Investigators from National Bureau of Economic Research Target Management Science (How Do Consumers Interact With Digital Expert Advice? Experimental Evidence From Health Insurance): Business – Management Science

2024 FEB 16 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Researchers detail new data in Business - Management Science. According to news reporting originating in Cambridge, Massachusetts, by NewsRx journalists, research stated, “Consumers increasingly use digital advice when making purchasing decisions. How do such tools change consumer behavior and what types of consumers are likely to use them? We examine these questions with a randomized controlled trial of digital expert advice in the context of prescription drug insurance.”

Funders for this research include NIH National Institute on Aging (NIA), Patient-Centered Outcomes Research Institute - PCORI, Stanford Innovation Funds.

The news reporters obtained a quote from the research from the National Bureau of Economic Research, “The intervention we study was effective at changing consumer choices. We propose that, conceptually, expert advice can affect consumer choices through two distinct channels: by updating consumer beliefs about product features (learning) and by influencing how much consumers value product features (interpretation). Using our trial data to estimate a model of consumer demand, we find that both channels are quantitatively important. Digital expert advice tools not only provide consumers with information, but also alter how consumers value product features. For example, consumers are willing to pay 14% less for a plan with the most popular brand and 37% less for an extra star rating when they incorporate digital expert advice on plan choice relative to only having information about product features. Further, we document substantial selection into the use of digital advice on two margins. Consumers who are inherently less active shoppers and those who we predict would have responded to advice more were less likely to demand it.”

According to the news reporters, the research concluded: “Our results raise concerns regarding the ability of digital advice to alter consumer preferences as well as the distributional implications of greater access to digital expert advice.”

This research has been peer-reviewed.

For more information on this research see: How Do Consumers Interact With Digital Expert Advice? Experimental Evidence From Health Insurance. Management Science, 2024. Management Science can be contacted at: Informs, 5521 Research Park Dr, Suite 200, Catonsville, MD 21228, USA.

Our news correspondents report that additional information may be obtained by contacting Maria Polyakova, National Bureau of Economic Research, Cambridge, MA 02138, United States. Additional authors for this research include M. Kate Bundorf and Ming Tai-Seale.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1287/mnsc.2020.02453. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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