Research

My research work focuses on how people use technology to consume experience goods and influence others to do so. These are inextricably linked to how firms behave and how public policies affect market structures. My work focuses on the application of robust empirical identification methods to analyze large datasets obtained from organic in-vivo large-scale network-centric field randomized experiments. Most of my research spans two interrelated applied areas. I am interested in the Impact of Information and Communication Technologies on Education (IICTE) and in Peer-Influence and Consumption in the Media Industry (PICMI). The bulk of my work is in medialytics — using big data to understand the future of the media industry. In addition, I have also been studying Competition, Consumer Churn and Switching Costs (CCCSC) in telecommunications. In 2018, I was awarded the Information Systems Society Sandy Slaughter Early Career Award, which “recognizes and honors early career individuals who are on a path towards making outstanding intellectual contributions to the IS discipline.”

Publications

Impact of Information and Communication Technologies on Education (IICTE)

Spillovers Effects of Wiring Schools with Broadband: The Critical Role of Children.
Belo, R; Ferreira, P; Telang, R.  Management Science.  Vol 62, N. 12, pp. 3450-3471,  2016.

Providing broadband to schools can be an effective way to foster household Internet adoption in neighboring areas. On the one hand, the infrastructure put into place to meet schools’ needs can also serve households. On the other hand, students get acquainted with Internet at school and signal its usefulness to adults at home who, consequently, can be more likely to adopt it. In this paper we model the roles that broadband use at school and Internet adoption in neighboring households play in the decision to adopt Internet at home and measure their effects empirically. We use data from Portugal between 2006 and 2009 on household Internet penetration and on how much schools use broadband. We use two different sets of instruments for the schools’ broadband use to alleviate endogeneity concerns. Both approaches yield similar results. We find that broadband use at school leads to higher levels of Internet penetration in neighboring households. Broadband use in schools was responsible for a year-over-year increase of 3.5 percentage points on Internet penetration in households with children. Across our dataset this effect accounts for about 17% of the increase in home Internet adoption. We also find evidence of regional spillovers in Internet adoption across households. These were roughly responsible for an increase of 2.1 percentage points in Internet penetration or 38% of the total increase in household Internet penetration between 2006 and 2009. These results show that wiring schools with broadband is an effective policy to lower the barriers for Internet adoption at home and as such contributes to accelerate the pace of broadband diffusion.

Broadband in School: Impact on Student Performance.
Belo, R; Ferreira, P; Telang, R.  Management Science, Lead Article.  Vol. 60, N. 2, pp. 265-282,  2014.

This paper examines the effects of providing broadband to schools on students’ performance. We use a rich panel of data on broadband use and students’ grades from all middle schools in Portugal. Employing a first-differences specification to control for school-specific unobserved effects and instrumenting the quality of broadband to account for unobserved time-varying effects, we show that high levels of broadband use in schools were detrimental for grades on the ninth-grade national exams in Portugal. For the average broadband use in schools, grades reduced 0.78 of a standard deviation from 2005 to 2009. We also show that broadband has a negative impact on exam scores regardless of gender, subject, or school quality and that the way schools allow students to use the Internet affects their performance. In particular, students in schools that block access to websites such as YouTube perform relatively better.

Peer-Influence and Consumption in the Media Industry (PICMI)

The Effect of Video-on-Demand on Piracy: Evidence From a Household Level Randomized Experiment.
Matos, M; Ferreira, P; Smith, M.  Management Science.  forthcoming.

We partner with a major multinational telecommunications provider to analyze the effect of Subscription Video-on-Demand (SVoD) services on digital piracy. For a period of 45 consecutive days, a group of randomly selected households who used BitTorrent in the past were gifted with a bundle of TV channels with movies and TV shows that could be streamed as in SVoD. We find that, on average, households that received the gift increased overall TV consumption by 4.6% and reduced Internet downloads and uploads by 4.2% and 4.5%, respectively. However, and also on average, treated households did not change their likelihood of using BitTorrent during the experiment. Our findings are heterogeneous across households and are mediated by the fit between the preferences of households in our sample for movies and the content available as part of the gifted channels. Households with preferences aligned with the gifted content reduced their probability of using BitTorrent during the experiment by 18% and decreased their amount of upload traffic by 45%. We also show using simulation that the size of the SVoD catalog and licensing window restrictions limit significantly the ability of content providers to match SVoD offerings to the preferences of BitTorrent users. Finally, we estimate that households in our sample are willing to pay at most $3.25 USD per month to access a SVoD catalog as large as Netflix?s in the US. Together, our results show that, as a stand-alone strategy, using legal SVoD to curtail piracy will require, at the minimum, offering content much earlier, and at much lower prices than those currently offered in the marketplace – changes that are likely to reduce industry revenue and may damage overall incentives to produce new content while, at the same time, might curb only a small share of piracy.

The Effect of Time Shift TV on TV Consumption and Ad-Avoidance.
Reis, F; Belo, R; Ferreira, P; Matos, M.  Management Science.  forthcoming.

We partner with a major telecommunications provider to study the effect of Time-Shift TV (TSTV) on TV consumption. TSTV automatically records in the cloud pro- grams that were broadcasted live for the past few days and thus allows users to watch the programs they want when they want. In 2012, our industrial partner deployed TSTV to half the TV channels it offered to premium consumers. Using difference-in-differences with Inverse Probability of Treatment Weighting we find that, on average, the introduction of TSTV increased the consumption of daily TV by 11 minutes (p < 0.01), from a baseline of 3.4 hours, and did not change the consumption of live TV. Furthermore, we find that the concentration of TV consumption increased after TSTV was available. In 2015, our industrial partner run a randomized experiment in which a random set of households was selected to obtain access to a new set of TV channels broadcasting movies and TV shows. A random subset of these households obtained access to these channels with TSTV and another random subset of them obtained access to these channels without TSTV. Using difference-in-differences we find that, on average, the former set of households consumed 4.5 more minutes of TV per day (p < 0.01), from a baseline of 5.0 hours, and as much live TV as the latter set of households. In addition, the consumption of TV by the former set of households was more concentrated towards the most popular programs. Finally, we show that households do not seem to use TSTV as a new tool to strategically avoid ads. In particular, and in 2015, households given access to the new TV channels with TSTV exit ads in the original TV channels as much as the households given access to these channels without TSTV. Therefore, the concern of advertisers that TSTV may reduce their revenues is unwarranted. How- ever, advertisers do not have data on TV audiences. Instead, content distributors do. Therefore, the latter are in a unique powerful position to deploy auction-based systems to sell TV ad slots taking advantage of the fine-grained information they have on TV viewership, much like websites do today online using cookies.

Welfare Properties of Profit Maximizing Recommender Systems: Theory and Results from a Randomized Experiment.
Zhang, X; Ferreira, P; Belo, R; Matos, M.  Management of Information Systems Quarterly (conditional accept).  forthcoming.

Recommender systems have been introduced to help consumers navigate large sets of alternatives. They usually lead to more sales, which may increase consumer surplus and firm profit. In this paper, we ask whether firms may hurt consumers when they choose which recommender systems to use. We use data from a large scale field experiment ran using the video-on-demand system of a large telecommunications provider to measure the price elasticity of demand for movies placed in salient and non-salient slots on the TV screen. During this experiment, the firm randomized the slots in which movies were recommended to consumers as well as their prices. This setting readily allows for identifying the effects of price and slot on demand and thus compute consumer surplus. We find empirical evidence that consumers are less price elastic towards movies placed in salient slots. Using the outcomes of this experiment we simulate how consumer surplus and welfare change when the firm implements several recommender system, namely one that maximizes profit. We show that this system hurts both consumer surplus and welfare relative to the systems designed to maximize the latter. We also show that, at least in our setting, the system that maximizes profit does not generate less consumer surplus than some recommender systems often used in practice, such as content-based, lists of most sold, most rated and highest rated products. Yet, how much extra rent the firm can extract from strategically placing movies in salient slots is still a function of the popularity and quality of movies used to do so. Ultimately, our results question whether recommender systems embed mechanisms that extract excessive surplus from consumers, which may call for better scrutiny.

Culling the Herd: Using Real World Randomized Experiments to Measure Social Bias with Known Costly Goods.
Matos, M; Ferreira, P; Smith, M; Telang, R.  Management Science.  Vol 62, N. 9, pp. 2563-2580,  2016.

Peer-ratings have become increasingly important sources of product information, particularly in markets for “information goods.” However, in spite of the increasing prevalence of this information, there are relatively few academic studies that analyze the impact of peer-ratings on consumers transacting in “real world” marketplaces. In this paper, we partner with a major cable company to analyze the impact of peer-ratings in a real-world Video-on-Demand market where consumer participation is organic and where movies are costly and well-known to consumers. After experimentally manipulating the initial conditions of product information displayed to consumers, we find that, consistent with the prior literature, peer-ratings influence consumer behavior independently from underlying product quality. However, we also find that, in contrast to the prior literature, at least in our setting there is little evidence of long-term bias due to herding effects. Specifically, when movies are artificially promoted or demoted in peer-rating lists, subsequent reviews cause them to return to their true quality position relatively quickly. One explanation for this difference is that consumers in our empirical setting likely had more outside information about the true quality of the products they were evaluating than did consumers in the studies reported in prior literature. While tentative, this explanation suggests that in real-world marketplaces where consumers have sufficient access to outside information about true product quality, peer-ratings may be more robust to herding effects and thus provide more reliable signals of true product quality, than previously thought.

Peer Influence in the Diffusion of iPhone 3G over a Large Social Network.
Matos, M; Ferreira, P; Krackhardt, D.  Management of Information Systems Quarterly.  Vol. 38, I. 4, pp. 1103-1133,  2014.

In this paper, we study the effect of peer influence in the diffusion of the iPhone 3G across a number of communities
sampled from a large dataset provided by a major European Mobile carrier in one country. We identify
tight communities of users in which peer influence may play a role and use instrumental variables to control
for potential correlation between unobserved subscriber heterogeneity and friends’ adoption. We provide
evidence that the propensity of a subscriber to adopt increases with the percentage of friends who have already
adopted. During a period of 11 months, we estimate that 14 percent of iPhone 3Gs sold by this carrier were
due to peer influence. This result is obtained after controlling for social clustering, gender, previous adoption
of mobile Internet data plans, ownership of technologically advanced handsets, and heterogeneity in the
regions where subscribers move during the day and spend most of their evenings. This result remains qualitatively
unchanged when we control for changes over time in the structure of the social network. We provide
results from several policy experiments showing that, with this level of effect of peer influence, the carrier
would have hardly benefitted from using traditional marketing strategies to seed the iPhone 3G to benefit from
viral marketing.

Competition, Consumer Churn and Switching Costs (CCCSC)

The Effect of Shortening Lock-In Periods in Telecommunication Services.
Yang, C; Matos, M; Ferreira, P.  Management of Information Systems Quarterly (conditional accept).  forthcoming.

We study the welfare implications of shortening the length of the lock-in period associated to triple play contracts using household level data for a period of 6 months from a large telecommunications provider. Using a multinomial logit model to explain consumer behavior we show that, in our setting, shortening the length of the lock-in period decreases the aggregated profit of the firms in the market more than it increases consumer surplus. This result arises because shortening the length of the lock-in period increases churn and the costs to set up service for the consumers that churn and join a new carrier supersede the increase in the consumers’ willingness to pay for service when the length of the lock-in period reduces. We also show that, in our setting, consumers are worse off with shorter lock-in periods if firms react by increasing prices to keep their profits. Therefore, regulators that introduce policies to shorten the length of lock-in periods may also need to consider policies that prevent firms from increasing prices (too much) in order to improve consumer well-being.

Target the Ego or Target the Group: Evidence from a Randomized Experiment in Proactive Churn Management.
Matos, M; Ferreira, P; Belo, R.  Marketing Science.  forthcoming.

We propose a new strategy for proactive churn management that actively uses social network information to help retain consumers. We collaborate with a major telecommunications provider to design, deploy and analyze the outcomes of a randomized control trial at the household level to evaluate the effectiveness of this strategy. A random subset of likely churners were selected to be called by the firm. We also randomly selected whether their friends would be called. We find that listing likely churners to be called reduced their propensity to churn by 1.9 percentage points from a baseline of 17.2%. When their friends were also listed to be called their likelihood of churn reduced an additional 1.3 percentage points. The NPV of likely churners increased 2.1% with traditional proactive churn management and this statistic becomes 6.4% when their friends were also listed to be called by the firm. We show that in our setting likely churners receive a signal from their friends that reduces churn among the former. We also discuss how this signal may trigger mechanisms akin to both financial comparisons and conformity that may explain our findings.

Welfare Changes in the Cournot Setting: An Applications to the Telecommunications Industry.
Ferreira, P.  Journal of Industrial Economics.  Forthcoming,

This paper characterizes the welfare efficiency of the Cournot equi- librium and provides bounds for the loss in consumer surplus, producer surplus and welfare when the number of firms in the market changes. I only assume that demand is decreasing in price and costs increasing in the quantity produced as long as Cournot equilibrium exists. I show how price, demand and average cost, before and after the number of firms in the market changes, can be used to compute these bounds. I apply these bounds to the Portuguese wireline market and conclude that the welfare loss carried by Portugal Telecom’s monopoly in 2005 reduced significantly when the company was split in 2007.