Alberto Rossi (Georgetown): Crowdsourcing Peer Information to Change Spending Behavior

Presenter: Alberto Rossi (Georgetown University)
Discussant: David Hirshleifer (University of Southern California) 
Zoom webinar link:
https://stanford.zoom.us/j/98653371381?pwd=YUhwemlnUlBtV1Iwb1dPTms2bTVy…
Webinar ID: 986 5337 1381
Passcode: 792959

Crowdsourcing Peer Information to Change Spending Behavior

Authors: Francesco D’Acunto, Alberto Rossi and Michael Weber

Abstract:
We isolate and quantify the information channel of peer effects using a unique consumption setting that by construction excludes any scope for common shocks or social pressure - a transaction-level panel dataset of spending paired with crowdsourced information about the spending of anonymous “peers” elicited at a different time than when users make their consumption choices. All consumers converge to their peers’ spending and more so when facing more informative peer signals, with the effect building up over time. The spending adjustments, though, are substantially larger for the overspenders, who close 37% of their spending gap within 12 months of using the platform. The effect for underspenders is 9% over 12 months. For identification, we exploit consumers’ quasi-random assignment to peer groups in an instrumental-variable strategy. Similar evidence from on a non-selected population provides external validity.

Bio of speaker:
Alberto Rossi is a Professor of Finance at the McDonough School of Business, Georgetown University. He is also the Director of the AI, Analytics, and Future of Work Initiative at Georgetown and an Academic Fellow of the Luohan Academy. His research interests include FinTech, Household Finance, Machine Learning, and Asset Pricing. His recent work studies how robo-advisors can help individuals make better financial decisions and how to predict stock market returns using machine learning algorithms. He has worked extensively in analyzing big data, has collaborated with major brokerage houses, FinTech firms, and asset managers around the world. Professor Rossi’s work has been published in leading academic journals such as the Journal of Finance, the Review of Financial Studies, the Journal of Financial Economics and Management Science. Before McDonough, he was an Associate Professor with tenure at the R.H. Smith School of Business, University of Maryland. He also worked as an economist at the Board of Governors of the Federal Reserve System in Washington DC. He received his Ph.D. in Economics from the University of California, San Diego. 

Bio of discussant:
David Hirshleifer is Merage Chair and Distinguished Professor of Finance at the Merage School of Business, University of California-Irvine. He is a Fellow and former-President of the American Finance Association. He currently serves as Coeditor of the Journal of Financial Economics, and has served as Executive Editor of the Review of Financial Studies, director of the American and Western Finance Associations, and co-editor and associate editor at leading finance, economics, and business journals. In his Presidential Address to the American Finance Association, he argues for an emerging paradigm, social economics and finance, which studies how biases in the social transmission of ideas, information and behavior affects markets and asset prices. His research interests include behavioral economics and finance, and other topics in the investments and corporate finance fields. His papers have won various research awards, including the Smith Breeden Award for outstanding paper in the Journal of Finance. He has been keynote or plenary speaker at many conferences internationally. He was previously on the faculties of UCLA, University of Michigan, and Ohio State University, and he received his PhD from the University of Chicago.
 

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https://www.abfr-forum.org