Managing Congestion in Matching Markets

2021 ◽  
Author(s):  
Nick Arnosti ◽  
Ramesh Johari ◽  
Yash Kanoria
Keyword(s):  
Problem Definition ◽  
Theoretic Model ◽  
Matching Markets ◽  
Contact Potential ◽  
Managerial Implications ◽  
The Commons ◽  
Game Theoretic ◽  
Face Search ◽  
Uniqueness Of Equilibrium ◽  
Never Screened

Problem definition: Participants in matching markets face search and screening costs when seeking a match. We study how platform design can reduce the effort required to find a suitable partner. Practical/academic relevance: The success of matching platforms requires designs that minimize search effort and facilitate efficient market clearing. Methodology: We study a game-theoretic model in which “applicants” and “employers” pay costs to search and screen. An important feature of our model is that both sides may waste effort: Some applications are never screened, and employers screen applicants who may have already matched. We prove existence and uniqueness of equilibrium and characterize welfare for participants on both sides of the market. Results: We identify that the market operates in one of two regimes: It is either screening-limited or application-limited. In screening-limited markets, employer welfare is low, and some employers choose not to participate. This occurs when application costs are low and there are enough employers that most applicants match, implying that many screened applicants are unavailable. In application-limited markets, applicants face a “tragedy of the commons” and send many applications that are never read. The resulting inefficiency is worst when there is a shortage of employers. We show that simple interventions—such as limiting the number of applications that an individual can send, making it more costly to apply, or setting an appropriate market-wide wage—can significantly improve the welfare of agents on one or both sides of the market. Managerial implications: Our results suggest that platforms cannot focus exclusively on attracting participants and making it easy to contact potential match partners. A good user experience requires that participants not waste effort considering possibilities that are unlikely to be available. The operational interventions we study alleviate congestion by ensuring that potential match partners are likely to be available.

scholarly journals The Role of Problem Specification in Crowdsourcing Contests for Design Problems: A Theoretical and Empirical Analysis

2020 ◽  
Author(s):  
Zhaohui (Zoey) Jiang ◽  
Yan Huang ◽  
Damian R. Beil
Keyword(s):  
Problem Definition ◽  
Empirical Literature ◽  
Theoretic Model ◽  
Real World Data ◽  
Solution Quality ◽  
Design Problems ◽  
Managerial Implications ◽  
Game Theoretic ◽  
Types Of Information

Problem definition: This paper studies the role of seekers’ problem specification in crowdsourcing contests for design problems. Academic/practical relevance: Platforms hosting design contests offer detailed guidance for seekers to specify their problems when launching a contest. Yet problem specification in such crowdsourcing contests is something the theoretical and empirical literature has largely overlooked. We aim to fill this gap by offering an empirically validated model to generate insights for the provision of information at contest launch. Methodology: We develop a game-theoretic model featuring different types of information (categorized as “conceptual objectives” or “execution guidelines”) in problem specifications and assess their impact on design processes and submission qualities. Real-world data are used to empirically test hypotheses and policy recommendations generated from the model, and a quasi-natural experiment provides further empirical validation. Results: We show theoretically and verify empirically that with more conceptual objectives disclosed in the problem specification, the number of participants in a contest eventually decreases; with more execution guidelines in the problem specification, the trial effort provision by each participant increases; and the best solution quality always increases with more execution guidelines but eventually decreases with more conceptual objectives. Managerial implications: To maximize the best solution quality in crowdsourced design problems, seekers should always provide more execution guidelines and only a moderate number of conceptual objectives.

scholarly journals Optimal Duration of Innovation Contests

2020 ◽  
Author(s):  
C. Gizem Korpeoglu ◽  
Ersin Körpeoğlu ◽  
Sıdıka Tunç
Keyword(s):  
Problem Definition ◽  
Theory And Practice ◽  
Theoretic Model ◽  
Output Uncertainty ◽  
Support Tools ◽  
Managerial Implications ◽  
Game Theoretic ◽  
Award Scheme ◽  
Over Time

Problem definition: We study the contest duration and the award scheme of an innovation contest where an organizer elicits solutions to an innovation-related problem from a group of agents. Academic/practical relevance: Our interviews with practitioners at crowdsourcing platforms have revealed that the duration of a contest is an important operational decision. Yet, the theoretical literature has long overlooked this decision. Also, the literature fails to adequately explain why giving multiple unequal awards is so common in crowdsourcing platforms. We aim to fill these gaps between the theory and practice. We generate insights that seem consistent with both practice and empirical evidence. Methodology: We use a game-theoretic model where the organizer decides on the contest duration and the award scheme while each agent decides on her participation and determines her effort over the contest duration by considering potential changes in her productivity over time. The quality of an agent’s solution improves with her effort, but it is also subject to an output uncertainty. Results: We show that the optimal contest duration increases as the relative impact of the agent uncertainty on her output increases, and it decreases if the agent productivity increases over time. We characterize an optimal award scheme and show that giving multiple (almost always) unequal awards is optimal when the organizer’s urgency in obtaining solutions is below a certain threshold. We also show that this threshold is larger when the agent productivity increases over time. Finally, consistent with empirical findings, we show that there is a positive correlation between the optimal contest duration and the optimal total award. Managerial implications: Our results suggest that the optimal contest duration increases with the novelty or sophistication of solutions that the organizer seeks, and it decreases when the organizer can offer support tools that can increase the agent productivity over time. These insights and their drivers seem consistent with practice. Our findings also suggest that giving multiple unequal awards is advisable for an organizer who has low urgency in obtaining solutions. Finally, giving multiple awards goes hand in hand with offering support tools that increase the agent productivity over time. These results help explain why many contests on crowdsourcing platforms give multiple unequal awards.

scholarly journals Motivating Supplier Social Responsibility Under Incomplete Visibility

2020 ◽  
Vol 22 (6) ◽  
pp. 1268-1286 ◽  
Author(s):  
Tim Kraft ◽  
León Valdés ◽  
Yanchong Zheng
Keyword(s):  
Supply Chain ◽  
Social Responsibility ◽  
Investment Decision ◽  
Problem Definition ◽  
Third Party ◽  
Theoretic Model ◽  
Practical Relevance ◽  
Managerial Implications ◽  
Game Theoretic ◽  
Game Theoretic Model

Problem definition: We examine how a profit-driven firm (she) can motivate better social responsibility (SR) practices by a supplier (he) when these practices cannot be perfectly observed by the firm. We focus on the firm’s investment in the supplier’s SR capabilities. To capture the influence of consumer demands, we incorporate the potential for SR information to be disclosed by the firm or revealed by a third party. Academic/practical relevance: Most firms have limited visibility into the SR practices of their suppliers. However, there is little research on how a firm under incomplete visibility should (i) invest to improve a supplier’s SR practices and (ii) disclose SR information to consumers. We address this gap. Methodology: We develop a game-theoretic model with asymmetric information to study a supply chain with one supplier and one firm. The firm makes her investment decision given incomplete information about the supplier’s current SR practices. We analyze and compare two settings: the firm does not disclose versus she discloses SR information to the consumers. Results: The firm should invest a high (low) amount in the supplier’s capabilities if the information she observes suggests the supplier’s current SR practices are poor (good). She should always be more aggressive with her investment when disclosing (versus not disclosing). This more aggressive strategy ensures better supplier SR practices under disclosure. When choosing between disclosing and not disclosing, the firm most likely prefers not to disclose when the supplier’s current SR practices seem to be average. Managerial implications: (i) Greater visibility helps the firm to better tailor her investment to the level of support needed. (ii) Better visibility also makes the firm more “truthful” in her disclosure, whereas increased third-party scrutiny makes her more “cautious.” (iii) Mandating disclosure is most beneficial for SR when the suppliers’ current practices seem to be average.

The Effects of Patent Extension and Take-Back Regulation on Green Pharmacy

2021 ◽  
Author(s):  
Tianqin Shi ◽  
Nicholas C. Petruzzi ◽  
Dilip Chhajed
Keyword(s):  
Pharmaceutical Industry ◽  
Social Welfare ◽  
Technical Information ◽  
Problem Definition ◽  
Theoretic Model ◽  
Innovative Company ◽  
Take Back ◽  
Starting Point ◽  
European Environmental Agency ◽  
Managerial Implications

Problem definition: The eco-toxicity arising from unused pharmaceuticals has regulators advocating the benign design concept of “green pharmacy,” but high research and development expenses can be prohibitive. We therefore examine the impacts of two regulatory mechanisms, patent extension and take-back regulation, on inducing drug manufacturers to go green. Academic/practical relevance: One incentive suggested by the European Environmental Agency is a patent extension for a company that redesigns its already patented pharmaceutical to be more environmentally friendly. This incentive can encourage both the development of degradable drugs and the disclosure of technical information. Yet, it is unclear how effective the extension would be in inducing green pharmacy and in maximizing social welfare. Methodology: We develop a game-theoretic model in which an innovative company collects monopoly profits for a patented pharmaceutical but faces competition from a generic rival after the patent expires. A social-welfare-maximizing regulator is the Stackelberg leader. The regulator leads by offering a patent extension to the innovative company while also imposing take-back regulation on the pharmaceutical industry. Then the two-profit maximizing companies respond by setting drug prices and choosing whether to invest in green pharmacy. Results: The regulator’s optimal patent extension offer can induce green pharmacy but only if the offer exceeds a threshold length that depends on the degree of product differentiation present in the pharmaceutical industry. The regulator’s correspondingly optimal take-back regulation generally prescribes a required collection rate that decreases as its optimal patent extension offer increases, and vice versa. Managerial implications: By isolating green pharmacy as a potential target to address pharmaceutical eco-toxicity at its source, the regulatory policy that we consider, which combines the incentive inherent in earning a patent extension on the one hand with the penalty inherent in complying with take-back regulation on the other hand, serves as a useful starting point for policymakers to optimally balance economic welfare considerations with environmental stewardship considerations.

scholarly journals The world's biomes and primary production as a triple tragedy of the commons foraging game played among plants

2016 ◽  
Vol 283 (1842) ◽  
pp. 20161993 ◽  
Author(s):  
Gordon G. McNickle ◽  
Miquel A. Gonzalez-Meler ◽  
Douglas J. Lynch ◽  
Jennifer L. Baltzer ◽  
Joel S. Brown
Keyword(s):  
Primary Production ◽  
Tragedy Of The Commons ◽  
Plant Production ◽  
Root Production ◽  
Theoretic Model ◽  
Theoretic Approach ◽  
Evolutionarily Stable Strategies ◽  
The Commons ◽  
Game Theoretic ◽  
Tissue Production

Plants appear to produce an excess of leaves, stems and roots beyond what would provide the most efficient harvest of available resources. One way to understand this overproduction of tissues is that excess tissue production provides a competitive advantage. Game theoretic models predict overproduction of all tissues compared with non-game theoretic models because they explicitly account for this indirect competitive benefit. Here, we present a simple game theoretic model of plants simultaneously competing to harvest carbon and nitrogen. In the model, a plant's fitness is influenced by its own leaf, stem and root production, and the tissue production of others, which produces a triple tragedy of the commons. Our model predicts (i) absolute net primary production when compared with two independent global datasets; (ii) the allocation relationships to leaf, stem and root tissues in one dataset; (iii) the global distribution of biome types and the plant functional types found within each biome; and (iv) ecosystem responses to nitrogen or carbon fertilization. Our game theoretic approach removes the need to define allocation or vegetation type a priori but instead lets these emerge from the model as evolutionarily stable strategies. We believe this to be the simplest possible model that can describe plant production.

The commons problem in the presence of negative externalities

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nahid Masoudi ◽  
Donique Bowie
Keyword(s):  
Empirical Literature ◽  
Theoretic Model ◽  
Negative Externalities ◽  
Content Type ◽  
Common Pool ◽  
Markov Perfect ◽  
Scale Down ◽  
The Commons ◽  
Game Theoretic ◽  
Harvest Decisions

PurposeWhile the commons problem and the issues related to the negative externalities of harvesting have been studied extensively, there remains a need to bridge these two streams of studies to comprehensively investigate the implications of the strategic interactions among resource harvesters in the presence of such negative externalities. This paper aims to fill this gap.Design/methodology/approachThe authors study a common-pool harvest problem when the extractive activities leave behind negative externalities which affect the resource growth rate and reduce the stock beyond the extracted levels. Markov perfect noncooperative and optimal solutions are presented under different scenarios regarding considerations of negative externalities into harvest decisions.FindingsResults of the study suggest that, in the presence of such externalities, all parties must scale down their extraction in accordance with their externalities. The resource can be preserved by implementation of such harvest rule. However, failure to incorporate the externalities exacerbates the commons problem and can even lead to exhaustion of the biomass even if countries manage to cooperate and coordinate their harvest. Suggesting that if such externalities are large enough – which empirical literature suggests they are – then recognition and consideration of these externalities in the harvest decisions is as crucial as cooperation.Originality/valueThis paper provides a framework that is capable of incorporating the negative externalities of harvest activities into a bioeconomic game theoretic model and thereby providing a more real-world representation of the state of the common-pool resource management. While, the authors extend a well-known simple model, the model of this research study has the capacity to explain the widespread incidences of resource collapses. Therefore, the important policy implication is that agents should rigorously work together to understand the extent of the negative externalities of their harvests on the resources.

Artificial Shortage in Agricultural Supply Chains

2021 ◽  
Author(s):  
Retsef Levi ◽  
Somya Singhvi ◽  
Yanchong Zheng
Keyword(s):  
Supply Chain ◽  
Dynamic Game ◽  
Consumer Welfare ◽  
Problem Definition ◽  
Theoretic Model ◽  
Government Interventions ◽  
Behavioral Game ◽  
Managerial Implications ◽  
The Government ◽  
Preemptive Effect

Problem definition: Price surge of essential commodities despite inventory availability, due to artificial shortage, presents a serious threat to food security in many countries. To protect consumers’ welfare, governments intervene reactively with either (i) cash subsidy, to increase consumers’ purchasing power by directly transferring cash; or (ii) supply allocation, to increase product availability by importing the commodity from foreign markets and selling it at subsidized rates. Academic/practical relevance: This paper develops a new behavioral game-theoretic model to examine the supply chain and market dynamics that engender artificial shortage as well as to analyze the effectiveness of various government interventions in improving consumer welfare. Methodology: We analyze a three-stage dynamic game between the government and the trader. We fully characterize the market equilibrium and the resulting consumer welfare under the base scenario of no government intervention as well as under each of the interventions being studied. Results: The analysis demonstrates the disparate effects of different interventions on artificial shortage; whereas supply allocation schemes often mitigate shortage, cash subsidy can inadvertently aggravate shortage in the market. Furthermore, empirical analysis with actual data on onion prices in India shows that the proposed model explains the data well and provides specific estimates on the implied artificial shortage. A counterfactual analysis quantifies the potential impacts of government interventions on market outcomes. Managerial implications: The analysis shows that reactive government interventions with supply allocation schemes can have a preemptive effect to reduce the trader’s incentive to create artificial shortage. Although cash subsidy schemes have recently gained wide popularity in many countries, we caution governments to carefully consider the strategic responses of different stakeholders in the supply chain when implementing cash subsidy schemes.

Supplier Centrality and Auditing Priority in Socially Responsible Supply Chains

2020 ◽  
Vol 22 (6) ◽  
pp. 1199-1214 ◽  
Author(s):  
Jiayu Chen ◽  
Anyan Qi ◽  
Milind Dawande
Keyword(s):  
Child Labor ◽  
Problem Definition ◽  
Socially Responsible ◽  
Supply Networks ◽  
Game Theoretic Analysis ◽  
Managerial Implications ◽  
Game Theoretic ◽  
Negative Publicity ◽  
The Impact ◽  
Number Of Firms

Problem definition: A key question in socially responsible supply networks is as follows: When firms audit some, but not all, of their respective suppliers, how do the degree centralities of the suppliers (i.e., the number of firms to which they supply) affect their auditing priority from the viewpoint of the firms? To investigate, we consider an assembly network consisting of two firms and three suppliers; each firm has one independent supplier that uniquely supplies to that firm and one common supplier that supplies to both. Academic/practical relevance: Most supply networks are characterized by firms that source from multiple suppliers and suppliers that serve multiple firms, thus resulting in suppliers who differ in their degree centrality. In such networks, any negative publicity from suppliers’ noncompliance with socially responsible practices—for example, employment of child labor, unsafe working conditions, and excessive pollution—can significantly damage the reputation of the buying firms. To mitigate this impact, firms preemptively audit suppliers although resource and time considerations typically restrict the number of suppliers a firm can audit. Consequently, it becomes important to understand the impact of the degree centralities of the suppliers on the priority with which firms audit them. Methodology: Game-theoretic analysis. Results: Downstream competition between the firms drives them away from auditing the supplier with higher centrality, that is, the common supplier, in equilibrium, despite the fact that auditing this supplier is better for the aggregate profit of the firms. We show that this inefficiency is corrected when the firms cooperate (via a stable coalition) to jointly audit the suppliers and share the auditing cost in a fair manner. We also identify conditions under which joint auditing improves social welfare. Managerial implications: We have two main messages: (i) individual incentives can lead firms to deprioritize the auditing of structurally important suppliers, which is inefficient; (ii) the practice of joint auditing can correct this inefficiency.

scholarly journals A Game Theoretic Model For Cellular Network Operators’ Cooperation Under Government Intervention

2021 ◽  
Author(s):  
Atieh Fander ◽  
Saeed Yaghoubi ◽  
Javad Tajik
Keyword(s):  
Cellular Networks ◽  
Government Intervention ◽  
Theoretic Model ◽  
Coverage Level ◽  
Digital World ◽  
Telecommunication Companies ◽  
Managerial Implications ◽  
Game Theoretic ◽  
The Government ◽  
The Cost

Abstract In the digital world today, cellular networks and their operators play a competitive and important role in communications. The basis of the competition of operators, the quality of provided services, and the coverage level of their antennas, thereby attract customers. This paper studies cellular networks with two old and new operators and under the influence of government intervention in one area. Due to the high cost of building an antenna, the new operator participates in the cost of the infrastructure of the old operator to use the services of these antennas for their customers. On the other hand, the government considers incentive schemes to support mobile operators. The government plan is that he takes part in the infrastructure cost of the old operator and will receive it an income tax; to support the new operator declare it exempt from tax. The government subsidy contract with the old operator is based on the coverage level of the antenna and supports the operator to increase the coverage level. Some numerical examples for Iranian telecommunication companies are applied to examine the applicability of the proposed models. Finally, sensitivity analysis on the main parameters is analyzed in-depth to extract some managerial implications.

scholarly journals Is Diversity (Un-)Biased? Project Selection Decisions in Executive Committees

2020 ◽  
Vol 22 (5) ◽  
pp. 906-924 ◽  
Author(s):  
Nektarios Oraiopoulos ◽  
Stylianos Kavadias
Keyword(s):  
Operations Management ◽  
Project Selection ◽  
Problem Definition ◽  
Decision Quality ◽  
Theoretic Model ◽  
Type I ◽  
Wrong Decision ◽  
Business Units ◽  
Selection Decisions ◽  
Managerial Implications

Problem definition: Is a committee composed of more or less cognitively diverse members better at approving the “good” projects and rejecting the “bad” ones? Academic/practical relevance: We contribute to the operations management literature by accounting for the fact that critical selection decisions are often made by a committee rather than a single decision maker. Understanding how the magnitude of diversity affects the decision quality of such a committee is an important consideration for practitioners. Methodology: We utilize a game-theoretic model to show that diverse perspectives are rarely “averaged out.” Results: Diversity leads to systematic biases in project selection. To mitigate the effect of diverse perspectives, managers need to uncover the sources of diversity: do they originate from different individual valuations and preferences, or do they express different assimilations of the information that arises during the project execution? We show that this distinction is crucial. Higher preference diversity always leads to higher likelihood of making the wrong decision. Higher interpretive diversity may be beneficial for the organization. Managerial implications: A clear managerial action is the need to identify and reduce such preference diversity. Senior management can achieve this by highlighting the need for more transparency in the pipeline of the business units. Moreover, our analysis shows that interpretive diversity can be a powerful managerial lever to influence the propensity for Type I and II errors. The latter might be easier to manage than the organizational structure.

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