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

See all articles by Khai Chiong

Khai Chiong

University of Texas at Dallas - Naveen Jindal School of Management

Matthew Shum

California Institute of Technology

Ryan Webb

University of Toronto

Richard Chen

Happy Elements, Inc.

Date Written: January 14, 2019

Abstract

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

Chiong, Khai and Shum, Matthew and Webb, Ryan and Chen, Richard, Combining Choices and Response Times in the Field: A Drift-Diffusion Model of Mobile Advertisements (January 14, 2019). Available at SSRN: https://ssrn.com/abstract=3289386 or http://dx.doi.org/10.2139/ssrn.3289386

Khai Chiong

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

Matthew Shum (Contact Author)

California Institute of Technology ( email )

Pasadena, CA 91125
United States

Ryan Webb

University of Toronto ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Richard Chen

Happy Elements, Inc. ( email )

Register to save articles to
your library

Register

Paper statistics

Downloads
157
Abstract Views
978
rank
193,757
PlumX Metrics