2015 Informs Annual Meeting

TC29

INFORMS Philadelphia – 2015

TC28 28-Room 405, Marriott New Frontiers in Market Design Cluster: Auctions Invited Session Chair: Tunay Tunca, ttunca@rhsmith.umd.edu 1 - Integrating Market Makers, Limit Orders, and Continuous Trade in Prediction Markets Sebastien Lahaie, Microsoft Research, New York, NY, United States of America, sebastien.lahaie@gmail.com, Hoda Heidari, David Pennock, Jenn Wortman Vaughan We provide an algorithm that combines market makers and limit orders in a prediction market with continuous trade. We define the notion of an approximate trading path, a path in security space along which orders execute at their limit prices to within a fixed tolerance. We show that a trading path with efficient endpoint exists under supermodularity, but not in general. We develop an algorithm for the general case, and evaluate it using real combinatorial predictions over election outcomes. 2 - Multi-dimensional Virtual Values and Second-degree Price Discrimination Nima Haghpanah, MIT, Boston, MA, United States of America, nima.haghpanah@gmail.com, Jason Hartline We consider a problem of selling a product with multiple quality levels and derive conditions that imply only selling highest quality is optimal. With multi- dimensional preferences, virtual values from integration by parts on arbitrary paths may not be incentive compatible. To resolve this issue, we impose additional conditions that are satisfied only by a unique choice of paths, and identify distributions that ensure the resulting virtual surplus is indeed point-wise optimized by the mechanism. 3 - Optimal Pricing for Two-sided Platforms with Externalities Levi Devalve, Duke University, Durham, NC, United States of America, levi.devalve@duke.edu, Sasa Pekec We consider pricing strategies of two-sided platforms serving consumers and marketers. We show that competing platforms can achieve optimal profit through “subscription-only” pricing. We identify settings in which competition increases both consumer prices and advertising volumes. We also derive the platform’s optimal price menu under incomplete information about the consumer’s disutility for advertising. We characterize when the optimal menu includes free use and no ad options. 4 - The Role of a Market Maker in Networked Cournot Competition We study the role of a market maker (or market operator) in a transmission constrained electricity market. We model the market as a one-shot networked Cournot competition. We analyze the class of market maker objective functions given by linear combinations of social welfare, residual social welfare, and consumer surplus. We show that there exist cost functions for which the maximum possible social welfare at equilibrium is not attained when the market maker chooses to maximize social welfare. TC29 29-Room 406, Marriott Joint Session Analytics/HAS: Analytics Innovations in Healthcare and Medicine Desmond Cai, California Institute of Technology, 1200 E California Blvd, Pasadena, CA, 91125, wccai@caltech.edu, Subhonmesh Bose, Adam Wierman

3 - Online Vs. Traditional Education: A Competitive Framework. Vashkar Ghosh, University of Florida, Department of ISOM, Gainesville, FL, 32611, United States of America, vashkar.ghosh@warrington.ufl.edu, Gulver Karamemis, Asoo Vakharia Innovation and technological advancement are eliminating a lot of constraints (eg. physical presence) bringing sweeping changes to higher education. We examine how technology in higher education is likely to develop and what its impacts will be on existing institutions. We examine a university’s incentive to offer online programs in addition to the traditional program in a competitive environment. We consider two different games: the simultaneous and the sequential leader/follower location game. 4 - The Diffusion of Product Generation of Auto Industry Gary Chao, Kutztown University, P.O. Box 730, Kutztown, PA, 18031, United States of America, chao@kutztown.edu, Maxwell Hsu Instead of a whole new model, every a few years, automakers introduce a new generation of their existing model to continue their success of old models or to correct the mistakes in the old models. Based on the Bass diffusion theory, we would like to study whether the different sales behavior among models and generations in US market.

TC27 27-Room 404, Marriott

Evolutionary Bilevel Optimization Sponsor: Multiple Criteria Decision Making Sponsored Session

Chair: Kalyanmoy Deb, Koenig Endowed Chair Professor, Michigan State University, 428 S. Shaw Lane, 2120 EB, East Lansing, MI, 48864, United States of America, kdeb@egr.msu.edu 1 - Bilevel Decision Making and Optimization Pekka Malo, Assistant Professor, Aalto University School of

Business, Runeberginkatu 22-24, Helsinki, Finland, pekka.malo@aalto.fi, Ankur Sinha, Kalyanmoy Deb, Jyrki Wallenius, Pekka Korhonen

Bilevel decision making and optimization problems are commonly framed as leader-follower problems, where the leader desires to optimize his own decision while taking the decisions of the follower into account. In such cases, the Pareto- optimal frontier of the leader is influenced by the decision structure of the follower facing multiple objectives. In this paper, we analyze this effect by modeling the lower level decision maker using value functions. 2 - Handling Uncertainties in Decision Variables for Bilevel Optimization Problems Kalyanmoy Deb, Koenig Endowed Chair Professor, Michigan State University, 428 S. Shaw Lane, 2120 EB, East Lansing, MI, 48864, United States of America, kdeb@egr.msu.edu, Zhichao Lu Bilevel problems involve two optimization problems in hierarchy and are challenging problems often found in practice. In this talk, we present evolutionary optimization algorithms and results on test and practical bilevel problems with uncertainties in decision variables for finding robust and reliable solutions. Uncertainties are considered for both lower and upper level variables and problems with and without constraints. 3 - Expected Frontiers: Incorporating Weather Uncertainty into an Integrated Bilevel Optimization Moriah Bostian, Assistant Professor, Lewis & Clark College, Department of Economics, 0615 SW Palatine Hill Rd, Portland, OR, 97219, United States of America, mbbostian@lclark.edu, Gerald Whittaker, Bradley Barnhart, Rolf Fare, Shawna Grosskopf Weather is a main driver of agricultural nutrient fate and transport in the environment. We use bilevel optimization and a time-series bootstrap to evaluate a water pollution policy subject to a distribution of weather outcomes. Our results show that the deterministic Pareto frontier is sensitive to climate variation. Some policy configurations that appear equally effective in a deterministic model setup are strongly differentiated when weather uncertainty is included in the policy evaluation.

Sponsor: Analytics Sponsored Session

Chair: Issac Shams, Postdoctoral Research Fellow, University of Michigan, 1205 Beal Ave, Ann Arbor, United States of America, issacsh@umich.edu 1 - Improving Societal Outcomes in the Organ Donation Value Chain Priyank Arora, Georgia Institute of Technology, 800 W Peachtree

St. NW, Atlanta, GA, 30308, United States of America, priyank.arora@scheller.gatech.edu, Ravi Subramanian

We examine a unique principal-agent problem in the cadaver organ donation value chain (ODVC) where the principal in our case is a social planner that has an overall quality-adjusted-life-year improvement objective. The agents include a non-profit organ procurement organization with a volume-of-care objective and a for-profit hospital (trauma center).

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