2016 INFORMS Annual Meeting Program

SA25

INFORMS Nashville – 2016

2 - Modeling Health Insurance Marketplaces

4 - Stock Market Undervaluation Of Resource Redeployability Arkadiy Sakhartov, University of Pennsylvania, Wharton School of Business, 3620 Locust Walk, Philadelphia, PA, 19104, United States, arkadiys@wharton.upenn.edu The study uses three steps to establish the applicability of the strategic factor market theory to acquisitions of firms in stock markets. First, the study reviews literature on resource valuation and finds a likely source of the undervaluation, ambiguity about redeployability of resources to a new business. Second, the study compiles a case of Apple Inc., revealing a prolonged undervaluation of redeployability of the firm’s resources to the smartphone business. Third, the study builds a valuation model deriving the undervaluation as a function of observable resource properties. SA25 110A-MCC Capacity Allocation and Scheduling Issues Invited: Project Management and Scheduling Invited Session Chair: Zhixin Liu, University of Michigan-Dearborn, 19000 Hubbard Dr, Dearborn, MI, 48126, United States, zhixin@umich.edu 1 - Coordination Mechanisms For Several Scheduling Game Problems Guo-Qiang Fan, Northwestern Polytechnical University, Xi’an, China, pacpos.gqfan@gmail.com, Jun-Qiang Wang We consider two scheduling problems in the non-cooperative game setting. Each job is owned by a selfish agent whose strategy is to minimize its completion time. (P1) For the scheduling game problem Q||max wjCj, we design the Greatest- Weight-First Coordination Mechanism and show that the price of anarchy is equal to 2-1/m for identical parallel machines and is not greater than 1+(m- 1)smax/ms for uniform parallel machines. (P2) For the scheduling game problem Q|p-batch,b

Zhaowei She, Georgia Institute of Technology, zhaowei@gatech.edu

As part of the Affordable Care Act, Health Insurance Marketplaces (HIX) has significantly reduced the number of uninsured in the United States. However, concerns exist about quality and accessibility of services in HIX. Motivated by these concerns, we propose a theoretical framework to understand the current state of HIX, and make projections about its future and sustainability. Our analysis shows that the current design of HIX may unintentionally incentivize health plans to ration services to attract low risk enrollees, leading to adverse selection and narrow-network phenomena in HIX. Moreover, HIX’s limitations in addressing upcoding behavior can lead to an unraveling of the market. 3 - Balancing Functional And Technical Quality In Health Services Under Provider Consolidation And Shifts In Payment Structure Aaron H Ratcliffe, University of North Carolina at Greensboro, 438 Bryan Building, University of North Carolina at Greensboro, Greensboro, NC, 27402-6165, United States, aaron.ratcliffe@uncg.edu, Ann Marucheck, Wendell G Gilland We develop a competitive queueing model to study how health service providers balance investments in functional quality (experiential elements of service) against investments in technical service quality (positive service outcomes). Our analytical derivations measure the impact of provider consolidation and alternative payment structures on the equilibrium technical quality and functional quality efforts and equilibrium wait times for health service. SA24 109-MCC Dynamics of Scope and Innovation Invited: Strategy Science Invited Session Chair: Brian Wu, University of Michigan, Tappan Street, Ann Arbor, MI, 48109, United States, wux@umich.edu 1 - Adaptation On Multiple Landscapes: Relatedness, Complexity And Dynamic Coordination Costs Aseem Kaul, University of Minnesota, Minneapolis, MN, United States, akaul@umn.edu, Mo Chen, Xun Wu We introduce and explore the concept of dynamic coordination costs, i.e. the reduction in a diversified firm’s ability to adapt within its businesses resulting from the coordination of activities across them. Using a modified NK simulation, we show that a combination of rigidity and learning means that these costs are highest at moderate levels of relatedness across business, with the level of interdependency within businesses moderating this effect. We also show that diversifying entrants in new markets experience a short-term learning advantage, but a long-term rigidity disadvantage. Our study speaks to work on organizational adaptation and strategic renewal in multi-business firms. 2 - Innovation In Ecosystems Gwendolyn K Lee, University of Florida, 2822 SW 94th Drive, Gainesville, FL, 32608, United States, gwendolyn.lee@cba.ufl.edu, Martin Ganco, Rahul Kapoor We consider the context for innovation to comprise of interdependent industries within an ecosystem. Using a simulation model, we explore how the structure of interdependencies shapes the pattern of innovation across industries. The notion is that an industry’s close proximity to end-use provides firms with a larger pool of components to combine but also more complex objective function to solve. A larger pool presents more choices and covers a wider variety of choices. However, certain architectural configurations impose heavy constraints on downstream firms. We show innovation outcomes depend on the architecture of interdependencies across and within the different industries in an ecosystem. 3 - Effect Of Competitor Investments On Established Firms’ Redeployment Entry Into Nascent Markets: Evidence From The U.S. Electric Utilities’ Adoption Of Solar Energy Shaohua Lu, Tulane University, Freeman School of Business, New Orleans, LA, 70118, United States, slu4@tulane.edu Jay Anand This paper examines the effect of competitor investments on established firms’ entry into an emerging, uncertain market. To understand information effect, we shift attention to the “flow” of recent competitor investments rather than analyzing the “stock” of cumulative investments. We further postulate that this information effect interacts with a competition effect in oligopolistic market competition. We construct formal models and predict a U-shaped relationship. We further examine how competitor similarity and existing capacity affect this U- shaped relationship. Using data on investor-owned utilities’ entry into the solar market, we find supporting evidence for our predictions.

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