Management Insights
2015; Institute for Operations Research and the Management Sciences; Volume: 61; Issue: 3 Linguagem: Holandês
10.1287/mnsc.2015.2169
ISSN1526-5501
Autores Tópico(s)Auction Theory and Applications
ResumoFree AccessAboutSectionsView PDF ToolsAdd to favoritesDownload CitationsTrack CitationsPermissionsReprints ShareShare onFacebookTwitterLinked InEmail Go to SectionFree Access HomeManagement ScienceVol. 61, No. 3 Management InsightsMichael F. GormanMichael F. GormanPublished Online:6 Mar 2015https://doi.org/10.1287/mnsc.2015.2169Spinoffs and the Mobility of U.S. Merchant Semiconductor Inventors (p. 487)Cristobal Cheyre, ), Francisco Veloso Do company spinoffs create mobility in the workforce? The authors analyze data on inventors and assignees of patents to assess the mobility of semiconductor inventors. Their empirical evidence suggests that spinoff entry promoted mobility in Silicon Valley even before the industry was clustered there. Agglomeration economies and the ban on noncompete covenants may influence spinoff entry, but spinoffs promote mobility even in the absence of those conditions. The insight for management: Because most of the greater inventor mobility in Silicon Valley corresponds to inventors moving from incumbents to recent entrants, the benefits that arise from greater mobility rates will be disproportionately reaped by new firms.Keyword Search Advertising and First-Page Bid Estimates: A Strategic Analysis (p. 507)Wilfred Amaldoss, Preyas S. Desai, Woochoel Shin How should a search engine such as Google use the generalized second-price (GSP) auction to sell advertising slots most effectively? The authors identify challenges with this problem. Advertisers do not truthfully bid their valuations, and the valuations are uncertain. Furthermore, advertisers are constrained by budgets. The authors analyze a stylized model of the first-page bid estimate (FPBE) mechanism first developed by Google and demonstrate its advantages in dealing with these challenges. The authors show why and when the FPBE mechanism yields higher profits for the search engine compared with the traditional GSP auction and the GSP auction with advertiser-specific minimum bid. In the event that a high-valuation advertiser is budget constrained, the search engine can use the FPBE mechanism to alter the listing order with the intent of keeping the high-valuation advertiser in the auction for a longer time. The insight for management: The resulting increase in the search engine's profits is not necessarily at the expense of the advertisers because the combined profits of the advertisers and the search engine increase.Drive More Effective Data-Based Innovations: Enhancing the Utility of Secure Databases (p. 520)Yi Qian, Hui Xie How can databases be more secure and more accessible at the same time? Databases play a central role in evidence-based innovations in business, economics, social, and health sciences. In modern business and society, there are rapidly growing demands for constructing analytically valid databases that also are secure and protect sensitive information to meet customer and public expectations, to minimize financial losses, and to comply with privacy regulations and laws. The authors propose new data perturbation and shuffling (DPS) procedures, named MORE, for this purpose. As compared with existing DPS methods, MORE can substantially increase the utility of secure databases without increasing disclosure risk. MORE overcomes some challenges of other methods. MORE provides unified, flexible, and robust algorithms to mask general types of confidential variables with arbitrary distributions, thereby making it suitable for general-purpose data masking. With MORE, a much wider range of statistical analyses can be conducted by using the secure databases with results similar to those achieved by using the original databases. Unlike existing DPS approaches that typically require a joint model for all variables, MORE requires no modeling of nonconfidential variables and thus further increases the robustness of secure databases. The insight for management: The authors demonstrate that MORE performs better than existing data-masking methods.Bargaining for an Assortment (p. 542)Goker Aydin, H. Sebastian Heese How can product improvement help both a retailer and its competitors? A retailer's assortment decision results from a process of give-and-take, during which the retailer may bid manufacturers against one another and the terms of trade offer plenty of flexibility for allocating the profit among the retailer and manufacturers. The authors investigate the properties of the profit allocations that could emerge in a decentralized supply chain. The authors find that when a manufacturer improves its product, such improvements not only benefit the retailer but might even benefit competing manufacturers. In fact, even improvements to out-of-assortment products can increase the profits of the retailer and certain in-assortment manufacturers. The insight for management: A manufacturer can benefit from collaborating with judiciously chosen competitors.Rationing Capacity in Advance Selling to Signal Quality (p. 560)Man Yu, Hyun-Soo Ahn, Roman Kapuscinski Less could be more; can limiting capacity signal a higher-quality product? In a two-period game, if a seller has private information about their product quality, they might be better off limiting quantity to signal that they have a higher-quality product. The question the authors consider is whether the seller has an incentive to signal quality in advance and, if so, should the seller convey a credible signal of product quality. The authors find that rationing of capacity in the early periods is an effective tool of signaling product quality. They find that the high-quality seller can distinguish itself by allocating less capacity than the low-quality seller in advance. The authors show that this signaling mechanism exists whenever advance selling would be optimal for both the high-quality and low-quality sellers if quality were known by the consumers. Interestingly, the seller's ability to ration (rationing flexibility) sometimes disadvantages the seller; this effect is independent of product quality. The insight for management: Rationing capacity may signal a high-quality product to consumers.Decentralized Procurement in Light of Strategic Inventories (p. 578)Anil Arya, Hans Frimor, Brian Mittendorf To centralize or decentralize? The centralization-versus-decentralization choice is perhaps the quintessential organizational structure decision. In the operations realm, this choice is particularly critical when it comes to the procurement function. Why firms may opt to decentralize procurement has been often studied and confirmed to be a multifaceted choice. The authors detail the trade-offs in the centralization-versus-decentralization decision in light of firms' strategic use of inventories to influence supplier pricing. The insight for management: A firm's decision to cede procurement choices to its individual divisions can help moderate inventory levels and provide a natural salve for supply chain frictions.Prioritization via Stochastic Optimization (p. 586)Ali Koç, David P. Morton What is the best approach—choosing the highest-priority projects or the best combination of projects—when resources are scarce and there are uncertain returns? Often such problems are approached by forming an optimal portfolio of activities. However, often practitioners instead form a rank-ordered list of activities and select those with the highest priority. The authors account for both approaches. They rank activities considering both the uncertainty in the problem parameters and the optimal portfolio that will be obtained once the uncertainty is revealed. The authors apply their approach to a facility location problem and a multidimensional knapsack problem. The insight for management: Both project prioritization and optimal project portfolios can be supported using a new approach.The Role of Accounting Quality in the M&A Market (p. 604)Carol Marquardt, Emanuel Zur What is the role of accounting quality in the mergers-and-acquisitions market? The authors examine the role of target firms' accounting quality in the merger and acquisition process. They predict that target firm accounting quality will be positively associated with (1) the likelihood that the deal will be structured as a negotiation rather than as an auction, (2) the speed with which the deal reaches final resolution, and (3) the likelihood that the proposed deal is ultimately completed. Their empirical evidence is consistent with these predictions. The insight for management: Financial accounting quality relates positively to the efficient allocation of the economy's capital resources.Are People Risk Vulnerable? (p. 624)Mickael Beaud, Marc Willinger Are people risk vulnerable? In an experiment, subjects face the standard portfolio choice problem in which the investor has to allocate part of his wealth between one safe asset and one risky asset. The authors elicit risk vulnerability by observing each subject's portfolio choice in two different contexts that differ only by the presence or absence of an actuarially neutral background risk. Their main result is that most of the subjects are risk vulnerable: 81% chose a less risky portfolio when exposed to background risk. More precisely, 47% invested a strictly smaller amount in the risky asset, whereas 34% were indifferent. The insight for management: Investors are risk vulnerable; many will choose a less risky portfolio when faced with a risky environment.Risk Preferences Around the World (p. 637)Marc Oliver Rieger, Mei Wang, Thorsten Hens What are the risk preferences around the world? The authors present results from a large-scale international survey on risk preferences conducted in 53 countries. They find in all countries, on average, an attitude of risk aversion in gains and of risk seeking in losses. The degree of risk aversion shows significant cross-country differences. Moreover, risk attitudes in the sample depend not only on economic conditions but also on cultural factors. The data serve as an interesting starting point for understanding cultural differences in behavioral economics. The insight for management: Risk aversion in gains and risk seeking in losses are the norm, but the level of such behavior differs heavily by economic and cultural conditions.Speculation Spillovers (p. 649)Yu-Jane Liu, Zheng Zhang, Longkai Zhao Can speculative activities can be contagious and spill over across markets? The authors observe that, during China's warrants bubble period, speculative activities in the warrants market grabbed investors' attention and caused them to trade more speculatively in the underlying stocks. They find that turnover and return volatility of the underlying stocks are positively associated with the warrants' unexpected turnover and price deviation from their fundamental values during the previous day, controlling for information-driven trading and hedging motives, and that such a spillover effect is more pronounced when warrants attract more investor attention. The insight for management: Speculative behaviors have spillover effects into related markets.The Effect of Content on Global Internet Adoption and the Global "Digital Divide" (p. 665)V. Brian Viard, Nicholas Economides What is the effect on Internet adoption on economic performance and growth? A country's human capital and economic productivity increasingly depend on the Internet as a result of its expanding role in providing information and communications. This has prompted a search for ways to increase Internet adoption and narrow its disparity across countries—the global "digital divide." There is an established understanding of the demographic, economic, and infrastructure determinants of Internet access that are difficult to change in the short run. The authors note that Internet content increases adoption and can be changed more quickly; however, the magnitude of its impact, and therefore its effectiveness as a policy and strategy tool, has until now been unknown. Quantifying the role of content is challenging because of feedback (network effects) between content and adoption: More content stimulates adoption, which in turn increases the incentive to create content. The authors find a statistically and economically significant effect, implying that policies promoting content creation can substantially increase adoption. Because it is ubiquitous, Internet content is also useful to effect social change across countries. Content has a greater effect on adoption in countries with more disparate languages, making it a useful tool to overcome linguistic isolation. The insight for management: Policymakers' policies encouraging content creation can increase adoption responsiveness, and Internet firms can focus on key areas to expand internationally and how to quantify content investments.On the Origin of Utility, Weighting, and Discounting Functions: How They Get Their Shapes and How to Change Their Shapes (p. 687)Neil Stewart, Stian Reimers, Adam J. L. Harris How are decision makers' utility, weighting, and discounting functions formed and shaped? Can they be changed? The authors present a theoretical account of the origin of the shapes of utility, probability weighting, and temporal discounting functions. They experimentally change the shape of revealed utility, weighting, and discounting functions by manipulating the distribution of monies, probabilities, and delays in the choices used to elicit them. The authors find that there is no stable mapping between attribute values and their subjective equivalents. This is surprising, because expected and discounted utility theories, and also their descendents, such as prospect theory and hyperbolic discounting theory, simply assert stable mappings to describe choice data and offer no account of the instability that the authors find. They explain where the shape of the mapping comes from and, in describing the mechanism by which people choose, explain why the shape depends on the distribution of gains, losses, risks, and delays in the environment. The insight for management: Traditional assumptions underlying theories on utility mapping may be challenged by gaps and instability found by the authors in choices made in an experimental setting. Back to Top Next FiguresReferencesRelatedInformation Volume 61, Issue 3March 2015Pages iv-vi, 487-705 Article Information Metrics Information Published Online:March 06, 2015 Copyright © 2015, INFORMSCite asMichael F. Gorman (2015) Management Insights. Management Science 61(3):iv-vi. https://doi.org/10.1287/mnsc.2015.2169 PDF download
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