2015 Informs Annual Meeting

SC45

INFORMS Philadelphia – 2015

SC45 45-Room 103C, CC Revenue Management in Online Advertising Sponsor: Revenue Management and Pricing Sponsored Session Chair: Hamid Nazerzadeh, University of Southern California, Bridge Memorial Hall, 3670 Trousdale Parkway, Los Angeles, CA, 90089, United States of America, hamidnz@marshall.usc.edu 1 - Recent Results in Internet Advertising Allocations Nitish Korula, Research Scientist, Google, New York, nitish@google.com, Morteza Zadimoghaddam, Hossein Esfandiari, Vahab Mirrokni Advertising provides the economic foundation of the Internet. Internet advertising applications motivate a host of optimization problems with unique challenges and as such, there is a large body of literature on optimizing various aspects of ad allocations. I will survey some of the recent work in this field, with special focus on two problems: Designing algorithms that work well in both adversarial and stochastic settings, and algorithms that balance multiple system objectives. 2 - Multi-stage Intermediation in Online Internet Advertising Ozan Candogan, University of Chicago, Booth School of Business, Chicago, United States of America, ozan.candogan@chicagobooth.edu, Santiago Balseiro, Huseyin Gurkan We consider a setting where an advertiser tries to acquire impressions from an ad exchange, through a chain of intermediaries. We characterize equilibrium profits of intermediaries as a function of their position in the chain. We consider three value distributions for the advertiser: (i) exponential, (ii) Pareto, (iii) uniform. We establish that in (i) all intermediaries have the same profit, whereas in (ii) and (iii) respectively downstream/upstream intermediaries have higher profits. 3 - Adverse Selection and Auction Design for Internet Display Advertising Nick Arnosti, Stanford University, Stanford, CA, United States of America, narnosti@stanford.edu, Marissa Beck, Paul Milgrom We model an online display advertising environment with brand advertisers and better-informed performance advertisers. We consider a mechanism which assigns the item to the highest bidder only when the ratio of the highest bid to the second highest bid is sufficiently large. For fat-tailed match-value distributions, this mechanism captures most of the gains from good matching and improves match values substantially compared to the common practice of setting aside impressions in advance. 4 - Deals or No Deals: Contract Design for Selling Online Advertising Hamid Nazerzadeh, University of Southern California, Bridge Memorial Hall, 3670 Trousdale Parkway, Los Angeles, CA, 90089, United States of America, hamidnz@marshall.usc.edu, Vahab Mirrokni I will discuss some of the challenges in maximizing revenue of online advertising market. I will explain preferred deals: a new generation of contracts for selling display advertising that allow publishers to offer their inventory to “first look” buyers before the inventory is made available to other buyers (advertiser) in the general auction. I present algorithms for deal recommendation and show that deals can obtain significantly higher revenue than auctions. SC46 46-Room 104A, CC Managing Professional Services Sponsor: Manufacturing & Service Oper Mgmt/Service Operations Sponsored Session Chair: Morvarid Rahmani, Assistant Professor, Georgia Tech, morvarid.rahmani@scheller.gatech.edu 1 - The Design of Multi-stage Service Processes Ioannis Bellos, Assistant Professor, George Mason University- ISOM Area, Enterprise Hall, 4400 University Drive, MS 5F4, Fairfax, VA, 22030, United States of America, ibellos@gmu.edu, Stelios Kavadias Motivated by the practices of design firms we build on the customer journey concept, which describes services as multi-stage processes. We develop a parsimonious model and we analyze the provider’s decisions on the amount of effort she exerts at each stage of the process and the overall price she charges.

2 - Skill and Capacity Management in Large-scale Service Marketplaces Eren Cil, University of Oregon, 1585 East 13th Avenue, Eugene, OR, United States of America, erencil@uoregon.edu, Achal Bassamboo, Gad Allon We characterize the optimal skill screening mechanism of a firm moderating a large-scale service marketplace where the ability of a service provider to cater customers, who can be of two classes, varies. We show that when the values that a service provider generates for each customer class are independent, the firm may need to refuse some of the service providers via its screening mechanism whereas this is never optimal when these values are perfectly correlated. 3 - Pricing Diagnosis-based Services when Customers Exhibit Sunk Cost Bias Guangwen Kong, University of Minnesota, 111 Church Street SE, Minneapolis, MN, 55414, United States of America, gkong@umn.edu, Sampath Rajagopalan, Chunyang Tong We build a model to shed light on how sunk-cost effect influences the SP’s choice of pricing scheme. We provide an analysis on how the sunk cost effect influences a monopolistic SP’s choice of pricing scheme, and then examine the impact of sunk-cost effects in a competitive setting. Further, we consider customers with differing levels of sophistication (being naïve or sophisticated) and investigate how a mixture of customer types further impacts the choice of pricing scheme. 4 - Balancing Experience in Fluid Teams: Team Familiarity, Partner Diversity and Performance Sarang Deo, Assistant Professor, Indian School of Business Hyderabad, ISB Hyderabad, Gachibowli, Hyderabad, TS, 500032, India, sarang_deo@isb.edu, Kamalini Ramdas, Zeynep Aksin, Jonas Jonasson We use data from London Ambulance Service to study the impact of partner diversity of new paramedics on their operational performance. We find that the greater diversity in prior partners directly improves performance for an unstandardized process. For a more standardized process, this effect is moderated by a new recruit’s total experience. We explore the implications of our results for team formation strategies by balancing the benefits of partner diversity with those of team familiarity. SC47 47-Room 104B, CC Incentives and Investment in Renewable Energy and Energy Efficiency Sponsor: Manufacturing & Service Oper Mgmt/Sustainable Operations Sponsored Session Chair: Owen Wu, Indiana University, 1309 E. 10th Street, Bloomington, IN, 47405, United States of America, owenwu@indiana.edu 1 - Impact of Electricity Pricing Policy on Renewable Energy Investments and Carbon Emissions Safak Yucel, PhD Candidate, Duke University, 100 Fuqua Drive, We investigate the impact of electricity pricing policy (i.e., flat pricing versus peak pricing) on renewable energy investments and carbon emissions. We find that flat pricing generally leads to a higher investment level and lower carbon emissions. Furthermore, our results indicate that the pricing policy that leads to higher investments may not reduce carbon emissions. We also study the effects of subsidy policies on the investments and emissions. 2 - Robustness of Renewable Energy Support Schemes Stefan Spinler, Professor, WHU-Otto Beisheim School of Renewable portfolio standards (RPS), feed-in-tariffs (FIT), and market premia (MP) are widely used policy instruments to promote investments in renewable energy sources (RES). Regulators continuously evaluate these instruments along the main electricity policy objectives of affordability, reliability, and sustainability. We assess these policies using a long-term dynamic capacity investment model and compare their robustness in the light of uncertain RES feed-in and ambiguous future regulation. Durham, NC, 27708, United States of America, safak.yucel@duke.edu, Gurhan Kok, Kevin Shang Management, Burgplatz 2, Vallendar, 56179, Germany, stefan.spinler@whu.edu, Ingmar Ritzenhofen, John Birge

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