Kohei Kawaguchi (Hong Kong University)

Kohei Kawaguchi (Hong Kong University)

Kalai Family Workshop in Applied Microeconomics
Apr 2 2019
When Will Workers Follow an Algorithm?: A Field Experiment with a Retail Business
 
Abstract: This paper studies if and under what conditions workers follow an algorithm, in the context of experimentation with product assortments for beverage vending machines. I develop an algorithm to automate the human task, and use simulation to show that it increases revenue. I then conduct a field experiment where I introduce the algorithm. However, it fails to increase revenue, because workers are not willing to follow it. They follow only when their opinions are integrated. Workers having more regret from the last business semester follow the algorithmic advice more, and less when their opinions are integrated.
 
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