Informs Annual Meeting 2017

SB26

INFORMS Houston – 2017

2 - Patient’s Waiting Experience in an Urban Emergency Department Sina Ansari, Northwestern University, McCormick School of Engineering, 2145 Sheridan Road, Evanston, IL, 60208, United States, sinaansari2013@u.northwestern.edu, Seyed Iravani, Laurens G.Debo Excessive wait time is the most common reason patients become unsatisfied and leave the emergency department before being treated. In this study, we aim to study the impact of announcing patient’s waiting times and operational transparency on patients satisfaction and Left-Without-Being-Seen (LWBS) rate. 3 - How Freemium Gets Consumers to Pay a Premium: The Role of Loss-Aversion Sami Najafi Asadolahi, Assistant Professor, Santa Clara University, Leavey School of Business, 500 El Camino Real. Lucas Hall, Santa Clara, CA, 95053, United States, snajafi@scu.edu, Nishant Mishra, Sajjad Najafi, Andy A.Tsay We consider a firm offering two versions of a single product: a basic version for free and a premium version at a positive price. Consumers are heterogeneous and loss-averse with, stochastic and endogenous reference points. Each consumer first uses the free version, which enables him to understand the value of both the free and premium versions; he then decides whether to buy the premium version. The firm maximizes its expected profits by setting the best price for the premium. We show that after using the free version, the consumer is less likely to buy the premium version if the realized free version’s value is unexpectedly high but more likely to buy if the realized free version’s value is unexpectedly low. 350A Managing Incentives in Collaborative New Product Development Invited: New Product Development Invited Session Chair: Timofey Shalpegin, University of Auckland, Auckland, 1010, New Zealand, t.shalpegin@auckland.ac.nz 1 - Incentivizing R&D for Neglected Diseases Rongrong Luo, SUTD, SIngapore, Singapore, rongrong_luo@mymail.sutd.edu.sg Many developing countries grapple with neglected diseases due to a lack of effective/safe biopharmaceutical treatments. The world health organization calls on non-government organizations (NGOs), and biopharmaceuticals to act in concert to eliminate neglected diseases. We model the interaction between an NGO, an Innovator and a Marketer. First, we characterize the conditions for a disease to be neglected in the absence of incentives. Subsequently, we evaluate the effectiveness of different incentive mechanisms in inducing collaboration to bring products targeting neglected diseases to market. 2 - Rights of First Negotiation and Rights of First Refusal in New Product Development Partnerships Shantanu Bhattacharya, Singapore Management University, Lee Kong Chian School of Business, 50 Stamford Road, Singapore, 178899, Singapore, shantanub@smu.edu.sg, Guangyu Wan, Sameer Hasija, Niyazi Taneri This paper considers a new product partnership between a pharmaceutical firm (Pharma) and a biotechnology firm (Biotech). The partnership involves collaboration in the early phase of the R&D process, when uncertainty about valuation makes designing a licensing contract challenging. In practice, right of first negotiation (ROFN) and right of first refusal (ROFR) contracts are used to manage future uncertainty that can be resolved over time. We build a principal- agent model where the Biotech as the principal designs a contract including a possible upfront fixed fee and a ROFN or ROFR clause for the future licensing of the drug candidate, and identify the situations where each clause is appropriate. 3 - Effect of Incentive Design on of Location Decision of Product Development of Teams To successfully compete on an international scale, multinationals increasingly turn towards globally dispersed product development teams, both to draw on a diverse set of expertise and to access more accurate local knowledge. However, dispersion also creates additional challenges for collaboration, which can have negative effects on project performance. In this study, we compare dispersed and co-located teams and address the question how to incentivise them. We show that despite the current trend among firms, geographically dispersed teams are not always the optimal structure, especially when collaboration is in the form of information sharing. SB25 Sara Rezaee Vessal, HEC Paris, Paris, 91570, France, sara.rezaee-vessal@hec.edu, Svenja C. Sommer

4 - Outsourcing Component Development for New Products to External Suppliers Timofey Shalpegin, University of Auckland, ISOM, Business School, The University of Auckland, Auckland, 1010, New Zealand, t.shalpegin@auckland.ac.nz New products sometimes fail due to failure of their key components developed by external suppliers. We find that some common contracts between manufacturer and suppliers cannot provide sufficient incentives for the suppliers to ensure high (first-best) component quality. We propose a contract that creates right incentives for the suppliers. 5 - Risk Taking in Organisations: An Evolutionary Approach Antoine Feylessoufi, University of Cambridge, Christ’s College, Cambridge, CB2 3BU, United Kingdom, af545@cam.ac.uk, Daniel Ralph, Stylianos Kavadias Through social interactions, the behaviour of an individual is affected by the population but also influences the other members within that population. In a new approach to capture this effect on risk taking in organisations, we incorporate notions of prospect theory into an evolutionary game theoretic model widely used in biological ecosystems. We find that unexpected and extreme levels of risk taking behaviour (or lack thereof) can emerge in organisations through this mechanism. Moreover, it may drive all employees to risk taking behaviour even when this is discouraged through a firm’s reward system. We describe how some successful ventures and collapses can be explained by this model. 350B Stochastic Approaches: Methods and Application Invited: Data Envelopment Analysis Invited Session Chair: Andrew L. Johnson, Texas A&M University, College Station, TX, 77843-3131, United States, ajohnson@tamu.edu 1 - Markup Size, Export Tax Rebates, and Resource Misallocation Mahmut Yasar, myasar@uta.edu The paper provides an analysis of the allocation effects of the export tax rebate policy. We first add a tax rebate to the Melitz and Ottaviano (2008) model and examine the impact of this policy on firms’ markup size and resource allocation. We then use customs transactions, tax administration, and firm-level data to measure the effect of variation in export tax rebates. We find that an increase in tax rebates shifts production to eligible firms and that “more fully” refunding export VATs increases allocative efficiency. 2 - Models with Ratio Measures & Potential Ratio Inefficiency Ole Bent Olesen, University of Southern Denmark, Odense, Denmark, ole@sam.sdu.dk, N.C. Petersen, Victor Podinovski In a recent, the authors developed a methodology that allows the incorporation of ratio inputs and outputs in the variable and constant returns-to-scale DEA models. Practical evaluation of strong and weak efficiency of decision making units (DMUs) in such models generally goes beyond the application of standard linear programming techniques. In this paper we discuss how the DEA models with ratio measures can be solved and introduce a new type of potential ratio (PR) inefficiency. It characterizes DMUs that are strongly efficient in the model of technology with ratio measures but become inefficient if the volume data used to calculate ratio measures become available. 3 - Estimating Firm Specific Efficiency in Stochastic Frontier Models John Ruggiero, University of Dayton, Dayton, OH, United States, jruggiero1@udayton.edu Production frontiers are estimated using either maximum likelihood or the method of moments when errors are composed of statistical noise and inefficiency. Firm level efficiency has been estimated using a conditional expectation of inefficiency given observed overall error. In this paper we discuss the limitations of this measure and provide an alternative estimator. 4 - Shape Constrained Estimation of Production Functions Andrew L. Johnson, Houston, TX, 77030, United States, ajohnson@tamu.edu Nonparametric estimation methods avoid functional form misspecification. However, the flexibility of nonparametric methods often cause difficulties in interpreting production function estimates. However, microeconomic theory provides additional structure for modeling a production or cost function which can be interpreted as shape constraints. Several nonparametric shape constrained estimators have been proposed that combine the advantage of avoiding functional misspecification with improving the interpretability of estimation results. We will review the recent work by our research team in this area. SB26

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