Informs Annual Meeting 2017

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INFORMS Houston – 2017

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under FIFO always increase, with SPT, they may be non-monotone, or, even decrease in quality (duration). 2 - Choosing to be Strategic: Implications of the Endogenous Adoption of Forward-looking Purchasing Behavior on Multiperiod Pricing Arian Aflaki, Duke University, Durham, NC, 27708, United States, arian.aflaki@duke.edu, Pnina Feldman, Robert Swinney We study whether consumers benefit from forward-looking behavior when they purchase from a firm that sets prices over multiple periods. We show that consumers do not necessarily benefit from strategic behavior, and therefore may choose to remain myopic if given the option. We then develop a model in which consumers choose to become strategic by exerting costly effort, and show that it is possible to increase firm profit, consumer, and social welfare simultaneously by increasing this cost. In contrast, strategies such as price commitment can reduce the cost of strategic behavior and harm all parties. 3 - Personalized Advertising and Learning Through High-dimensional Data with Limited Samples Mingcheng Wei, University at Buffalo, 326C Jacobs Management Center, Buffalo, NY, 14260, United States, mcwei@buffalo.edu, Xue Wang, Tao Yao In this paper, we propose a Minimax Concave Penalized Multi-Armed Bandit algorithm for a decision-maker facing high-dimensional data with latent sparse structure in an online learning and decision-making process. This algorithm performs favorably compared to other algorithms, especially when there is a high level of data sparsity or when the sample size is not too large. 350A Innovation/Entrepreneurship Contributed Session Chair: Hongzhi Chen, Purdue University, West Lafayette, IN, United States, hzchen@purdue.edu 1 - Entrepreneurial Positive Thinking About the Future Predicts Unethical Behaviors Jacob Do-Hyung Cha, Seoul National University, Room 313, 58-dong, Seoul National University, Gwanak-gu, 150-742, Korea, Republic of, research.dohyung@gmail.com, Hye-Jin Cho Psychologists argue that positive thinking about the future predict low performance due to (1) low efforts and (2) favor pro over con information. I propose that entrepreneurs’ positive thinking about the future is positively related to his/her earnings manipulation behavior. Low effort may lead to low performance and this poor outcome may increase the pressures to compensate such low performance by manipulation of company earnings. Favoring positive information may lead to (morally) risky decisions, that is, manipulated earnings too. I use content analysis method to measure positive thinking about the future by utilizing corporate documents. 2 - The Strategic use of Opposition for European Patent Xia Liu, Zhejiang University, Hangzhou, 310000, Hangzhou, 310000, China, liuxia0510@gmail.com This paper analyses the relationship between technology ownership fragmentation and the opposition filing in the European Patent Office. I develop a two stages game for technology access bargaining. Opposition is more attractive under two conditions: when the ownership to external technologies is concentrated, and profit dissipation is over the licensing revenue for the potential licensee; when the ownership to external technologies is widely fragmented, yet the transaction cost is too high for the entrance. To empirically test this hypothesis, I use a data set that covers patent opposition cases during the period 1985-2005. Regression results confirma U-shape relationship. 3 - Why Innovating Firms Trademark (or Not): Identity Protection and the Maintenance of First Mover Advantage Xiaoshu Bei, Duke University, 2514 Preston Ave, Durham, NC, 27705, United States, xiaoshu.bei@duke.edu In this paper I study a special role of trademarks to sustain the innovator’s first mover advantage. Even though both innovators and imitators file for trademarks, innovators who anticipate competition have significantly higher propensity to trademark. There is an inverted U relationship between the overall incentive to trademark and the level of competition. When competition is high, imitators decrease in their incentive to trademark, but innovators still have high incentive because trademarks help sustain the first mover advantage. Other factors that condition this role of trademarks include level of information asymmetry and size. WA25

342E Revenue Management, Pricing in Airline and Hotel Industry Sponsored: Revenue Management & Pricing Sponsored Session

Chair: Ravi Kumar, rkumar04@pros.com 1 - Pricing Advance Purchase Products

Matthew Maxwell, SAS.Institute, Inc., 500 Sas Campus Drive, Cary, NC, 27513, United States, matt.maxwell@sas.com, Jennie Hu Advance purchase products are characterized by non-refundable discounted products that are fully paid at the time of booking. Such products give providers increased revenue opportunities and protection against late cancellations; however, if priced incorrectly, these products may reduce overall revenue due to cannibalization of the full fare refundable product. We develop a closed-form model to predict the amount of purchases for each product given prices for both products. We verify that this model satisfies properties of rational behavior from customers and show how model parameters may be estimated and how to calculate optimal prices. 2 - Explicitly Incorporating Competition and Customer Choice in Dynamic Pricing Siddharth Prakash Singh, Carnegie Mellon University, Tepper School of Business, 5000 Fobes Avenue, Pittsburgh, PA, 15213, United States, sps1@andrew.cmu.edu, Darius Walczak We analyze a two-competitor dynamic pricing game introduced by Dudey (1992) and subsequently considered by Martinez-de-Albeniz and Talluri (2011). We allow more general distributions of customer valuation and expand the game to include customers who are loyal to each airline, in addition to customers who seek the lowest price in the market. This is particularly relevant in the airline industry where demand may be price-sensitive but dedicated to a particular carrier. We establish the non-existence of subgame-perfect pure strategy Nash equilibria in a market with loyal customers. However, when all customers are flexible, we are able to construct a subgame-perfect pure strategy Nash equilibrium. 3 - Travel Network Optimization Parallelization Techniques under Dependencies Between Daily Itineraries Evan Davidson, PhD, PROS.Inc, 101 Montgomery St, Suite 400, San Francisco, CA, 94104, United States, edavidson@pros.com Under many travel network optimization methodologies, often seen in the airline industry, pricing and revenue management problems are solved as separable by day, each day being treated independently. If this daily independence assumption is no longer applicable, here focusing on the passenger bus industry, other techniques must be used to make these large travel network problems tractable. Here we explore a heuristic to parallelize on overlapping sets of days and utilizing the results from only the middle days of each set. We explore the implications on feasibility, optimality, and performance under this parallelization heuristic. 4 - A Dynamic Pricing Model with Capacity Sharing for Airline Revenue Management Ang Li, PROS, Inc., 3100 Main Street, Suite #900, Houston, TX, 77002, United States, ali@pros.com, Ravi Kumar, Darius Walczak We consider a Revenue Management setting for airlines where limited capacity from a business compartment can be shared with an economy compartment on each flight. We develop several heuristic dynamic pricing policies for this problem based on a deterministic model and network decomposition related ideas and evaluate their performance via simulation. 342F Consumer-Driven Innovative Pricing Sponsored: Revenue Management & Pricing Sponsored Session Chair: Mingcheng Wei, University at Buffalo, Buffalo, NY, 14260, United States, mcwei@buffalo.edu 1 - Pricing and Design of Discretionary Service Lines Laurens G.Debo, Dartmouth College, 100 Tuck Hall, Hanover, NH, 03755, United States, laurens.g.debo@tuck.dartmouth.edu, Cuihong Li Discretionary services as services whose quality increases in the service duration such as e.g. personal care. In a congested environment, however, longer service time also increases the congestion. We discuss the optimal structure and pricing of a menu of services of different duration— a service line— when customers have heterogeneous quality sensitivity and are delay sensitive. We study both First In First Out (FIFO) and Shortest Processing Time disciplines (SPT). While prices WA24

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