Informs 2015

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INFORMS Philadelphia – 2015
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2 - Pay-as-You-go Business Models for Energy Technology
Innovations in Developing Economies
Jose Guajardo, University of California Berkeley, 545 Student
Services Bldg #1900, Berkeley, CA, 94720-1900,
United States of America,
Pay-As-You-Go business models have become widespread for the diffusion of
energy technology innovations in developing economies, yet not much is known
about this recent phenomenon. In this research, we analyze central aspects of
consumer behavior and contract design in these novel markets.
3 - Selling Freemium Products to Loss Averse Consumers
Sami Najafi-Asadolahi, Santa Clara University, 500 El Camino
Real, Santa Clara, CA, United States of America, ,
Nishant Mishra, Andy Tsay
We consider a firm selling two versions of a single product, a freemium for free
and a premium at a regular price, to consumers who are loss-averse. Each
consumer first uses the freemium, and after using it, decides whether to buy the
premium. We find that when consumers become slightly dissatisfied from the
freemuim’s valuation they, counter-intuitively, become more willing to purchase
the premium, thereby increasing the firm’s revenue.
4 - Product Recommendations via Geometric-based Adaptive Choice
Conjoint Analysis
Denis Saure, University of Chile, Republica 701, Santiago, Chile
Juan Pablo Vielma
Aiming to obtain individualized estimates of consumer preferences in the context
of product recommendations, we study the construction of adaptive conjoint
choice designs under a Bayesian framework. By adopting a geometric
interpretation of the problem, we construct near optimal designs when the
number of questions is small, and also give a precise interpretation of efficiency
criteria and design methods used in extant research, which we show result in
suboptimal designs.
MD45
45-Room 103C, CC
Revenue Management and Learning II
Sponsor: Revenue Management and Pricing
Sponsored Session
Chair: John Birge, Professor, University of Chicago Booth School of
Business, 5807 S Woodlawn Ave, Chicago, IL, 60637, United States of
America,
1 - Learning to Compete Against Dynamic Pricing Strategies
Matthew Stern, University of Chicago - Booth School of Business,
5807 S Woodlawn Ave, Chicago, IL, 60637, United States of
America, , John Birge
We examine the impact of competition on the design and implementation of
dynamic pricing strategies. Observing posted prices in each period, as well as their
own private demand realizations, firms compete for revenues while learning the
parameters of their underlying demand curves. We show that when firms remain
willfully ignorant of their business environment, they can sustain collusive prices.
We conclude that incomplete learning is a desired outcome of competing dynamic
pricing strategies.
2 - Dynamic Pricing and Learning in Spread Betting
Adam Schultz, PhD Student, University of Chicago Booth School
of Business, 5807 S Woodlawn Ave., Chicago, IL, 60637, United
States of America, , John Birge,
Bora Keskin
We develop a model in which a sportsbook dynamically prices the point spread
for a sporting event. In our model, bettors maximize their expected profits by
timing their bets, while the sportsbook follows an easily implementable policy to
update the point spread. To analyze the decisions of the betting market, we
introduce a mean-field approximation. Using data from online sportsbooks, we
reveal insights about the betting market.
3 - Rental System Revenue Management Problem with Totally
Unimodular Constraints
Ali Cem Randa, University of Chicago Booth School of Business,
5807 Woodlawn Ave., Chicago, IL, 60637, United States of
America, John Birge, Baris Ata
We analyze the example of a renter which has finite number of identical units
that can be loaned for durations of days. The renter has to determine its booking
limits for a planning horizon of finite duration which is considerably far in the
future. We assume that all permutations of consecutive days in the planning
horizon define a different product. The capacity constraints formed by these
products are totally unimodular. We solve a multi-stage stochastic program
exploiting this structure.
MD46
46-Room 104A, CC
Equilibrium Models and Pricing of Queues
Sponsor: Manufacturing & Service Oper Mgmt/Service Operations
Sponsored Session
Chair: Philipp Afeche, Associate Professor, University of Toronto, 105
St. George Street, Toronto, ON, M5S3E6, Canada,
1 - An Equilibrium Analysis of a Multiclass Queue with Endogenous
Abandonments
Xiaoshan Peng, The University of Chicago, Booth School of
Business, 5807 S Woodlawn Ave, Chicago, Il, 60637,
United States of America, Baris Ata,
Peter Glynn
This paper studies a multiclass queueing system with endogenous abandonments
where the congestion affects customers’ abandonment behavior and vice versa.
Our model captures this interaction by developing two closely related models: an
abandonment model and a queueing model. Combining the results for the two
models, we show that there exists a unique equilibrium in which the customers’
abandonment time and the virtual waiting time for the various classes are
consistent in the two models.
2 - Observational Learning and Abandonment
John Yao, Columbia University, 3022 Broadway, New York, NY,
10027, United States of America, ,
Costis Maglaras, Assaf Zeevi
Demand models used in service operations often assume that users have accurate
knowledge of the service system parameters needed to make decisions, such as
whether to join a queue. What if instead, users must form estimates of these
system parameters through their own observations or experiences in the system?
I show the effect of observational learning on user behavior and equilibrium
system performance in the context of abandonment in a queueing model.
3 - Strategic Open Routing in Queueing Networks
Andrew Frazelle, Fuqua School of Business, Duke University,
100 Fuqua Drive, Durham, NC, 27708, United States of America,
, Alessandro Arlotto, Yehua Wei
Motivated by self-interested routing, we propose a two-station queueing network
with open routing in which agents require service at both stations and seek to
minimize their individual total system times. Agents have no inherent preference
over the sequence of stations that they visit apart from the impact of this
sequence on their system times. We evaluate system performance and determine
Nash or subgame perfect Nash equilibrium customer routing behavior in three
different overloaded settings.
4 - Pricing and Prioritizing Time-sensitive Customers with
Heterogeneous Demand Rates
Ricky Roet-Green, University of Toronto, 37 Zola Gate,
Thornhill, L4J9A7, ON, Canada, ,
Opher Baron, Philipp Afeche, Joseph Milner
Providers often face time-sensitive customers that differ in their demand rates.
Examples include amusement parks, museums, and ski resorts. However, the
pricing literature for queues typically assumes unit demand for all customers. We
study a revenue-maximizing provider that designs a price/lead-time menu for
customers with heterogeneous demand rates and private information on their
preferences. We show under what conditions it is optimal to prioritize customers
based on their demand rates and transaction values, even if all are equally time-
sensitive.
MD45