Combining Choices and Response Times in the Field: A Drift-Diffusion Model of Mobile Advertisements
38 Pages Posted: 19 Dec 2018 Last revised: 16 Oct 2019
Date Written: January 14, 2019
We utilize the class of drift-diffusion models — originally developed in psychology and neuroeconomics to jointly explain subjects’ choices and response times in laboratory ex- periments — to model users’ responses to video advertisements on mobile devices. The combination of response time with choice data allows separate identification of the diffusion processes characterizing users when the ad is playing, as well as when they subsequently whether to click-through on the ad. Our estimates identify two segments of users that also exhibit distinct out-of-sample behaviour including app engagement and in-app spending. Counterfactual simulations utilizing our estimates predict that ads with a 2 second duration yield roughly the same revenue as forcing a user to view the entire thirty-second ad, thus rationalizing the practice of some platforms (e.g. YouTube) where users can skip an ad after watching for a few seconds.
Keywords: Mobile advertising, Attention, Drift-diffusion model, Response times, Video advertisements, Skippable ads
JEL Classification: L81, M37, D03, D83, D87, C15, C22
Suggested Citation: Suggested Citation