Meet the New Faculty: Constanca Esteves-Sorenson, Assistant Professor of Management

"My two main research interests are behavioral economics and labor economics," says assistant professor of management Constança Esteves-Sorenson, who joined Yale SOM from the PhD program at the University of California at Berkeley.

She is currently investigating inertia in decision-making. Inertia, the propensity by decision-makers to choose the default option repeatedly, is usually ascribed to the higher cost of switching away from the default relative to the benefit of doing so. She investigates a setting, however, where this switching cost is almost negligible but still people persist in their default state: program choice in television in Italy. "Despite the fact that the switching cost is really low — just clicking the remote — the audience of a program is systematically influenced by whether viewers were drawn to that channel during the previous program. Investigating the mechanisms underpinning this phenomenon presented several econometric challenges because persistence from one show to the next could be due to a myriad of things, like stations endogenously scheduling shows to create this persistence."

Esteves-Sorenson studied television viewership in Italy where six channels represent 90% of the viewership. She looked at the viewership of the news at 11:00 p.m. The 11:00 p.m. news broadcasts are sometimes preceded by soccer, which appeals more to men than to women, and are sometimes preceded by soap operas, which appeal more to women than to men. "When you have soccer before the 11:00 p.m. news, you have more men watching soccer than women, and the news has more men than women viewers. In contrast, on soap opera days, more women watch the soap opera than men, and therefore, more women than men watch the 11:00 p.m. news." She also analyzed this phenomenon from another angle: she looked at how the viewership of a show and the news changes with the popularity of the movies that air prior to them. Esteves-Sorenson addressed shocks that can affect both the audience of a movie and of its subsequent show, thus biasing her results, by using information on the Italian theatrical audience of movies that were screened in Italy and subsequently aired on Italian television.

According to Esteves-Sorenson, people eventually do switch channels, as evidenced by a decay rate to inertia. She investigated and ruled out several mechanisms that could lead to viewer persistence in the default channel. She finds that the most compelling mechanism is viewer procrastination. "People think I’ll switch in the next minute. And then the next minute comes, and they think I’ll switch in the next minute, causing persistence in the default channel." Behavioral models of procrastination also explain why people procrastinate in enrolling in 401k plans, even when they are losing money by not doing so.

Her research shows that this inertia is valuable for channels. "Channels best respond to viewer inertia. If viewer inertia did not exist, channels would not care in which order they schedule programs. When there is viewer inertia, there is an optimal line-up: schedule programs by descending order of popularity so that you get a cascading effect. Taking into account viewer inertia in scheduling can influence 20% to 40% of stations’ profits."

In labor economics, Esteves-Sorenson is currently studying wage discrimination between male and female physicians.

Read about other new faculty:

• Olav Sorenson, Professor of Organizational Behavior
• Arthur Campbell, Assistant Professor of Economics
• Kalin Kolev, Assistant Professor of Accounting