Does Immediate Feedback Make You Try Less Hard? A Study of Automotive Telematics

40 Pages Posted: 28 Oct 2018 Last revised: 3 Jul 2019

See all articles by Vivek Choudhary

Vivek Choudhary

INSEAD - Technology and Operations Management

Masha Shunko

Foster School of Business, University of Washington

Serguei Netessine

The Wharton School, University of Pennsylvania

Date Written: July 02, 2019

Abstract

Problem definition:
Mobile and internet-of-things (IoT) devices increasingly enable tracking of user behavior and they often provide real-time or immediate feedback to the consumers in an effort to improve their conduct. Growing adoption of such technologies leads to an important question, “Does immediate feedback provided to users improve their behavior?” We study immediate (close to real-time) feedback in the context of automotive telematics, which has been recognized as the most disruptive technology in the automotive insurance industry.
Academic/Practical relevance:
While telematics devices are already providing complex feedback to drivers, we still poorly understand implications of such feedback on user behavior. Given that the effect of feedback is sometimes ambiguous, while at the same time the use of such feedback-providing devices is increasing, it is important to study immediate feedback and identify the effect it has on human behavior, especially in such important applications as automotive. This understanding is important given that other attempts to make driving safer have led to unintended consequences in the past. Methodology:
Using proprietary data on driving behavior, as measured by several parameters such as harsh braking, over speeding, and steep acceleration we investigate the impact of immediate feedback on driving behavior using econometric methods. To estimate the effect, we use matching methods and instrumental variable regression.
Results:
Contrary to much of the existing feedback literature, we find that, on average, the driving performance of users post-detailed feedback is nearly 13.0% worse than the performance of users who do not review their detailed feedback. This impairment in performance translates into a one-year reduction in inter-accident time. Our results suggest that this deterioration is associated with increased sharp accelerations and speeding. Drivers also demonstrate higher speed dispersion within a trip after feedback that results in 1.62% increased probability of an accident. Negative feedback (e.g., a decrease in performance) has a positive effect on short-term performance. Further, we demonstrate the critical role that insurance incentive thresholds play in the effect of immediate feedback. Finally, we find evidence of a diminishing effect of feedback over time.
Managerial implications:
Our results provide a key message to the firms employing immediate feedback; specifically, that such technology can have unintended consequences. Further, we provide recommendations related to incentive thresholds and types of feedback that should be considered in designing such feedback applications to improve human behavior.

Keywords: Immediate Feedback, Empirical Operations Management, Behavioral Operations Management, Automotive Telematics

Suggested Citation

Choudhary, Vivek and Shunko, Masha and Netessine, Serguei, Does Immediate Feedback Make You Try Less Hard? A Study of Automotive Telematics (July 02, 2019). INSEAD Working Paper No. 2019/28/TOM. Available at SSRN: https://ssrn.com/abstract=3260891 or http://dx.doi.org/10.2139/ssrn.3260891

Vivek Choudhary

INSEAD - Technology and Operations Management ( email )

Singapore, France

HOME PAGE: http://www.insead.edu

Masha Shunko

Foster School of Business, University of Washington ( email )

PACCAR Hall
Seattle, WA 47185
United States

Serguei Netessine (Contact Author)

The Wharton School, University of Pennsylvania ( email )

3730 Walnut Street
Philadelphia, PA 19104-6367
United States
(215) 573 3571 (Phone)

HOME PAGE: http://www.netessine.com

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