2016 INFORMS Annual Meeting Program

SA26

INFORMS Nashville – 2016

SA26 110B-MCC Procurement Auctions and Bidding

3 - Newsvendor Problem In The Presence Of Strategic Customers: Theory And Laboratory Evidence Yang Zhang, Tsinghua University, yangzhanguser@mail.tsinghua.edu.cn, Benny Mantin, Yaozhong Wu How would a newsvendor react to strategic customers who may delay their purchase until a price discount to take place? In theory, the newsvendor should optimally order less than the conventional critical fractile, in order to signal a shortage of products so that strategic customers herd into purchases at full price. In the laboratory however, retailers tend to psychologically overreact to the strategic customer behavior, which produces the so-called pull-below-center bias. We develop a behavioral model based on reference dependence to explain the observed ordering patterns, comparative statics, and the presence and asymmetry of pull-below-center bias across treatments. 4 - Competitive Dynamic Pricing Under Capacity Constraints: An Experimental Study Bahriye Cesaret, Ozyegin University, Istanbul, Turkey, bahriye.cesaret@ozyegin.edu.tr, Elena Katok We present an experimental study of a stylized competitive dynamic pricing model for a duopoly. We designed a set laboratory experiments to investigate how human decision makers price their fixed units of capacity over a multiple-period selling season when they face a competition in the market. We report on the results of four experiments. The results show that our laboratory participant tends to underprice (i.e., price over-competitively) at the beginning of a selling season, and as the selling deadline gets closer she tends to overprice (i.e., price not competitive enough) her units. SA28 201B-MCC MSOM Student Paper Competition Finalists – I Sponsored: Manufacturing & Service Oper Mgmt Sponsored Session Chair: Sameer Hasija, Insead, 1 Ayer Rajah Avenue, Singapore, 138676, Singapore, sameer.hasija@insead.edu Co-Chair: Tolga Tezcan, London Business School, Regent’s Park, London, IL, NW1 4SA, United Kingdom, ttezcan@london.edu Co-Chair: Nicos Savva, London Business School, Regent’s Park, London, NW1 4SA, United Kingdom, nsavva@london.edu The MSOM Student Paper Competition is awarded annually by the Manufacturing & Service Operations Management Society at the INFORMS Annual Meeting for papers judged to be the best in the field of operations man- agement. 1 - Buyer Intermediation in Supplier Finance Weiming Zhu, Smith School of Business, College Park, MD, United States, zhuwm923@gmail.com Abstract to come 2 - Using Patient-Centric Quality Information to Unlock Hidden Health Care Capabilities Guihua Wang, University of Michigan, Ann Arbor, MI, United States, guihuaw@umich.edu Abstract to come 3 - Strategic Open Routing in Service Networks Andrew Frazelle, Duke University, Durham, NC, United States, andrew.frazelle@duke.edu Abstract to come

Invited: Auctions Invited Session Chair: Kartikeya Puranam, La Salle University, 1900 West Olney Ave, Philadephia, PA, 19141, United States, puranam@lasalle.edu 1 - Behavioral Analysis Of A + B Sealed Bid Procurement Auctions Bernardo F. Quiroga, Assistant Professor, Clemson University, Clemson, SC, 29634, United States, bquirog@g.clemson.edu Brent Moritz, Xiaosong Wu Using a laboratory experiment, we study the effect of complexity in multidimensional bidding in A+B governmental procurement auctions. Varying the number of bidders and the dimensionality of the bid, we offer an explanation for over/underbidding, and suggest potential solutions to the welfare implications of the observed biases. In our analyses, we evaluate several different explanations to rationalize this behavior, including risk attitudes, bounded rationality, loss aversion, quantile response equilibria measures, and structural estimation of the implied private value of the contracts. 2 - Score Auction Bidding Under Quality Uncertainty: Effort, Risk And Agency Considerations Daniel Nielubowicz, Clemson University, dnielub@g.clemson.edu Bernardo F. Quiroga In a price-and-quality score procurement auction setting, we model the effect of quality uncertainty on bidding behavior under the presence of moral hazard, using a sealed-bid-first-score mechanism. In our scenario, bidders submit prices and target quality levels, and are subject to a failure-to-deliver penalty from deviations below said target. We present our analytical model and offer policy implications in presence and absence of default risk/renegotiation, and offer light to a dynamic extension of this model (in which credibility plays a fundamental role). 3 - Bidding With Learning In Repeated Auctions Kartikeya Puranam, La Salle University, puranam@lasalle.edu, Michael N Katehakis We consider the problem of a firm that procures items in a sequence of auctions by bidding against the “market.” The firm has two bid levels available (High and Low). The firm and the “market” learn from each winning bid. We study bidding strategies for the firm when the objective of the firm is to minimize the expected total cost of acquiring items to meet demand. SA27 201A-MCC Behavioral Operations Sponsored: Manufacturing & Service Oper Mgmt Sponsored Session Chair: Javad Nasiry, Hong Kong University of Science and Technology- HKUST, Hong Kong, nasiry@ust.hk Co-Chair: Xiaoyang Long, Hong Kong University of Science and Technology, Hong Kong, xlongaa@connect.ust.hk 1 - Trust, Social Networks, And Information Sharing Among Executives Ozalp Ozer, The University of Texas at Dallas, Richardson, TX, 75080, United States, oozer@utdallas.edu, Emily Choi, Yanchong Zheng We experimentally study how trust and social networks influence forecast information sharing behavior among executives with an average 17 years of professional experience. We demonstrate how trust preconditioned by prior experiences and trust measured from social network jointly influence information sharing behavior and the resulting supply chain efficiency. 2 - A Behavioral Study On Abandonment Decisions In Multi-stage Projects Xiaoyang Long, Hong Kong University of Science and Technology, Hong Kong, Hong Kong, xlongaa@connect.ust.hk Javad Nasiry, Yaozhong Wu We experimentally investigate continuation/abandonment decisions in a multi- stage project under two conditions: when the project is reviewed at every stage and when review opportunities are limited. We find systematic deviations from the optimal solution: subjects may wrongly continue or abandon the project, and their decisions are path dependent. We propose a behavioral model which explains the behavioral regularities.

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