This month’s selection of new research by INSEAD faculty investigates how AI (artificial intelligence) can both enhance and constrain the human experience; size penalties in bond-market trading; and whether new inventions benefit younger and older workers to the same degree. Other recently released studies look at how multitasking can have a negative impact on the performance of knowledge workers, as well as dissect global trends in productivity. Another paper examines what influences the uptake of sharing-economy platforms.1. How AI constrains the human experienceResearch by INSEAD’s Klaus Wertenbroch and his co-authors* uncovers a complex interplay between the ability of AI to enhance human capabilities, performance and creativity and its inadvertent potential to restrict human autonomy, self-identity, relational dynamics and social behaviour. The researchers suggest three different mechanisms at the core of these constraining forces – parametric reductionism, agency transference and regulated expression – while highlighting the risks connected to system design and the implications for future policymakers.*Ana Valenzuela, ESADE-Ramon Llul et al.Read the full paper 2. How does size affect trading costs in bond markets?In this paper, INSEAD’s Junyuan Zou and his co-authors* show that larger trades incur lower trading costs in government bond markets (“size discount”), but that costs increase as the trade size increases after controlling for client identity (“size penalty”). The size discount is driven by the cross-client variation of larger traders obtaining better prices, consistent with theories of trading with imperfect competition. The size penalty was larger during the Covid-19 pandemic, as well as for corporate bonds and during major macroeconomic surprises. Additionally, the differences are larger among more sophisticated clients.*Gabor Pinter, Bank for International Settlements, Switzerland, and Chaojun Wang, The Wharton School. Read the full paper 3. Do new inventions benefit older workers?Recently published research suggests that new inventions can significantly benefit both white- and blue-collar workers, especially those with more education. INSEAD’s Philippe Aghion and his co-authors* found that older workers generally benefited less from inventions, because of the longer time they had spent away from formal education compared to younger workers. They conclude that retraining programmes could be helpful in making the process of creative destruction and economic growth more inclusive.*Ufuk Akcigit, University of Chicago; Ari Hyytinen, Hanken School of Economics and Helsinki Graduate School of Economics; and Otto Toivanen, Aalto University School of Business.Read the full paper 4. When multitasking negatively affects performanceNew research highlights the negative impact of multitasking on knowledge workers’ performance. A study by INSEAD’s Mark Mortensen and his co-authors* looks at how knowledge workers – those whose tasks are characterised as non-routine and complex – need deep focus to excel, yet often end up in roles where they are forced to juggle multiple teams. The research found that dedicating time to a primary team improves focus, but that this benefit is reduced when workers have to handle numerous teams and complex problems. *Julia Backmann, University of Munster et al.Read the full paper5. Important trends in global productivityUtilising a new method of growth accounting, this new paper analyses key trends in global productivity from 1996 to 2014. INSEAD’s John Fernald and his co-authors* found that while overall global productivity fluctuates yearly due to labour shifts between countries and industries, underlying productivity growth within individual countries and industries has remained steady. However, this stability masked a significant trend: rising productivity in emerging economies offsetting declining productivity in developed economies. After 2008, this balancing act ended, leading to an overall drop in global productivity.*Bart Hobijn, Federal Reserve Bank of Chicago, and Mehrdad Esfahani, Arizona State University.Read the full paper 6. Spatial network effects in the adoption of a sharing-economy platformThis paper examines what influences the spread of a car-sharing platform that connects consumers with individual car owners. According to research by INSEAD’s Paulo Albuquerque and HEC Paris’ Ludovic Stourm, location is crucial for customer adoption and long-term success. Specific findings include the fact that people are more likely to use a service if it is nearby and that popular places attract more visitors. In the same vein, starting a business in a big city is better for growth because there are more potential customers.Read the full paper
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