Ofer H. Azar

• PhD
• Professor (Full) at Ben-Gurion University of the Negev

Traditional economic theory suggests that when consumers decide whether to exert effort and travel to a remote store that is cheaper, the decision should compare the time and effort of travelling the relevant distance to the money that can be saved. Our research examined whether the unit of distance measurement, meters or miles, affects the actual...

Influences from external factors can affect decision-makers, preventing them from making decisions in a fully rational manner. Music may serve as one such influential factor in this context. Music is part of our daily lives, and we are exposed to music in numerous places. We designed a field experiment to study the influence of background music on...

We study how the buying purpose affects the trade-off between time and money. We consider the case of buying something for ourselves versus buying a gift and the decision whether to spend time traveling to a cheaper store to save money. We hypothesized that when purchasing a gift, people make less effort to save money, and therefore will be less wi...

Previous research has reported that the gambler’s fallacy could be detected in goalkeepers’ behavior during penalty shootouts. Following repeated kicks in the same direction, goalkeepers were more likely to dive in the opposite direction on the next kick. We employ here a unique data collection approach and accurately measure the exact location of...

We examine the effect of an irrelevant task that may become a reference point on subjects’ effort, feelings and perceptions. All subjects complete up to 25 tasks and are paid $0.10 per task solved correctly. However, some subjects have an easy task of finding one letter and others have a hard task of finding two letters. In the irrelevant-task trea...

We review some topics in which soccer penalty kicks are related to phenomena in game theory, decision making and psychology. In particular, we discuss the game theoretic analysis of the kicker's and goalkeeper's behavior and its relation to the concept of mixed strategy Nash Equilibrium. The main idea is that both players should not follow a predic...

There is plenty of research on penalty kicking in men's soccer, with a focus on either the goalkeeper or the penalty taker. Yet women's soccer and their playing behaviour are under-represented in research. The current study was designed to examine gender differences in the choice patterns of expert kickers and goalkeepers during penalty shooting in...

The Journal of Behavioral and Experimental Economics (JOBEE) celebrates its 50 th year in 2021. To commemorate its 50 th anniversary, this study presents a retrospect on the journal's journey since it began publishing in 1972. We find that the journal has since grown in terms of both the number of annual articles and citations. The contribution bas...

The article uses an experiment to address two issues. The first issue is the impact of a strategy's past outcomes on managers' willingness to change it, when these outcomes are irrelevant. The literature suggests that bad outcomes that result from abnormal actions cause more regret than similar outcomes that follow normal actions. In addition, a pr...

The incentives provided to participants are an important aspect in experimental economics. We discuss several aspects of experimental incentives: how they help to recruit subjects; why performance-based incentives can motivate careful decision making, and yet why sometimes experiments without performance-based incentives are also useful; paying for...

How can we maximize what is learned from a replication study? In the creative destruction approach to replication, the original hypothesis is compared not only to the null hypothesis, but also to predictions derived from multiple alternative theoretical accounts of the phenomenon. To this end, new populations and measures are included in the design...

How can we maximize what is learned from a replication study? In the creative destruction approach to replication, the original hypothesis is compared not only to the null hypothesis, but also to predictions derived from multiple alternative theoretical accounts of the phenomenon. To this end, new populations and measures are included in the design...

How can we maximize what is learned from a replication study? In the creative destruction approach to replication, the original hypothesis is compared not only to the null hypothesis, but also to predictions derived from multiple alternative theoretical accounts of the phenomenon. To this end, new populations and measures are included in the design...

We develop a modified ultimatum game, in which the proposer gives two offers, and the responder selects one offer out of the two without seeing them. Then, the selected offer becomes the relevant offer, and the unselected offer becomes the irrelevant one. Finally, the responder evaluates the fairness of the pair of offers and makes a hypothetical d...

Momentum is often cited in the media and in other sources as an important factor in performance over time in business, politics, sports and other areas. Yet, academic research on whether momentum actually exists is mixed. This study aims to assess momentum perceptions in a context in which momentum could be relevant, but where empirical data have s...

Tipping involves dozens of billions of dollars annually in the US alone and is a major income source for millions of workers. But beyond its economic importance and various economic implications, tipping is also a unique economic phenomenon in that people pay tips voluntarily without any legal obligation. Tipping demonstrates that psychological and...

Previous studies suggest that approach motivation (a focus on achieving positive outcomes) is related to relative left-hemispheric brain activation, which results in a variety of right-oriented behavioral biases. It has been argued that during FIFA World Cup penalty shootouts, soccer goalkeepers whose team was behind and therefore had approach moti...

Several prior studies have shown that success during fierce sport competitions may put extra pressure on teams that lag behind and boost performance of teams that experienced success. In basketball, games that are tied at the end of regulation time proceed to five minutes overtime. An overtime is a particularly stressful situation because players a...

The literature on momentum is still undecided, with mixed results whether momentum exists or is only perceived to exist ("hot hand fallacy"). We explore whether momentum exists by looking at cases in which a basketball player has three consecutive free throws. A free throw is a well-defined task executed in a stable environment, allegedly giving mo...

We use data from a children mathematics contest in Israel that involved a first unmonitored online stage at home and a second monitored stage in class, both with the same difficulty level. The performance deterioration from the first to the second stage allows to estimate the dishonesty in the unmonitored first stage (mostly in the form of being he...

We study the effect of employee-manager relations on salary increases. We use data obtained from a longitudinal survey, carried out among auditing team members in leading Israeli CPA firms (which are subsidiaries of American firms). Our main findings suggest that the degree of friendship with the team manager is positively correlated with the rate...

An attacking basketball player initiating significant physical contact with a defender who has already established a legal and stationary position, should be called with an offensive foul. Offensive foul situations are particularly ambiguous and complex, making the referee’s task a difficult one. In such conditions of complexity and constraints of...

The article analyzes the impact of three important areas in psychological game theory (PGT), namely the basic framework, reciprocity, and guilt aversion. Using a set of 12 highly-influential articles in these areas, their citing articles in the Web of Science are analyzed in terms of research areas (Web of Science categories), citing journals, citi...

Despite the prevalence of the momentum concept, the literature is still divided on whether psychological momentum actually exists. We aimed to detect psychological momentum in the specific setting of overtime in basketball games. We collected data from 11 NBA seasons and identified all games that were tied after the end of regulation time. Comeback...

Several earlier studies have shown that people exhibit “relative thinking”: they consider relative price differences even when only absolute price differences are relevant. The article examines whether relative thinking exists when people face mixed compensation schemes that include both fixed and pay-for-performance components. Such compensation s...

The explosion of data, with large datasets that are available for analysis, has affected virtually every aspect of our lives. The sports industry has not been immune to these developments. In this article, we provide examples of three types of data-driven analyses that have been performed in the domain of sport: (a) field-level analysis focused on...

In the current observational study, we aimed to examine the questionable use of the diving act in the penalty area in soccer. The study is based on 339 events in 160 filmed games played in Division 1 in Israel, where a case of physical contact observed between an offensive player and a defensive player resulted in the falling of the offensive playe...

How social norms evolve over time and what affects their evolution are central questions in the literature about norms. A study suggests that over time, hygiene and violence norms have become stricter, because those who prefer strict norms sanction those who prefer loose norms more than sanctioning in the other direction.

Regret is an unpleasant feeling that may arise following decisions that ended poorly, and may affect the decision-maker's well-being and future decision making. Some studies show that a decision to act leads to greater regret than a decision not to act when both resulted in failure, because the latter is usually the norm. In some cases, when the no...

Tipping behavior is analyzed in a field experiment where restaurant customers received excessive change, either 10 or 40 Shekels (about $3 versus $12). One third of the tables reported the extra change to the server and returned it. Tips were higher with the higher level of extra change. Returning the extra change was negatively correlated with tip...

The article analyzes a linear-city model where the consumer distribution can be asymmetric, which is important because in real markets this distribution is often asymmetric. The model yields equilibrium price differences, even though the firms' costs are equal and their locations are symmetric (at the two endpoints of the city). The equilibrium pri...

We conduct a multi-period ultimatum game in which we elicit players' beliefs. Responders do not predict accurately the amount that will be offered to them, and do not get better in their predictions over time. At the individual level we see some effect of the mistake in expectations in the previous period on the responder's expectation about the of...

Research on the academic review process may help to improve research productivity. The article presents a model of the review process in a top journal, in which authors know their paper’s quality whereas referees obtain a noisy signal about quality. Increased signal noisiness, lower submission costs and more published papers all reduce the average...

Many studies have shown that decision makers have a tendency to choose the default or standard action among several possible actions. The article develops a model to explore under what conditions it is optimal for a firm facing a strategic decision problem to choose the default action without investing in obtaining more information that allows a mo...

The article presents a model that analyzes the optimal strategy of multi-product firms when consumers are affected by reference prices. Generally, the stronger the consideration of reference prices is, the more intensified the competition is and the lower are the prices and profits. In some cases it becomes optimal to sell the good for which consid...

The article reports the results of a field experiment used to study dishonest behavior in a natural setting. Customers in a restaurant in tables of one or two diners who paid with cash received excessive change of either 10 or 40 Shekels (about $3 or $12). A majority of customers (128 out of 192) did not return the excessive change. Repeated custom...

This article confronts the empirical evidence and theoretical predictions about the correlation between price dispersion and price. Theoretically, search and location differentiation models suggest that price dispersion is a function of search and transportation costs, but is independent of the good's price. Empirical evidence, however, suggests ot...

Millions of workers derive much of their income from tips and are subject to the “tipped minimum wage” that differs from the regular minimum wage. This article examines the implications of the tipped minimum wage and shows that increasing it may lead restaurants to adopt a compulsory service charge in lieu of tipping to extract the economic rent en...

Recent years have seen increased cooperation between psychologists and economists. This is mirrored in interdisciplinary journals (like the Journal of Economic Psychology or the Journal of Socio-Economics) as well as in interdisciplinary conferences. During one of these conferences, The IAREP/SABE conference in Cologne in 2010, a group of scholars...

Data about 233 new car models were collected, and a measure of customer success in bargaining for a new car (alpha) was created by computing the ratio between the discount received on the manufacturer's suggested retail price (MSRP) and the negotiable range (MSRP−dealer's car cost). One hypothesis was that customers who purchase more expensive cars...

The article presents experimental evidence that shows that people often consider relative price differences in addition to absolute differences when choosing between substitute goods. Because the choice between substitute goods is a very common one, this is an important finding. The experiment uses scenarios in various consumption categories: hotel...

Tipping is an important economic phenomenon, involving about $47Â billion a year in the US food industry alone, and trillions of dollars across different occupations and countries over the years. Moreover, tipping is a major source of income for millions of workers. This article discusses the implications of tipping for business strategy in the rel...

The article shows that when people consider differentiated goods or services that differ in price and quality, they exhibit a decision-making bias of ``relative thinking'': relative price differences affect them even when economic theory suggests that only absolute price differences matter. This result is obtained in four different consum...

The article analyzes the optimal pricing strategy of duopoly retailers who sell two goods to three consumer segments: two segments that are interested in one good, and one that wants to buy both goods. The analysis suggests that the markup on one of the goods might be negative and that the existence of consumers who buy both goods can either increa...

One of the most interesting and central questions about tipping is why people tip. The two major potential reasons are strategic behaviour aimed to ensure good future service and social/psychological motivations. Data on tipping behaviour suggests that there is no positive effect of patronage frequency on the sensitivity of tips to service quality....

Tipping is a multibillion dollar phenomenon and a major source of income for millions of workers. The results of a study conducted in the U.S. and Israel suggest that people tip mainly to show gratitude, conform to the social norm, and because they know that waiters' income depends on tips. Tipping is motivated more by the positive consequences of...

We analyze how the strategy field evolved between 1980-2004 by examining the topics of influential articles published in two of the field’s most prominent journals, Long Range Planning (LRP) and the Strategic Management Journal (SMJ). Our findings describe the field's development, including declines in the traditional "content" and "process" catego...

This article examines the influence of economics on business research using citation data. The share of economics in citations from business is 10.78% until 1995, but only 6.95% for 1996-2003. Four potential explanations for this decline are discussed: interdisciplinary spillover of research is slower than within a discipline; the increasing use of...

The outcomes of penalty kicks in soccer have assumed the utmost importance in the last few decades. However, it seems that shooting strategy is often based more on intuition than on careful research. To find out what should be the kicker's best strategy, two studies were conducted. In the first one, data about 311 penalty kicks in top leagues and c...

This chapter discusses penalty kicks in soccer, interpreted within the framework of behavioral economics. We present two behaviors of professional soccer players during penalty kicks that seem nonoptimal, and possibly indicate biases in decision making. We ask whether, despite the huge incentives involved in professional soccer and the possibility...

We use a laboratory experiment to study the extent to which investors’ choices are affected by limited loss deduction in income taxation. We first compare investment behavior in the no tax baseline to a tax control setting, in which the income from investments is taxed. We find that investors significantly reduce their risk-taking as predicted by t...

The article presents an experiment that illustrates a behavior denoted "relative thinking." Subjects in the experiment revealed the minimal price difference for which they were willing to spend 20 minutes and go to a cheaper store. Five goods and nine prices were used in a between-subjects design. Subjects showed striking positive correlation betwe...

Many experiments show that consumers consider relative price differences even when only absolute price differences are relevant from an economic perspective, a phenomenon that was denoted "relative thinking." These experiments, however, were conducted using hypothetical questions. To test whether the relative thinking bias also exists in real-world...

This article analyzes the impact of economics on management by examining citations of 71 management journals. AER, JPE, Econometrica and QJE have the highest impact. Industrial organization journals also have a particularly large impact. The share of economics in management citations drops from 9.91 percent until 1995 to 5.70 percent for 1996-2005....

According to construal level theory (CLT) [Trope, Y., & Liberman, N. (2003). Temporal construal. Physical Review, 110, 403–421], psychological representation of information depends on “psychological distance”, that is, on whether the relevant information refers to the near or distant psychological space. While CLT was originally developed to accoun...

Consumers often have to decide whether to make an effort and go to a remote store rather than a nearby one in order to obtain a lower price. Only the absolute price difference between the stores should be relevant in this case, but several experiments showed that people exhibit "relative thinking": they are affected also by the relative savings (re...

We present an optimal-control model in which tipping behavior creates a reputation that affects future service. Tipping and reputation can evolve in four path prototypes: converging to an interior equilibrium, converging to minimum tips and reputation, and two prototypes that start differently but end with tips and reputation increasing indefinitel...

The article presents a model of social norm evolution that suggests how the increase in optimal and actual first response times (FRT) of economics journals can be related. When the optimal FRT and the norm about how much time refereeing should take increase, it seems that the existence of a norm increases the average refereeing time. The model sugg...

We present an optimal-control model in which tipping behavior creates a reputation that affects future service. Tipping and reputation can evolve in four path prototypes: converging to an interior equilibrium, converging to minimum tips and reputation, and two prototypes that start differently but end with tips and reputation increasing indefinitel...

Tipping is a multi-billion-dollar phenomenon that traditional economic theory finds hard to explain. Why do people leave money as tips when service has already been provided? Two main potential reasons are that tipping is a social norm, and a strategic behavior aimed to assure good future service. A game-theoretical model is developed which allows...

The article examines the firm's choice of incentives when workers face additional incentives (external incentives) to those provided by the firm, such as building reputation that improves the workers' prospects with other employers, or satisfaction from working well. Surprisingly, the firm might find it optimal to increase the incentives it provide...

"Rankings of strategy journals are important for authors, readers, and promotion and tenure committees. We present several rankings, based either on the number of articles that cited the journal or the per article impact. Our analyses cover various periods between 1991 and 2006, for most of which the Strategic Management Journal was in first place...

In soccer penalty kicks, goalkeepers choose their action before they can clearly observe the kick direction. An analysis of 286 penalty kicks in top leagues and championships worldwide shows that given the probability distribution of kick direction, the optimal strategy for goalkeepers is to stay in the goal’s center. Goalkeepers, however, almost a...

Tipping is a multi-billion-dollar phenomenon that standard economic models find hard to explain. I discuss several aspects of tipping and divide tipping to six different categories: reward-tipping, price-tipping, tipping-in-advance, bribery-tipping, holiday-tipping and gift-tipping, and discuss the economics of each category. Often tipping has econ...

Tipping in U.S. restaurants alone amounts to $27 billion annually. Tipping is also common in other occupations and countries, making tipping a significant economic activity. The literature on tipping is spread over various disciplines: mainly psychology, economics, hospitality, and tourism. This survey article integrates the research conducted on t...

"The first-response time (henceforth FRT) of economics journals has increased over the last four decades from 2 months to 3-6 months. The optimal FRT, however, is not zero because a longer FRT deters submissions of mediocre papers to good journals and consequently saves valuable time of referees and editors. Interestingly, the change in the actual...

A central question about tipping is whether people tip strategically, to improve future service, or only because tipping is a social norm. I present a theoretical model that incorporates psychological utility associated with tipping (because it is a social norm) and allows tipping to be motivated also by future service considerations. The model pre...

The article presents a theory that I denote "Relative Thinking Theory," which claims that people consider relative differences and not only absolute differences when making various economics decisions, even in those cases where the rational model dictates that people should consider only absolute differences. The article reviews experimental eviden...

Journal quality is a major consideration for authors, readers, and promotion and tenure committees. Unfortunately, no objective quality measure exists for most behavioral economics and socio-economics journals. To address this need, the number of articles that cited each journal in these fields was recorded for 2001–2005, 1996–2000, and 1996–2005....

The field of behavioral economics is one of the fastest-growing fields in economics in recent years. Not long ago this was a small field, but over the last decade or so, the field gained more recognition, and today it seems clear that psychological motivations and biases affect economic behavior in many important ways. Insights from psychology were...

Tipping is a phenomenon that has been studied for many years, but is receiving increased attention in recent years. The magnitude of tips is very large – in the US, for example, tips in the food industry alone amount to about $42 billion each year, and tips are given in many other establishments and countries, so annual worldwide tips are much high...