TEC (Theory) Seminar: Ryan Webb, Rotman School of Management, University of Toronto

Speaker

Ryan Webb, Rotman School of Management, University of Toronto

Title

"A Neuro-Autopilot Theory of Habit: Evidence from Canned Tuna"

Abstract: We integrate a neuroeconomic concept of habit into a consumer choice model. We propose that habit represents a distinct decision-making mode in which past choices are automatically repeated, in contrast with state-dependent utility maximization. Transitions between these decision modes are governed by the reliability of a reinforcement learning algorithm, such that habits arise when the choice environment is sufficiently stable. We estimate and test this model on product choice in the canned tuna category between 2006 and 2010, a period of considerable price and product variation which included a package down-sizing event. We find that a substantial proportion of choice persistence is due to a habitual automation of consumption, in addition to a degree of state-dependent utility.

Biography

Dr. Ryan Webb’s research integrates neuroscience, psychology, and economics to provide insight into consumer behaviour. He is interested in how choices can be predicted using neural data, how our brains encode and perceive value, and how neural computations influence human (and monkey) choice behaviour.

Ryan Webb is an Associate Professor at the Rotman School of Management at the University of Toronto, Director of the TD-Management and Data Analytics Lab, and on the editorial board of PNASnexus. He received a Ph.D. in Economics from Queen’s University and research fellowships at New York University and the California Institute of Technology.