236 research outputs found
The Emerging Role of Electronic Marketplaces on the Internet
NYU, Stern School of Business, IOMS Department, Center for Digital Economy Researc
Why Information Technology Workers Own Their Firms: How the Relative Importance of Human Capital Affects Firm Ownership
Knowledge workers are critical for the production of goods and services in the information economy, and thus investment in human capital plays an increasingly important role in economic growth. Since firms cannot directly own human capital and cannot easily monitor or verify human capital investments made by their employees, they need to devise appropriate incentives to attract skilled employees and to encourage them to develop their human capital. One such scheme is employee ownership of the firm, and in this paper we use the theory of incomplete contracts to show that when investments in human capital are relatively more important, firms should be characterized by higher levels of employee ownership. Specifically, we employ a model of the firm where production requires both human capital and nonhuman (e.g., physical) capital. Because of the difficulty of ex ante contracting with employees and managers to invest in human capital specific to the firm, employees and users need to be given partial ownership of firm in order to increase their incentives to invest in human capital. As the importance of human capital relative to the physical capital employed by the firm increases, the model predicts an increase in the appropriate level of employee and serial ownership. We test this prediction through the empirical analysis of firm-level data in three high tech sectors, software, hardware, and biotechnology. Our results confirm the predicted relationship, and demonstrate that the high degree of managerial ownership in the IT industry in comparison to the biotechnology industry (e.g., managerial ownership in software companies is an order of magnitude higher than biotechnology companies) can be explained by the relative importance of human capital compared to physical capital in these industries
Cooperation Without Enforcement? A comparative analysis of litigation and online reputation as quality assurance mechanisms
Online reputation mechanisms are emerging as a promising alternative to more
established mechanisms for promoting trust and cooperative behavior, such as legally
enforceable contracts. As information technology dramatically reduces the cost of
accumulating, processing and disseminating consumer feedback, it is plausible to ask
whether such mechanisms can provide an economically more efficient solution to a
wide range of moral hazard settings where societies currently rely on the threat of
litigation in order to induce cooperation. In this paper we compare online reputation to
legal enforcement as institutional mechanisms in terms of their ability to induce
cooperative behavior. Furthermore, we explore the impact of information technology
on their relative economic efficiency. We find that although both mechanisms result in
losses relative to the maximum possible social surplus, under certain conditions online
reputation outperforms litigation in terms of maximizing the total surplus, and thus the
resulting social welfa
Panel 3 How Should Information be Priced? Winning Strategies for the Digital Economy
This panel will discuss and debate the best strategies for pricing information goods such as news, online entertainment, software and even academic research and teaching materials, with a special focus on the emerging information marketplace enabled by the Internet. The pricing of information goods presents special difficulties for conventional markets (e.g., Varian 1995). In particular, digital copies of information goods are equivalent in all respects to the originals, and can be created and distributed almost without cost via the emerging information infrastructure. From a societal perspective, free (or nearly free) information would be efficient in a static sense: all consumers who valued information more than its marginal cost would gain access to it. However, this price would not generate revenues to provide incentives for the creation of new information goods
Electronic Commerce in the Retail Brokerage Industry: Trading Costs of Internet Versus Full Service Firms
Electronic brokerages on the Internet represent one of the most successful examples of
electronic commerce, having captured over 20% of retail stock trades. According to
economic theory, prices of commodities like securities should converge to one price in a
market with the transparency of the Internet. A review of published commissions for
online brokers shows that this "law of one price" does not appear to hold for the
commissions charged by retail brokers. In this paper we explore one possible explanation
for these differences in commissions. Specifically, we test whether the total cost of
trading, including commissions and savings based on the quality of execution, obeys the
law of one price. In a carefully designed experiment, we simultaneously purchased or
sold 100 share lots of stock using a voice-broker, an expensive online broker and an
inexpensive online broker in each trial. We found relatively few price improvements,
which are a measure of execution quality. The difference among brokers in obtaining
price improvements was not statistically significant. The brokers do exhibit statistically
significant differences in total trading costs; at a volume of 100 shares commission costs
dominate execution quality. We explore the implications of the findings for larger lot
sizes, choosing a broker, and electronic commerce in the brokerage industry.Information Systems Working Papers Serie
Electronic Commerce in the Retail Brokerage Industry: Trading Costs of Internet Versus Full Service Firms
Electronic brokerages on the Internet represent one of the most successful examples of
electronic commerce, having captured over 20% of retail stock trades. According to
economic theory, prices of commodities like securities should converge to one price in a
market with the transparency of the Internet. A review of published commissions for
online brokers shows that this "law of one price" does not appear to hold for the
commissions charged by retail brokers. In this paper we explore one possible explanation
for these differences in commissions. Specifically, we test whether the total cost of
trading, including commissions and savings based on the quality of execution, obeys the
law of one price. In a carefully designed experiment, we simultaneously purchased or
sold 100 share lots of stock using a voice-broker, an expensive online broker and an
inexpensive online broker in each trial. We found relatively few price improvements,
which are a measure of execution quality. The difference among brokers in obtaining
price improvements was not statistically significant. The brokers do exhibit statistically
significant differences in total trading costs; at a volume of 100 shares commission costs
dominate execution quality. We explore the implications of the findings for larger lot
sizes, choosing a broker, and electronic commerce in the brokerage industry.Information Systems Working Papers Serie
Does Anyone Read the Fine Print? Testing a Law and Economics Approach toStandard Form Contracts
A cornerstone of the law and economics approach to standard form
contracts is the 'informed minority' hypothesis: in competitive markets,
a minority of term-conscious buyers is enough to discipline sellers from
offering unfavorable boilerplate terms. The informed minority argument
is widely invoked to limit intervention in consumer transactions, but
there has been little empirical investigation of its validity. We track
the Internet browsing behavior of 45,091 households with respect to 66
online software companies to study the extent to which potential buyers
access the standard form contract associated with software purchases,
the end user license agreement. We find that only one or two out of
every thousand retail software shoppers chooses to access the license
agreement, and those that do spend too little time, on average, to have
read more than a small portion of the license text. The results cast
doubt on the relevance of the informed minority mechanism in a specific
market where it has been invoked by both theorists and courts and, to
the extent that comparison shopping online is relatively cheap and easy,
suggest limits to the mechanism more generally
Are We Wise About Sub-Fields in IS? Lessons from Forming and Sustaining a Research Community
Sub-fields within I.S. generate benefits for their participants and for the larger research discipline. Sub-fields can also fragment and compete with the broad field they emerge from. One of the largest and most active research groups in the ICIS community is the researchers examining Information Systems Economics. After 20 years of the Workshop on Information Systems and Economics (WISE), this is a moment to identify what sub-fields contribute in I.S. and look forward to what sub-fields can do for ICIS researchers and I.S. practice in the future
Towards personalized data-driven bundle design with QoS constraint
Singapore National Research Foundation under its International Research Centre @ Singapore Funding Initiativ
- …