Modeling customer bounded rationality in operations management: A review and research opportunities

Many studies in operations management started to explicitly model customer behavior. However, it is typically assumed that customers are fully rational decision-makers and maximize their utility perfectly. Recently, modeling customer bounded rationality has been gaining increasing attention and interest. This paper summarizes various approaches of modeling customer bounded rationality, surveys how they are applied to relevant operations management settings, and presents the new insights obtained. We also suggest future research opportunities in this important area

Essays on Service Information, Retrials and Global Supply Chain Sourcing

In many service settings, customers have to join the queue without being fully aware of the parameters of the service provider (for e.g., customers at check-out counters may not know the true service rate prior to joining). In such blind queues\u27\u27, customers typically make their decisions based on the limited information about the service provider\u27s operational parameters from past experiences, reviews, etc. In the first essay, we analyze a firm serving customers who make decisions under arbitrary beliefs about the service parameters. We show, while revealing the service information to customers improves revenues under certain customer beliefs, it may however destroy consumer welfare or social welfare. When consumers can self-organize the timing of service visits, they may avoid long queues and choose to retry later. In the second essay, we study an observable queue in which consumers make rational join, balk and (costly) retry decisions. Retrial attempts could be costly due to factors such as transportation costs, retrial hassle and visit fees. We characterize the equilibrium under such retrial behavior, and study its welfare effects. With the additional option to retry, consumer welfare could worsen compared to the welfare in a system without retrials. Surprisingly, self-interested consumers retry too little (in equilibrium compared to the socially optimal policy) when the retrial cost is low, and retry too much when the retrial cost is high. We also explore the impact of myopic consumers who may not have the flexibility to retry. In the third essay, we propose a comprehensive model framework for global sourcing location decision process. For decades, off-shoring of manufacturing to China and other low-cost countries was a no-brainer decision for many U.S. companies. In recent years, however, this trend is being challenged by some companies to re-shore manufacturing back to the U.S., or to near-shore manufacturing to Mexico. Our model framework incorporates perspectives over the entire life cycle of a product, i.e., product design, manufacturing and delivering, and after-sale service support, and we use it to test the validity of various competing theories on global sourcing. We also provide numerical examples to support our findings from the model

The Causes and Consequences of Corporate Short-Termism

Corporate short-termism is one of the most significant concerns facing companies and society today. It demands that companies maximize profits in the short term regardless of the long-term consequences. Corporate short-termism can destroy long-run wealth generation, fuel job lay-offs, impede innovation, and neglect society’s social and environmental interests. Paul Polman, CEO of Unilever, declares that short-termism, “lies at the heart of many of today’s problems.” In spite of the potential harm it may cause, corporate short-termism is one of least understood topics in management research. Anecdotal evidence suggests that financial market pressures fuel corporate short-termism, but little research has explored this claim. Difficulties of measuring and empirically testing short-termism have contributed to this limited work. In my dissertation, I develop a new measure of organizational time horizons to test the presence of short-termism in companies. I then apply this measure to answer the question: What are the causes and consequences of corporate short-termism? In three essays, I postulate that financial markets affect organizational time horizons (Essay #1), which ultimately influence organizational-level outcomes, such as the corporate investment decisions of managers (Essay #2) and the resiliency of companies (Essay #3). I investigate these hypotheses in three empirical studies, using data on large, multinational companies across an array of industries. The methods I employ include textual analysis, difference-in-differences, two-stage least squares with instrumental variables, and survival analysis. Taken together, this body of work provides a clearer understanding of the role that financial markets have in shaping the temporal perceptions of managers, and how these perceptions affect managers’ strategic decisions and the performance of their companies

A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions

Why should you read another book about transport and land use? This book differs in that we won’t focus on empirical arguments – we present political arguments. We argue the political aspects of transport policy shouldn’t be assumed away or treated as a nuisance. Political choices are the core reasons our cities look and function the way they do. There is no original sin that we can undo that will lead to utopian visions of urban life. The book begins by introducing and expanding on the idea of Accessibility. Then we proceed through several major parts: Infrastructure Preservation, Network Expansion, Cities, and Institutions. Infrastructure preservation concerns the relatively short-run issues of how to maintain and operate the existing surface transport system (roads and transit). Network expansion in contrast is a long-run problem, how to enlarge the network, or rather, why enlarging the network is now so difficult. Cities examines how we organize, regulate, and expand our cities to address the failures of transport policy, and falls into the time-frame of the very long-run, as property rights and land uses are often stickier than the concrete of the network is durable. In the part on Institutions we consider things that might at first blush appear to be short-run and malleable, are in fact very long-run. Institutions seem to outlast the infrastructure they manage. Many of the transport and land use problems we want to solve already have technical solutions. What these problems don’t have, and what we hope to contribute, are political solutions. We expect the audience for this book to be practitioners, planners, engineers, advocates, urbanists, students of transport, and fellow academics

Market Engineering

This open access book provides a broad range of insights on market engineering and information management. It covers topics like auctions, stock markets, electricity markets, the sharing economy, information and emotions in markets, smart decision-making in cities and other systems, and methodological approaches to conceptual modeling and taxonomy development. Overall, this book is a source of inspiration for everybody working on the vision of advancing the science of engineering markets and managing information for contributing to a bright, sustainable, digital world. Markets are powerful and extremely efficient mechanisms for coordinating individuals’ and organizations’ behavior in a complex, networked economy. Thus, designing, monitoring, and regulating markets is an essential task of today’s society. This task does not only derive from a purely economic point of view. Leveraging market forces can also help to tackle pressing social and environmental challenges. Moreover, markets process, generate, and reveal information. This information is a production factor and a valuable economic asset. In an increasingly digital world, it is more essential than ever to understand the life cycle of information from its creation and distribution to its use. Both markets and the flow of information should not arbitrarily emerge and develop based on individual, profit-driven actors. Instead, they should be engineered to serve best the whole society’s goals. This motivation drives the research fields of market engineering and information management. With this book, the editors and authors honor Professor Dr. Christof Weinhardt for his enormous and ongoing contribution to market engineering and information management research and practice. It was presented to him on the occasion of his sixtieth birthday in April 2021. Thank you very much, Christof, for so many years of cooperation, support, inspiration, and friendship

Practical financial decision making : essential tools

https://egrove.olemiss.edu/aicpa_guides/1813/thumbnail.jp

The Economics of Biodiversity The Dasgupta Review Full Report

In 2019, Her Majesty’s Treasury (UK) commissioned Sir Partha Dasgupta, an economist and Professor Emeritus at Cambridge University to produce an independent, global review on the Economics of Biodiversity. Sir Partha was assisted by a multi-disciplinary Advisory Panel that included representatives of public policy, science, economics and business. The Review argues that countries should de-emphasize GDP as an index of progress and instead should focus on a national Wealth measure that includes an accounting for Natural Capital. After World War II, when the world was very different from what it is now, Sir Partha argues the economic questions being faced could be studied most productively by excluding Natural Capital and focusing on Produced Capital (e.g. infrastructure) and Human Capital. But today, as economists have begun to devise methods to value and to track Natural Capital, it is becoming apparent that while Produced and Human Capital may be increasing, Natural Capital is declining. The Review analyzes what we know about Natural capital and begins to address how Natural Capital might be incorporated into a valid assessment of national wealth and long-term sustainability