Monic Sun

Assistant Professor of Marketing, Stanford University, 2008-Present

Visiting Assistant Professor of Marketing, University of Southern California, 2011-Present

Monic Sun conducts research in the realm of Internet marketing by focusing on strategic information transmission. She explores, through both theoretical and empirical lenses, how companies decide on the optimal amount of product information to provide to their customers, how various elements of consumer reviews such as the variance of ratings have an impact on the market outcomes, and how consumers optimally search for product information. She is also interested in studying how consumers react to monetary incentives and their friends' behavior in online social networks. Professor Sun's research has appeared in leading journals such as Management Science and Journal of Economics and Management Strategy.

Monic Sun received her PhD in Economics from Boston University and joined the faculty of Stanford GSB in July 2008. Prior to joining the PhD program, she obtained a B.A. in economics from Peking University (China). In her spare time, Monic enjoys reading and travelling.

Publications

Ad Revenue and Content Commercialization: Evidence from Blogs, with Feng Zhu, Management Science, forthcoming

Many scholars are concerned about the impact of ad-sponsored business models on content providers. They argue that content providers, when incentivized by ad revenue, are more likely to tailor their content to attract “eyeballs,” and as a result, popular content may be excessively supplied. We empirically test this prediction by taking advantage of the launch of an ad revenue-sharing program initiated by a major Chinese portal site in September 2007. Participating bloggers allow the site to run ads on their blogs and receive 50% of the revenue generated by these ads. After analyzing 4.4 million blog posts, we find that compared to nonparticipants, the percentage of popular content increases by about 13% on the participants’ blogs after the program takes effect. More than 50% of this increase can be attributed to topics shifting towards three domains: stock market, salacious content, and celebrities. We also find evidence that, relative to nonparticipants, the participants’ content quality increases after the program takes effect.

Optimal Search for Product Information, with Fernando Branco and J. Miguel Villas-Boas, Management Science, 2012, 58 (11), 2037-2056.

Consumers often need to search for product information before making purchase decisions. We consider a parsimonious model in which consumers incur search costs to learn further product information, and update their expected utility of the product at each search occasion. We characterize the optimal stopping rules to either purchase, or not purchase, as a function of search costs and the informativeness of each attribute. The paper also characterizes how the likelihood of purchase changes with the ex-ante expected utility, search costs, and informativeness of each attribute. We discuss optimal pricing, the impact of consumer search on profits and social welfare, and how the seller chooses its price to strategically affect the extent of the consumers’ search behavior. The paper also considers the impact of searching for signals of the value of the product, of discounting, and of endogenizing the intensity of search.

How Does the Variance of Product Ratings Matter? Management Science, 2012, 58 (4), 696-707.

This paper examines the informational role of product ratings. We build a theoretical model in which ratings can help consumers ﬁgure out how much they would enjoy the product. In our model, a high average rating indicates a high product quality, whereas a high variance of ratings is associated with a niche product, one that some consumers love and others hate. Based on its informational role, a higher variance would correspond to a higher subsequent demand if and only if the average rating is low. We ﬁnd empirical evidence that is consistent with the theoretical predictions with book data from Amazon.com and BN.com. A higher standard deviation of ratings on Amazon improves a book’s relative sales rank when the average rating is lower than 4.1 stars, which is true for 35% of all the books in our sample.

A Reflection on Analytical Work in Marketing: Three Points of Consensus, with R. Thomadsen, R. Zeithammer, D. Mayzlin, Y. Orhun, A. Pazgal, D. Purohit, R. Rao, M. Riordan, J. Shin, and J.M. Villas-Boas, Marketing Letters, 2012, 23 (2), 381-389.

People make a wide variety of choices as consumers, managers, employers, and regulators. Most of these choices are not made in a vacuum but rather in a context of strategic interactions that make individual payoffs interdependent across the decision makers. This payoff interdependence leads to intertwined individual incentives, necessitating analysis of the entire system before one can predict and understand individual behavior. Analyzing such a complex system requires a precise mathematical framework to develop intuition and qualify theoretical predictions. A commonly used analytical framework is non-cooperative game theory. We present several general points on which the marketing literature rooted in the paradigm of game theory has reached a broad consensus. We also organize the literature according to three broad substantive areas: competition, information, and market rules. This paper is not an exhaustive review of the literature. Instead, we use several particular examples from each area to illustrate the more general points of consensus that characterize the discourse in the literature. The points of consensus we propose are as follows: 1) Equilibrium analysis within an analytical framework is necessary for testing and refining conventional wisdom about situations with strategic interactions. Equilibrium as a solution concept ensures stability of the system under study, and equilibrium behavior can depart sharply from simpler intuition that does not consider the feedback inherent in strategic interactions. 2) Theoretical predictions can be sensitive to details of the modeling assumptions, making general predictions elusive. A trade-off exists between the generality of modeling assumptions and the usefulness of the resulting insights in answering a concrete question in a specific institutional situation. Therefore, more general models are not necessarily “better,” and the appropriate compromise between generality and usefulness depends on the scope of the question. Further, understanding which details significantly affect a theory’s predictions can be informative in its own right. 3) A two-way road should exist between theory and empirics. In one direction, theory can inform data analysis. In the other direction, empirical analysis can inform the assumptions of the theory. Either way, we agree with Bass (1995, p. G12) that science is “a process of interaction between theory and data that leads to higher level explanations.”

Informal Payments in Developing Countries' Public Health Sectors, with Ting Liu, Pacific Economic Review, 2012, 17 (4), 514-524.

In many developing countries, public patients offer payments to their doctors outside the ofﬁcial payment channels. We argue that the fundamental reason for these informal payments is that formal prices cannot fully differentiate patients’ various needs. We compare patient welfare and social efﬁciency when informal payments are allowed with the scenario when they are banned. Patient heterogeneity plays a central role in the comparison. Contrary to conventional wisdom, allowing informal payments always improves social efﬁciency when patients do not face income constraints. Moreover, allowing informal payments improves patient welfare if patients’ willingness to pay differs signiﬁcantly.

Disclosing Multiple Product Attributes, Journal of Economics & Management Strategy, 2011, 20 (1), 195-224.

How do multiple attributes of a product jointly determine a seller’s disclosure incentives? I model a monopolist whose product is characterized by vertical quality and a horizontal attribute. Contrary to the unraveling theory, the monopolist in equilibrium does not always choose disclosure. When the product’s quality is common knowledge, a monopolist with higher quality is less likely to disclose the horizontal attribute. Notably, the monopolist may choose nondisclosure when his product has the highest quality. The results shed light on mandatory disclosure policies and the design of quality surveys.

Working Papers

When Does a Manufacturer Disclose Product Match Information? with Rajeev Tyagi

We investigate a manufacturer’s decision to disclose product information that would enable consumers to learn how well the product would suit their tastes. We report three main findings. First, the manufacturer is less likely to disclose product match information when the product’s quality is perceived to be high. Second, the manufacturer is less likely to disclose product match information when she sells through a distribution channel than when she sells direct. She is even less likely to disclose product match information when competition between downstream retailers is fiercer. Third, the manufacturer discloses product match information less often than desired from the retailers’ perspective, especially for high quality products. We also offer an extension on manufacturers who sell online and find that they are less likely to disclose product match information than those who sell in traditional brick and mortar stores.

Too Much Information? Information Gathering and Search Costs, with Fernando Branco and J. Miguel Villas-Boas
A seller often needs to determine the amount of product information to provide to consumers. We model costly consumer information search in the presence of limited information. We derive the consumer’s optimal stopping rule for the search process. We find that, in general, there is an intermediate amount of information that maximizes the likelihood of purchase. If too much information is provided, some of it is not as useful for the purchase decision, the average informativeness
per search occasion is too low, and consumers end up choosing not to purchase the product. If too little information is provided, consumers may end up not having sufficient information to decide to purchase the product. The optimal amount of information increases with the consumer’s ex-ante valuation of the product. One can also show that there is an intermediate amount of information that maximizes the consumer’s expected utility from the search problem, and this amount is smaller
than the one that maximizes the probability of purchase. That is, the market outcome leads to information overload with respect to the social welfare optimum. The paper can be seen as providing a rationale for why too much information may hurt consumer decision-making.

Does Peer Pressure Always Lead to Conformity? with Xiaoquan Zhang and Feng Zhu
In a large-scale field experiment in China, we examine whether subjects conform to or diverge from the most popular choices among their friends. The experiment allows us to eliminate confounding effects such as pre-existing taste similarities between a subject and her friends, the need to signal one’s group identity to the general public,and the possibility of learning from friends’ choices.We find that, on average, a subject is more likely to diverge from the popular choice among her friends as the popularity of that choice increases. Divergence is even more pronounced when subjects are reminded that their choices are visible to their friends. Furthermore, female subjects and subjects born in more affluent regions have a stronger need to be different from their friends. Our results suggest that uniqueness seeking can become dominant in social networks when contextual influences are limited.