets above $30. He regarded this investor bias toward winning stocks as the disposition effect.

The disposition effect, which was coined by Hersh Shefrin and Meir Statman, combines anchoring bias and mental accounting. It refers to traders’ tendency to prematurely sell assets that made gains more frequently while keeping assets that have lost their values. This behavior can be considered irrational and it violates RCT.

RCT Example: Traveling to Save Money on One Item vs. Another

Money is fungible, which means it’s perfectly interchangeable. For example, people are willing to swap $1 for another $1 without knowing the difference. However, that may change depending on where the money came from.

Thaler (1999) found that consumers were willing to travel 20 minutes to another store to save $5 on a $15 calculator but not to save $5 on a $125 jacket. Following RCT, one should be willing to save $5 regardless of the purchased item. A person acting in their best interest would choose to travel to save $5, regardless of the cost of the original item.

However, in most cases, people view money in comparable terms. In the example given, the $5 savings on the calculator is seen as 33%. However, the $5 savings on the jacket is only 4%.

RCT Example: Fear of Death Doesn’t Correlate With Probabilities

Dissenters of RCT argue that people tend to act according to emotion over probabilities. For instance, dying of heart disease is far more likely than dying in an airplane. According to the Centers for Disease Control and Prevention (CDC), approximately 659,000 people in the country die from heart disease every year. Meanwhile, the National Transportation Safety Board reported 349 fatalities from airplane crashes in 2020. Despite these probabilities, a lot of people fear flying but continue consuming high cholesterol foods.

Additionally, other factors can also affect a person’s fear of death. For example, money or the mere reminder of money can offer soothing effects to help people cope with the psychological terror that comes with the knowledge of mortality. Gasiorowska, et. al (2017) argued that money cues can activate self-esteem which can provide protection against mortality concerns.

RCT Example: Recent News Stories Can Influence People’s Choices

Recent stories in the news can also cause people to inflate the probability of an outcome. For example, Blalock and his team (2009) found that after 9/11, people feared flying and decided to drive more.

While the probability of a car accident is far greater than an airplane crash, many concluded that driving was safer because 9/11 was recent and easily available in people’s minds.

RCT Example: Choosing Wine Based on Price, Not Taste

According to RCT, people should not base decisions on irrelevant factors. For example, if a person wants the wine with the best taste, price should not influence their wine choice. Only the taste should matter. However, that is not how the human brain works. Cambridge University studied more than 6,000 blind tastings and people only preferred more expensive wine when they knew the price (Goldstein et al., 2008).

While the price of wine should have no effect on the taste, people can be irrational. When irrelevant factors influence preferences, there is a violation of the RCT.

RCT Example: Outcome Rates Change People’s Choices

An experiment conducted by Sox and Tversky showed that 50% of patients were more likely to opt for surgery when doctors described the outcome as having a 90% survival rate as opposed to a 10% death rate.

While the odd of dying are the same in both scenarios, the mere description of the surgery changed the patient’s preferences. Behavioral economists call this phenomena the framing effect and nudges individuals to violate RCT (Lewis, 2016).

Does RCT Help Us Understand People’s Choices Better?

Economic theories exist to find ways to understand how money organizes production distribution and consumption of products and services. For rational choice theorists, the same general principles can help understand human interactions wherein time, approval, information and prestige are exchanged.

The theory states that individuals have to make choices based on their goals and the means to attain said goals. Preferences are based on anticipated outcomes for each action. As rational actors, individuals will choose the course of action leading to the greatest result or satisfaction.

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All images courtesy of MoneyGeek

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Professor Recognized for Consumer Psychology Work

ilseu — Wed, 13 Mar 2024 14:46:21 +0000

Professor Recognized for Consumer Psychology Work ilseu Wed, 03/13/2024 - 07:46 More News David Danelski (david.danelski@ucr.edu) | Inside UCR March 13, 2024

Margaret “Meg” C. Campbell, an associate dean, professor of marketing, and Anderson Presidential Chair in Business Administration at UC Riverside’s School of Business, has received the Fellows Award for Outstanding Contributions to the Field of Consumer Psychology.

The Society for Consumer Psychology, or SCP, a top professional organization of academics and practitioners focused on consumer psychology, presented Campbell with the honor at the group’s annual conference on Saturday, March 9, in Nashville, Tenn. The Fellows Award is one of the society’s most prestigious recognitions, reserved for individuals whose work has made a lasting and meaningful impact on the field.

The award recognized Campbell for her years of scholarship, research impact, and her work with the field, SCP, and the Journal of Consumer Psychology. She has been a co-editor of a special issue of the Journal of Consumer Psychology on Marketplace Morality, a co-editor of the Journal of Consumer Research, or JCR, and has served in leadership roles for both SCP and the Association for Consumer Research. These leadership roles have allowed her to contribute not only as a researcher but also as a mentor and guide, shaping the direction of consumer psychology research and supporting the professional development of other scholars in the field.

Campbell has made groundbreaking contributions to the literature about persuasion knowledge and price fairness. Her research has advanced understanding of how consumers evaluate marketing tactics, how they form judgments about fairness in pricing, and how these perceptions influence decision-making in the marketplace. Her published work has been widely cited, with more than 10,000 Google Scholar citations, demonstrating its influence and continued relevance across marketing, psychology, and business disciplines.

Previous honors for Campbell reflect the sustained quality and impact of her scholarship. These include the JCP 2019 Park Award Honorable Mention, the 2017 JCR Best Article Honorable Mention, and the JCR 40th Anniversary Most Impactful Paper of 2000. Each of these recognitions underscores the significance of her contributions over time, from early career achievements to her most recent work.

Campbell joined UC Riverside in 2021 and currently serves as the faculty chair of the School of Business and the A. Gary Anderson Graduate School of Management. In these roles, she provides academic leadership and strategic direction, helping to guide the School of Business in its mission to foster innovation, inclusivity, and excellence in business education. Her experience as a scholar and leader enhances the school’s reputation and creates opportunities for students and faculty alike to engage in impactful research and applied learning.

Before arriving at UC Riverside, Campbell was the provost professor of marketing at the Leeds School of Business at the University of Colorado Boulder. Her academic career has included several other positions that highlight her dedication to advancing both research and education. Through these roles, she has taught and mentored countless students, many of whom have gone on to successful careers in academia and industry.

Campbell received a doctoral degree in business from Stanford University in 1992. That training provided the foundation for her distinguished career in consumer psychology, one that has combined rigorous scholarship with a commitment to service and leadership. The Fellows Award for Outstanding Contributions to the Field of Consumer Psychology marks another milestone in a career defined by influence, impact, and the advancement of knowledge.

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Women Add Value to Complex ‘Integral’ Inventions

ilseu — Wed, 14 Jun 2023 18:38:57 +0000

Women Add Value to Complex ‘Integral’ Inventions ilseu Wed, 06/14/2023 - 11:38 More News David Danelski (david.danelski@ucr.edu) | UCR News June 13, 2023

A recent study co-authored by a University of California, Riverside, business professor challenges a long-held finding in academic literature that the presence of women on company invention teams results in products of lesser value than inventions produced by teams that consist of all men.

Haibo Liu, assistant professor of management

By taking a more nuanced approach, Haibo Liu, an assistant professor at the School of Business, found that the presence of women increased the invention value by 6.3% on average when the teams worked on inventions that are more complex, or, more precisely, have higher levels of integrality.

With highly integral products, such as smartphones, each major component, such as the screen, cannot be modified without forcing changes on several other parts of the device, such as the circuit board, battery, and other parts.

Integral inventions differ greatly from modular inventions, devices in which each component can be replaced with little effect on the other components. For example, desktop computers may have modular components like the processor, memory, and storage, which can be easily upgraded or swapped out for more powerful versions.

So, product development teams that work on highly integral inventions must have effective team coordination, Liu said. This includes intimate familiarity with others’ contributions, effective discussion, and a willingness by team members to adjust their contributions accordingly for the product to work.

“While studies have found mixed gender teams tend to negatively impact invention value, especially for patented inventions, our contribution is saying, ‘wait a minute, it’s not the female inventors’ fault,’” Liu said.

“This is more likely to be the result of gender-specific barriers that female inventors face in innovation settings. For example, previous studies have found that female inventors experience more negative outcomes in their work, despite strong evidence that female inventors are no less qualified than their male counterparts.”

“The key point is that it really depends on the task. If the inventions are more integral or less modular, you need more coordination, more communication, and the female inventor is especially valuable in this condition.”

Earlier research cited in the study found that sexism by men on mixed gender teams can compromise the entire team’s work and result in inventions of less value.

“Male inventors tend to disregard the female team members’ input and ideas,” Liu said. “That is one of the reasons why you see an overall negative effect without considering the integrality.”

The analysis by Liu and his colleagues was based on data gleaned from 468,023 patents granted to publicly traded corporations by the U.S. Patent and Trademark Office between 1983 and 2015. Patent data contains information on the invention team, including the given names of invention team members, which identified teams that included women, allowing for an analysis of the impact of gender.

Liu and his co-authors estimate the value that an invention brings to a company by measuring stock market reaction to its patent being granted. And they infer an invention’s integrality based on the highly structured claims on each patent documentation using text analyses.

“Also important is the group process," Liu said. "Social psychology research has shown that women are less likely than the male inventors to make a hasty decision, or to be dominated by, say, the alpha male in the group. So, when there's a female presence, people tend to be more caring for each other's comments.”

But more integral projects need more robust coordination and thus benefit from women, who, Liu says, “can make a mental shift toward more team-oriented norms and toward a psychologically safer atmosphere.”

Liu’s paper is titled “When do teams generate valuable inventions? The moderating role of invention integrality on the effects of expertise similarity, network cohesion, and gender diversity.” It was published in the journal Production and Operations Management earlier this year. The other authors are Tian Heong Chan of Emory University, and Steffen Keck and Wenjie Tang of the University of Vienna in Austria.

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Cover photo: Getty Images

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COVID-19 Lockdowns Reduced Spread but with Costs

ilseu — Thu, 09 Mar 2023 02:22:47 +0000

COVID-19 Lockdowns Reduced Spread but with Costs ilseu Wed, 03/08/2023 - 18:22 More News David Danelski (david.danelski@ucr.edu) | UCR News March 07, 2023

The lockdowns at the beginning of COVID-19 pandemic reduced the spread of infection by an estimated 56%, a recent study has found. If all governors did not issue any lockdowns until April 23, 2020, the number of cases would have been five times higher by April 30, 2020, the study asserts.

But the lockdowns came with economic costs.

Ashish Sood

Specifically, the U.S. lockdowns reduced gross domestic product, or GDP (−5.4%); employment (−2%); customer satisfaction (−2%), and consumer spending (−7.5%) for the next quarter. These impacts, on average, translated to a cost of $27,567 in lower GDP, according to “Lockdown Without Loss? A Natural Experiment of Net Payoffs from COVID-19 Lockdowns,” which is forthcoming in the Journal of Public Policy and Marketing.

The study is the first to capture the tradeoffs of lockdowns, weighing the effectiveness of disease reduction with their economic cost.

“Understanding the true costs and benefits of COVID-19 policies helps policymakers assess the payoff of past decisions and prepares them to navigate future large-scale health crises,” said co-author Ashish Sood, a marketing professor at the University of California, Riverside, and a research fellow at the Center of Global Innovation, University of Southern California.

“By examining the causal effects of state-ordered lockdowns, our research accurately reveals the trade-off: Lockdowns are effective in reducing the spread of the virus, but they come at a measurable cost to the economy and consumers,” added co-author Gerard J. Tellis, Neely Chaired Professor of American Enterprise at the USC Marshall School of Business.

The other authors are Sajeev Nair, assistant professor of marketing at School of Business, University of Kansas, and Nitish Sood, a student at the Medical College of Georgia at Augusta University.

A federal policy to control COVID-19 did not exist in 2020, which allowed state governors to decide when and if to order lockdowns and mask mandates. Mandatory stay-at-home orders were enacted at different times, creating a unique natural experiment that authors exploited to address four issues: their effectiveness, the cost to the economy and consumers, their effects on mask adoption, and why governors varied in ordering them.

Times Square in New York City during the 2020 COVID-19 lockdowns. (Photo/Getty Images)

Notably, lockdowns increased the public’s use of face masks.

“Preventive measures like mask usage and social distancing help reduce the transmission of the disease and the number of sick patients in hospitals,” said Nitish Sood. The study found that lockdowns increased mask usage by 17.9%.

The study highlights how tensions between medical science and behavioral theories have fundamental implications for public policy, management, and consumers. Despite the economic costs, avoiding lockdowns in the belief that consumers would adopt masks may backfire.
“Many experts thought that lockdowns would mitigate the need for masks. However, we found that lockdowns increased mask-wearing probably due to its signaling effect of the urgency of a pandemic,” said Sajeev Nair.

Importantly, the study’s authors show that the spread of the disease had no effect on governors’ decisions, as public health professionals hoped. Rather, the study found that governors were primarily motivated by political affiliation, imitating the policy of states affected earlier, and actions of governors of the same party who acted earlier.

Read the full study in the Journal of Public Policy and Marketing.

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(Header photo: The Santa Monica beach during 2020 COVID-19 lockdowns/Getty Images)

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