Bidder Support in Multi-item Multi-unit Continuous Combinatorial Auctions: A Unifying Theoretical Framework

Combinatorial auctions have seen limited applications in large-scale consumer-oriented marketplaces, partly due to the substantial complexity to keep track of auction status and formulate informed bidding strategies. We study the bidder support problem for the general multi-item multi-unit (MIMU) combinatorial auctions, where multiple heterogeneous items are being auctioned and multiple homogeneous units are available for each item. Under two prevalent bidding languages (OR bidding and XOR bidding), we derive theoretical results and design efficient algorithmic procedures to calculate important bidder support information, such as the winning bids of an auction and the minimum bidding value for a bid to win an auction either immediately or potentially in the future. Our results unify the theoretical insights on bidder support problem for different bidding languages as well as different special cases of general MIMU auctions, namely the single-item multi-unit (SIMU) auctions and the multi-item single-unit (MISU) auctions. We also consider auctions with additional bidding constraints, including batch-based combinatorial auctions and hierarchical combinatorial auctions, as well as the combinatorial reverse auctions, all of which have relevant practical applications (e.g., industrial procurements). Our results can be readily extended to solve the bidder support problems in these auction mechanisms.

Shared Prosperity (or Lack Thereof) in the Sharing Economy

This paper examines the potential economic spillover effects of a home sharing platform—Airbnb—on the growth of a complimentary local service—restaurants. By circumventing traditional land-use regulations and providing access to underutilized inventory, Airbnb attracts visitors to outlets that are not traditional tourist destinations. Although visitors generally bring significant spending power, it is unclear whether visitors use Airbnb only primarily for lodging and thus do not contribute to the adjacent economy. To evaluate this, we focus on the impact of Airbnb on restaurant employment growth across locales in New York City (NYC). Specifically, we focus on areas in NYC that did not attract a significant tourist volume prior to the emergence of a home-sharing service. Our results indicate a salient and economically significant positive spillover effect on restaurant job growth in an average NYC locality. A one-percentage-point increase in the intensity of Airbnb activity (Airbnb reviews per household) leads to approximately 1.7% restaurant employment growth. Since home-sharing visitors are lodging in areas that are not accustomed to tourists, we also investigate the demographic and market-structure-related heterogeneity of our results. Notably, restaurants in areas with a relatively high number of White residents disproportionately benefit from the economic spillover of Airbnb activity, whereas the impact in majority-Black areas is not statistically significant. Thus, policy makers must consider the heterogeneity in the potential economic benefits as they look to regulate home-sharing activities.

Social Media Marketing, Quality Signaling, and the Goldilocks Principle

Embraced by a rapidly increasing number of companies, social media marketing has become an integral part of companies' business strategies. However, not all the firms plan on a big spend on social media marketing. Our stylized model investigates the strategic effects of social media marketing spending (SMM spending) with the presence of exogenous quality revelation through sources over which firms have no direct control. Unlike traditional advertising, social media marketing has two roles: awareness enhancement and information revelation. Consumers are heterogeneous in their awareness of the product (e.g., whether they know the existence of the product). Our results suggest that the high-quality firm gets enough quality transparency from background user-generated discussions, and the cost of maintaining a social presence outweighs the benefits. The low-quality firm avoids social media marketing because quality transparency is broadly detrimental, whereas the mid-tier firm is “just right” to benefit from social media discussions they encourage. Our model provides a first step toward framing social media marketing spending as a strategic investment. We recognize that social media marketing, although capable of increasing consumer awareness and improving the realized perceptions of a firm's true quality, also has strategic signaling effects.

Pay-What-You-Want Pricing in the Digital Product Marketplace: A Feasible Alternative to Piracy Prevention?

In pay-what-you-want (PWYW) pricing, buyers are allowed to pay any amount they want, often including a price of zero. Standard theory predicts that buyers are driven solely by their own interest and will always choose to pay nothing, making PWYW pricing impractical to use. Nonetheless, PWYW pricing has been consistently occurring in the marketplace. We build and analyze a theoretical model to explain the presence of PWYW pricing in the marketplace and identify the situations under which businesses are better off adopting it over the traditional posted pricing. Because the digital product domain is a particularly good fit for PWYW pricing because of its constant exposure to piracy threats, we focus on digital product firms and examine PWYW pricing as an alternative to their piracy prevention efforts. We show that PWYW pricing becomes a superior pricing strategy when the pirate version is quite similar to the authentic product and it is costly for the firm to improve its product quality. Moreover, if network externalities are present, PWYW pricing can outperform posted pricing only when the network externalities are weak. The results explain why PWYW pricing is rare in the established digital product marketplace, which exhibits strong network externalities.

Socialize More, Pay Less: Randomized Field Experiments on Social Pricing

We propose social pricing, a novel pricing framework under which consumers with higher social capital enjoy a better price. Conceptually, social pricing enables firms to achieve price discrimination based on a consumer’s social value. This is in sharp contrast with traditional price discrimination strategies where price differentiation typically hinges on consumers’ personal value. We design and conduct two randomized field experiments on a leading online fresh food retailer to understand the value of social pricing. Social pricing has been commonly credited for its effectiveness in new customer acquisition. Interestingly, our study reveals that it is also highly effective on existing consumers. Our analysis shows that social pricing can increase an online retailer’s profit by 40% solely from existing consumers, compared with regular firm-offered discounts. Exploration of the underlying mechanisms reveals that perceived engagement and social cost are the main drivers, which not only help to increase purchasing frequency but also induce higher order value per purchase. In a follow-up experiment, we vary the rules of social interactions by requiring heterogeneity in consumers’ purchasing frequencies. The results suggest that a heterogeneity-based strategy can further amplify the benefits of social pricing.

How IT Investments Help Hospitals Gain and Sustain Reputation in the Media: The Role of Signaling and Framing

Practice- and Policy-Oriented Abstract Understanding how IT investments help organizations to build and sustain reputation is of particular relevance for healthcare practitioners and policy makers because patients are often unable to assess the quality of care, relying instead on the reputation of health service providers in the media, such as newspapers. As information intermediaries, journalists detect, aggregate, and translate the weaker signals for quality, such as state-of-the-art IT, that a hospital emanates. Our analysis of 152 hospital organizations in England, complemented by interviews with healthcare journalists, shows that journalists write less negatively about hospitals when healthcare organizations’ IT equipment investments are high. This implies that investments in IT equipment can buffer hospitals from negative press, thereby helping them to gain and maintain a strong reputation in the media. Practitioners and policy makers may incorporate the reputational effect of IT when making investment decisions and further amplify such IT investment through press releases, corporate reports, and media interactions.

Do You Really Know if It’s True? How Asking Users to Rate Stories Affects Belief in Fake News on Social Media

Research shows that consuming ratings influences purchase decisions in e-commerce and also has modest effects on belief in news articles on social media. We find that the act of producing ratings reduces belief in news articles on social media and induces social media users to think more critically. We propose this intervention as a method to encourage users to realize that, unlike in the product rating setting, social media users who submit their ratings for news articles typically lack firsthand knowledge of the events reported in the news, making it difficult for most users to rate news articles accurately. We asked 68 social media users to assess the believability of 42 social media articles and measured their cognitive activity using electroencephalography. We found that asking users to rate articles using a self-referential question induced them to think more critically—as indicated by increased activation in the medial prefrontal cortex and dorsolateral prefrontal cortex—and made them less likely to believe the articles. The effect extended to subsequent articles; after being asked to rate an article, users were less likely to believe other articles that followed it whether they were asked to rate them or not.

Information Control for Creator Brand Management in Subscription-Based Crowdfunding

Digital content creators, such as podcasters, musicians, writers, and YouTubers, are increasingly using subscription-based crowdfunding (SBC) platforms to attract backers and obtain recurring funding from them. Unlike conventional crowdfunding, a hallmark of SBC is the recurring funding scheme structured as a creator-centered freemium model. Empowering creators to build their person brands, SBC platforms are providing creators with novel features to control the information that they share with their backers or fans or conceal from them. Based on a large-scale study on Patreon, an SBC platform, we show how creators can effectively leverage two types of information controls—earnings concealment and private postings—to build their person brands and thereby develop their backer base and fan engagement. Interestingly, we also find a reinforcing relationship in which the increases in backer base and fan engagement further stimulate creators to leverage information controls in their SBC campaigns to grow their person brands. In sum, although information controls are effective in aggregate to build person brands on SBCs, creators need to dynamically adjust the extent of use of information controls based on changes in their backer base and fan engagement.

Configuring the Enterprise Systems Portfolio: The Role of Information Risk

Information risk, the likelihood that corporate financial information is of poor quality, adversely impacts investor confidence regarding a firm’s financial health, making it an economically important problem. Viewing a firm’s enterprise systems (ES) portfolio as made up of operational modules (customer relationship management and supply chain management) and functional modules (accounting and finance, and human resource management), we examine how firms configure their ES portfolio by changing the balance in the implementation of two types of modules in response to information risk. We find internal controls to be an important contingency in determining how firms change their ES portfolio balance when information risk increases. When there is no weakness in internal controls, firms change their ES portfolio balance more toward operational modules. However, when internal controls are afflicted with material weakness, firms change their ES portfolio balance more toward functional modules instead. When evaluating the link between ES portfolio configuration and information processing requirements in the context of financial processes, managers should assess both information risk and internal controls to decide how to change the balance between operational and functional modules that are implemented.

Does Social Media Accelerate Product Recalls? Evidence from the Pharmaceutical Industry

Social media has become a vital platform for voicing product-related experiences that may not only reveal product defects, but also impose pressure on firms to act more promptly than before. This study scrutinizes the rarely studied relationship between these voices and the speed of product recalls in the context of the pharmaceutical industry in which social media pharmacovigilance is becoming increasingly important for the detection of drug safety signals. Using Federal Drug Administration drug enforcement reports and social media data crawled from online forums and Twitter, we investigate whether social media can accelerate the product recall process in the context of drug recalls. Results based on discrete-time survival analyses suggest that more adverse drug reaction discussions on social media lead to a higher hazard rate of the drug being recalled and, thus, a shorter time to recall. To better understand the underlying mechanism, we propose the information effect, which captures how extracting information from social media helps detect more signals and mine signals faster to accelerate product recalls, and the publicity effect, which captures how firms and government agencies are pressured by public concerns to initiate speedy recalls. Estimation results from two mechanism tests support the existence of these conceptualized channels underlying the acceleration hypothesis of social media. This study offers new insights for firms and policymakers concerning the power of social media and its influence on product recalls.