2016 INFORMS Annual Meeting Program

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INFORMS Nashville – 2016
410
3 - Operations Decisions With Target Based Incentives
Andrea Hupman Cadenbach, University of Missouri - St. Louis,
Supply chains represent complex systems in which numerous performance
measures are used and in which responses to incentive structures can change
system performance. One type of incentive is a fixed target in which performance
above a threshold is rewarded. The literature shows that high targets tend to
induce risk taking while low targets tend to induce the selection of safer decision
alternatives, but this talk examines the effects of setting targets on different types
of performance measures in addition to the magnitude of the target.
4 - Team Incentives In Multi-level Principal Agent Problems
Aditya Umesh Kulkarni, PhD Candidate, Virginia Tech, 11700
Cardinal Court, Apt E, Blacksburg, VA, 24060, United States,
Christian Wernz
Existing literature on relational contracts typically does not account for the
interdependency of stochastic performance outcomes across multiple levels of
superior-subordinate interactions in organizations. We use multiscale decision
theory to derive relational, that is, trust-based, contracts for teams while
accounting for the aforementioned influences. We derive the optimal job design
for employees, which is a function of rewards and performance influence. Our
results extend agency theory by accounting for cascading and team-based
incentives in organizations.
WB44
208B-MCC
Behavioral Decision Analysis
Sponsored: Decision Analysis
Sponsored Session
Chair: Matthias Seifert, IE Business School, Maria de Molina 12, 5,
Madrid, Spain,
1 - Exploring The Consistency Of Higher-order Risk Preferences
Timo Heinrich, IN-EAST School, Universität Duisburg-Essen,
Duisburg, Germany, ,
Alexander Haering, Thomas Mayrhofer
We measure higher-order risk preferences and explore their consistency across
orders. We analyze the role of (i) country differences between China, Germany,
and the US, (ii) differences in stake size, and (iii) differences through displaying
reduced rather than compound lotteries. We replicate the finding of mixed risk-
averse and mixed risk-loving behavior by Deck and Schlesinger (2014) in the US
and identify a similar pattern in Germany and in China. Moreover, we observe an
increase in risk aversion when stakes are increased tenfold. Finally, in reduced
lotteries there is only weak evidence for prudence and no evidence for
temperance.
2 - Regime Shift Detection In The Domain Of Losses
Matthias Seifert, Associate Professor of Decision Sciences, IE
Business School, Madrid, 28006, Spain, ,
Sara Farooqi
We extend Massey and Wu’s (2005) work on regime shift detection by studying
the influence of system neglect on trading behavior in experimental markets. We
show in a series of laboratory experiments how patterns of probabilistic over- and
underreaction translate into investment decisions under risk and use Prospect
Theory to explain systematic differences between buyers/sellers as well as
gains/loss domains.
4 - Risky Choice Following Near Miss Events In Sequential Tasks
Under Ambiguity
Florian Federspiel, IE Business School, Madrid, Spain,
, Matthias Seifert
Studies have shown that near miss events can lead to inconsistent risk
perceptions. Yet near misses are often clouded in ambiguity, allowing for hubris
and misattribution of what caused success or prevented failure. We provide an
analytical model of near misses and investigate the experience of such an event
on risk taking in a real options task. We show that increases in risk taking
following a near miss occur mainly under ambiguity. We further find that this
effect depends on the decision maker’s prior expectation. Only those with an
expectation of failure fall prey to the near miss bias.
3 - The Reasonability Of Behavioral Assumptions Made In Complex
Systems Models
Allison C Reilly, University of Michigan, Ann Arbor, MI,
United States, , Seth Guikema
Improved capture of human behavior in complex systems modeling has
significantly advanced in recent decades and proffers a more cohesive approach to
understanding how these systems may operate, fail, or evolve. The behavioral
assumptions have significant implications on the insights derived from these
models, though these implications are rarely explored. In this work, we address
frequently confused decision science terminology used in systems models - from
rationality to strategy - the reasonability of the behavioral assumptions, and their
implications via case studies.
WB45
209A-MCC
Simulation for Performance of
Non-Stationary Queues
Sponsored: Simulation
Sponsored Session
Chair: John Shortle, George Mason University, Fairfax, VA,
United States,
1 - A Performance Algorithm For Periodic Queues
Ni Ma, Columbia University, , Ward Whitt
An efficient algorithm is developed to calculate the steady-state distribution of
virtual waiting time in a general Gt/G/1 queue with a periodic arrival-rate
function. We first approximate the Gt/G/1 model by an associated GIt/GI/1 model
based on a recent heavy-traffic functional central limit theorem, and then
compute the exact tail probabilities of the virtual wait by exploiting a modification
of the classic exponential change of measure. That algorithm is then applied to
compute related performance measures, such as the mean and variance of the
virtual wait.
2 - Fourier Trajectory Analysis For Identifying System Congestion
Russell R Barton, Pennsylvania State University, 210 Business
Building, University Park, PA, 16802, United States,
Xinyi Wu
We examine the use of the Fourier transform to discriminate dynamic behavior
differences between congested and uncongested systems. Simulation continuous
time statistic ‘trajectories’ are converted to time series for Fourier analysis. We use
this knowledge to explore statistical process control methods to monitor
nonstationary systems for transition from uncongested to congested state and vice
versa.
3 - Staffing To Stabilize Blocking In Loss Models With Time-varying
Arrival Rates
Jingtong Zhao, Columbia University, ,
Ward Whitt
It is not possible to find a time-varying staffing policy to stabilize blocking
probabilities in a multiserver loss model with a time-varying arrival rate to the
same extent as in corresponding delay models, because the blocking probabilities
necessarily change dramatically after each staffing change, but nevertheless a
variant of the established modified-offered-load staffing algorithm performs well
if we randomize appropriately.
4 - Effects Of Arrival Variability on Delays at Congested Airports
John Shortle, George Mason University,
More precise spacing of flight arrivals into airports has the potential to increase
capacity and reduce delays. However, even with precise spacing, delays can also
result from the variability in the mean arrival rates throughout the day (i.e., the
non-stationary nature of the arrival process) due to banking of flights at hub
airports. This talk presents a queueing simulation of an airport and investigates
the relative impact of reducing the uncertainty in the spacing of arrivals versus
reducing the schedule variability. Under conditions of high utilization, reducing
the arrival variability has limited impact on delays unless also accompanied by
reduced schedule variability.
WB46
209B-MCC
Networks and Games in Operations
Sponsored: Revenue Management & Pricing
Sponsored Session
Chair: Kimon Drakopoulos, Marshall School of Business,
3670 Trousdale Pkwy, Los Angeles, CA, 90089, United States,
1 - Information Obfuscation In Strategic Experimentation
Kimon Drakopoulos, Massachusetts Institute of Technology,
In our work we model a continuous time strategic experimentation problem
against an informed opponent (incumbent) who can take actions to obfuscate
learning. We show that the unique (weak) perfect Bayesian equilibrium of this
dynamic game takes the form of the ”delayed war of attrition” where over a range
of beliefs of the experimenter, both players use mixed strategies — for the
entrant, to determine when to stop experimenting and for the incumbent, to
determine when to stop obfuscating. The uniqueness of the outcome gives rise to
many questions such as market design in order to maximize fairness for the
entrants, or consumer surplus.
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