Competing in the presence of privacy concerns: a model of the market for customer information

Working papers seriesThere is 'no free disposal' (NFD) in the consumption of online personalization services, as this activity inherently involves sharing of personal and preference information that creates disutilities to the consumer. Not only are more services not necessarily better for the consumer, but these services are also provided for free as firms extract value from the usage of consumer information rather than from directly pricing the services. Further, the services themselves may be provided to a consumer as a fixed-length toolbar/deskbar (fixed-services strategy) or with the option of choosing a subset of the portfolio of services offered (variable-services strategy). This paper models a duopoly of firms that are heterogeneous in their marginal value for consumer information (MVI) and interact through a two-stage dynamic game, where the firms choose a fixed- or variable-services strategy in the first stage and their level of services of-fering in the second. After examining a series of subgame equilibria, we arrive at distinct subgame-perfect Nash equilibriua (SPNEs) that allows us to characterize competition between firms of different MVI endowments. Our findings suggest that while there is no SPNE in a duopoly of two small firms, when one firm is small and the large, there is a unique SPNE in pure strategies where both firms offer fixed-services such that they segment the market. As the differences in their valuations increase, the larger firm continues to offer fixed-services while smaller firm enjoys the option of offering variable services. A duopoly of large firms results always results in symmetric SPNE; both firms offer variable services as long as one firm has very large MVI and both offer fixed-services otherwise. Interestingly while the former is consumer welfare maximizing, the latter results in a third of the market (consisting of privacy seekers) not being served. Our results lead to important managerial and policy implications, as well as interesting extensions to the existing location models.preprin

Resolving the personalization-privacy dilemma: theory and implications of a privacy-preserving contract

Working papers seriesPersonalization is an integral part of e-commerce strategy today. A unique feature of personalization is that it requires users to provide a certain amount of personal information to the service provider, thus giving rise to an interesting dilemma in that consumers cannot enjoy more personalized services without sacrificing more privacy. In this paper, we propose a mechanism that allows an online personalization vendor to provide proper incentives for consumers to share information, while protecting their privacy at the same time. The proposed solution not only enables consumers and the firm to engage in an otherwise unviable market, but it also allows the firm to implement an incentive-compatible menu that serves all consumers regardless of their privacy sensitivity. Further, we demonstrate that a minimum privacy-preservation policy is an effective device for protecting consumers’ online privacy, and that it outperforms restricting vendors’ ability in collecting customer information. Our proposed mechanism is of theoretical and practical importance: By transforming the compensation schedule (privacy preservation) into a set-compliment device to the production variable, our approach offers an alternative to the reliance on external transfer, thus eradicating a major constraint confronted by traditional mechanism design. Practically, our research proposes a realistic, easily-implementable solution to the fervent calls for endowing consumers with greater control over their online privacy. Further, it offers important policy guidelines to the regulator on not only what devices can be applied in governing the information practice of online vendors, but also exactly how social-efficiency can be enhanced.preprin

Strategic implementation of 'everyday low price' in electronic markets: a study of airline pricing on the internet

Working papers seriesAn Everyday Low Price (EDLP) strategy is a product-portfolio level pricing strategy by which a firm attempts to convey to consumers that prices across its product portfolio are consistently low. Empirically, the EDLP strategy is operationalized along two dimensions; the “everyday” component, which relates to the consistency in product prices over time, and the “low price” component, which implies that the prices set are on average lower than other prices available in the market. There may, however, be specific categories or markets in which even EDLP firms may prefer to eschew their consistency and low price goals. The U.S. domestic airline industry has two airlines that adopt the EDLP format while most others employ a promotional (HILO) pricing strategy, thus providing a rich context to investigate how the EDLP price-image strategy is implemented. We use a web crawler to gather information on over 270,000 ticket prices offered by the major airlines in 472 markets, and use a hierarchical linear model to analyze how these two dimensions of price vary with ticket categories and market conditions – defined in economics literature by advance purchase periods, weekend restrictions, airlines’ competitiveness, market distance, and hub operations. We find that the EDLP airlines emphasize the everyday dimension of their pricing much more than the low price dimension. Thus while their prices are systematically more consistent than their HILO competitors, their price levels show that they practice the same form of price discrimination with advance-purchase periods as their HILO competitors. Interestingly, while most airlines charge higher prices for tickets without weekend restriction, which are typically targeted towards business travelers, EDLP firms charge lower prices for these tickets. Further investigation at a category level reveals that these lower business fares are distinct features of short-haul markets where EDLP firms are known to enjoy certain cost advantages due to smaller equipment sizes of their flights. From the “everyday” point of view, we see that while there are no differences in the consistency of prices of EDLP tickets based on advance purchase periods, prices of business-focused EDLP tickets are distinctly more consistent than those of leisure-oriented tickets. Curiously, even in markets where EDLP firms are monopolists, they do not appear to be exercising their monopoly power; on the other hand, HILO firms distinctly employ discriminatory pricing in their monopoly markets. Perhaps this is a reflection of EDLP firms pursuing a limit-pricing/barrier-to-entry strategy. Our research shows that the practice of EDLP in online markets involves strategic variations in how price image is communicated.preprin

Price formats as a source of price dispersion: A Study of online and ofline pices in the dmestic U.S. arline markets

Alarge body of research in economics, information systems, and marketing has sought to understand sources of price dispersion. Previous empirical work has mainly offered consumer- and/or product-based explanations for this phenomenon. In contrast, our research explores the key role played by vendors' price-format adoption in explaining price dispersion. We empirically analyze over a half-million online and offline prices offered by major U.S. airlines in the top 500 domestic markets. Our study shows that a vendor's price format remains an important source of price dispersion in both channels even after accounting for other factors known to impact dispersion in airline ticket prices. Importantly, this finding is true for both transacted and posted tickets. We document several other interesting empirical findings. First, the lower variance in the prices of "everyday low price" (EDLP) firms serves to reduce the market-level dispersion in prices when such firms are present. Moreover, the price variance of non-EDLP firms in these markets is also lower than in those markets in which EDLP competitors are absent. Second, we also find that dispersion in offered prices increases closer to the departure date, which is consistent with theoretical assertion that price dispersion increases with reservation prices. Finally, we continue to observe dispersion of online prices even after accounting for vendor strategy and other known sources of dispersion, suggesting that the prices are unlikely to converge even in the presence of sophisticated online search mechanisms.preprin

Measurement of Contractile Stress Generated by Cultured Rat Muscle on Silicon Cantilevers for Toxin Detection and Muscle Performance Enhancement

Background: To date, biological components have been incorporated into MEMS devices to create cell-based sensors and assays, motors and actuators, and pumps. Bio-MEMS technologies present a unique opportunity to study fundamental biological processes at a level unrealized with previous methods. The capability to miniaturize analytical systems enables researchers to perform multiple experiments in parallel and with a high degree of control over experimental variables for high-content screening applications.Methodology/Principal Findings: We have demonstrated a biological microelectromechanical system (BioMEMS) based on silicon cantilevers and an AFM detection system for studying the physiology and kinetics of myotubes derived from embryonic rat skeletal muscle. It was shown that it is possible to interrogate and observe muscle behavior in real time, as well as selectively stimulate the contraction of myotubes with the device. Stress generation of the tissue was estimated using a modification of Stoney's equation. Calculated stress values were in excellent agreement with previously published results for cultured myotubes, but not adult skeletal muscle. Other parameters such as time to peak tension (TPT), the time to half relaxation (KRT) were compared to the literature. It was observed that the myotubes grown on the BioMEMS device, while generating stress magnitudes comparable to those previously published, exhibited slower TPT and KRT values. However, growth in an enhanced media increased these values. From these data it was concluded that the myotubes cultured on the cantilevers were of an embryonic phenotype. The system was also shown to be responsive to the application of a toxin, veratridine.Conclusions/Significance: The device demonstrated here will provide a useful foundation for studying various aspects of muscle physiology and behavior in a controlled high-throughput manner as well as be useful for biosensor and drug discovery applications

Activation of Host Translational Control Pathways by a Viral Developmental Switch

In response to numerous signals, latent herpesvirus genomes abruptly switch their developmental program, aborting stable host–cell colonization in favor of productive viral replication that ultimately destroys the cell. To achieve a rapid gene expression transition, newly minted capped, polyadenylated viral mRNAs must engage and reprogram the cellular translational apparatus. While transcriptional responses of viral genomes undergoing lytic reactivation have been amply documented, roles for cellular translational control pathways in enabling the latent-lytic switch have not been described. Using PEL-derived B-cells naturally infected with KSHV as a model, we define efficient reactivation conditions and demonstrate that reactivation substantially changes the protein synthesis profile. New polypeptide synthesis correlates with 4E-BP1 translational repressor inactivation, nuclear PABP accumulation, eIF4F assembly, and phosphorylation of the cap-binding protein eIF4E by Mnk1. Significantly, inhibiting Mnk1 reduces accumulation of the critical viral transactivator RTA through a post-transcriptional mechanism, limiting downstream lytic protein production, and impairs reactivation efficiency. Thus, herpesvirus reactivation from latency activates the host cap-dependent translation machinery, illustrating the importance of translational regulation in implementing new developmental instructions that drastically alter cell fate

Increasing upper limb training intensity in chronic stroke using embodied virtual reality: a pilot study.

Technology-mediated neurorehabilitation is suggested to enhance training intensity and therefore functional gains. Here, we used a novel virtual reality (VR) system for task-specific upper extremity training after stroke. The system offers interactive exercises integrating motor priming techniques and embodied visuomotor feedback. In this pilot study, we examined (i) rehabilitation dose and training intensity, (ii) functional improvements, and (iii) safety and tolerance when exposed to intensive VR rehabilitation. Ten outpatient stroke survivors with chronic (>6 months) upper extremity paresis participated in a ten-session VR-based upper limb rehabilitation program (2 sessions/week). All participants completed all sessions of the treatment. In total, they received a median of 403 min of upper limb therapy, with 290 min of effective training. Within that time, participants performed a median of 4713 goal-directed movements. Importantly, training intensity increased progressively across sessions from 13.2 to 17.3 movements per minute. Clinical measures show that despite being in the chronic phase, where recovery potential is thought to be limited, participants showed a median improvement rate of 5.3% in motor function (Fugl-Meyer Assessment for Upper Extremity; FMA-UE) post intervention compared to baseline, and of 15.4% at one-month follow-up. For three of them, this improvement was clinically significant. A significant improvement in shoulder active range of motion (AROM) was also observed at follow-up. Participants reported very low levels of pain, stress and fatigue following each session of training, indicating that the intensive VR intervention was well tolerated. No severe adverse events were reported. All participants expressed their interest in continuing the intervention at the hospital or even at home, suggesting high levels of adherence and motivation for the provided intervention. This pilot study showed how a dedicated VR system could deliver high rehabilitation doses and, importantly, intensive training in chronic stroke survivors. FMA-UE and AROM results suggest that task-specific VR training may be beneficial for further functional recovery both in the chronic stage of stroke. Longitudinal studies with higher doses and sample sizes are required to confirm the therapy effectiveness. This trial was retrospectively registered at ClinicalTrials.gov database (registration number NCT03094650 ) on 14 March 2017

Murine Gamma-herpesvirus Immortalization of Fetal Liver-Derived B Cells Requires both the Viral Cyclin D Homolog and Latency-Associated Nuclear Antigen

Human gammaherpesviruses are associated with the development of lymphoproliferative diseases and B cell lymphomas, particularly in immunosuppressed hosts. Understanding the molecular mechanisms by which human gammaherpesviruses cause disease is hampered by the lack of convenient small animal models to study them. However, infection of laboratory strains of mice with the rodent virus murine gammaherpesvirus 68 (MHV68) has been useful in gaining insights into how gammaherpesviruses contribute to the genesis and progression of lymphoproliferative lesions. In this report we make the novel observation that MHV68 infection of murine day 15 fetal liver cells results in their immortalization and differentiation into B plasmablasts that can be propagated indefinitely in vitro, and can establish metastasizing lymphomas in mice lacking normal immune competence. The phenotype of the MHV68 immortalized B cell lines is similar to that observed in lymphomas caused by KSHV and resembles the favored phenotype observed during MHV68 infection in vivo. All established cell lines maintained the MHV68 genome, with limited viral gene expression and little or no detectable virus production - although virus reactivation could be induced upon crosslinking surface Ig. Notably, transcription of the genes encoding the MHV68 viral cyclin D homolog (v-cyclin) and the homolog of the KSHV latency-associated nuclear antigen (LANA), both of which are conserved among characterized γ2-herpesviruses, could consistently be detected in the established B cell lines. Furthermore, we show that the v-cyclin and LANA homologs are required for MHV68 immortalization of murine B cells. In contrast the M2 gene, which is unique to MHV68 and plays a role in latency and virus reactivation in vivo, was dispensable for B cell immortalization. This new model of gammaherpesvirus-driven B cell immortalization and differentiation in a small animal model establishes an experimental system for detailed investigation of the role of gammaherpesvirus gene products and host responses in the genesis and progression of gammaherpesvirus-associated lymphomas, and presents a convenient system to evaluate therapeutic modalities