Paul R. Messinger

Virtual worlds - past, present, and future: New directions in social computing

Virtual worlds, where thousands of people can interact simultaneously within the same three-dimensional environment, represent a frontier in social computing with critical implications for business, education, social sciences, and our society at large. In this paper, we first trace the history of virtual worlds back to its antecedents in electronic gaming and on-line social networking. We then provide an overview of extant virtual worlds, including education-focused, theme-based, community-specific, children-focused, and self-determined worlds - and we analyze the relationship among these worlds according to an initial taxonomy for the area. Recognizing the apparent leadership of Second Life among todays self-determined virtual worlds, we present a detailed case study of this environment, including surveys of 138 residents regarding how they perceive and utilize the environment. Lastly, we provide a literature review of existing virtual world research, with a focus on business research, and a condensed summary of research issues in education, social sciences, and humanities.

Business Models in Emerging Online Services

Due to advances in technology and the rapid growth of online services, a significant number of new and inventive web-based service models and delivery methods have been introduced. Although online resources and services are having an impact on more traditional service delivery mechanisms, it is not yet clear how these emerging mechanisms for online service delivery will result in profitable business models. In this paper, we consider emerging business models for online services and their implications for how services are delivered, used, and paid for.We demonstrate the changing roles of user / consumer and provider / seller. We also discuss the applicability of different business models for various domains.

The role of fairness in competitive supply chain relationships: An experimental study

This paper examines whether the conclusions of standard supply-chain models carry over to repeated supply-chain relationships. The past models assume profit-maximizing agents in one-shot games. In these games, an essential unresolved issue concerns which parties in the supply chain have greater power to extract a larger share of supply chain profit: the manufacturer or the retailer. In particular, we consider a two-manufacturer/one-retailer supply chain over repeated periods of interaction. We find that the experimental results are closest to a symmetric outcomes hypothesis: the supply chain members tend to choose similar margin levels and profits tend to be more fairly divided than non-cooperative, game-theoretic, supply-chain models predict. Individual supply chain members behavior shows evidence of fairness concerns for supply chain members. These results indicate the significant role of fairness in competitive supply chain relationships, even in a scenario that is designed to favor one supply chain member over the others.

Optimal Management of Fringe Entry Over Time

In this paper, we investigate the problem of a dominant company facing entry of a “competitive fringe” (smaller competitor or fringe of smaller competitors). We seek to identify pricing and advertising (or other promotional strategies) that maximize long-term profits for the dominant firm, under possible reactions of the competitive fringe. Two main situations are considered: •The firms in the fringe are price-takers, but they advertise. •The firms in the fringe are not price-takers and advertise. The possibility of a passive reaction, in the case of a very small fringe, is considered as a particular case. We assume that the rate of change of fringe sales is dynamically related to the current sales, price and advertising efforts of both the dominant firm and the fringe. The higher the dominant firm price, the faster fringe entry. The higher dominant firm advertising effort, the slower fringe entry. Fringe advertising and pricing may counterbalance these effects. Formulating a dynamic game, with the dominant firm as a leader and the fringe as a follower, we present a new methodology for providing time-invariant feedback Stackelberg equilibrium. The methodology relies on finding the relationship between the co-state variables and the state variable. The equilibrium solution is obtained in an implicit form by solving a set of two backward differential equations. To show the applicability of our solution to real situations, we use data from the U.S. long-distance market and find optimal decision rules for AT&T facing the entry of MCI and Sprint during the 1980-1990 period. The feedback equilibrium indicates that while AT&Ts price is decreasing when fringe (MCI and Sprint) sales increase, the fringe price is increasing. AT&Ts advertising is increasing with fringe sales while the fringes advertising increases and then decreases. The comparison with actual behavior indicates that AT&T has adhered closer to the optimal solution in both price and advertising than the fringe.

Consumer perceptions of ambiguous price promotions: scratch and save promotions versus tensile price claims

Purpose – The purpose of this paper is to examine how consumers respond differently to “scratch and save (SAS)” promotions versus “tensile price claims (TPC).” SAS promotions provide a possible discount (determined probabilistically) but conceal the exact amount until purchase. Tensile price claims (e.g. “up to 25 percent off on items marked with a red tag”) make imprecise price promotional claims. In addition to making indefinite price claims, SAS promotions (e.g. scratch and save up to 25 percent off) include gambling elements; the exact discount is determined randomly for individual consumers by a scratch‐off card.Design/methodology/approach – Two experimental studies are conducted.Findings – Evidence from two experiments indicates that consumers perceive SAS promotions to be more ambiguous than tensile price claims. In addition, the results demonstrate consumer uncertainty towards SAS promotions but also consumer willingness to gamble: deep discount SAS promotions are perceived as more attractive than...

Multicomponent Systems Pricing: Rational Inattention and Downward Rigidities

The authors examine the relative magnitude of price reductions for product systems and their constituent components (e.g., cameras, computers, monitors, lenses) and hypothesize that these price reductions systematically vary across different types of systems. The authors offer rational inattention as an explanation and document patterns of downward rigidity in online prices of computers and cameras that are consistent with this view. Their basic argument is that under certain circumstances, it is rational for consumers to ignore small price changes. This results in some price rigidity because firms would see no demand effect for small reductions. The authors suggest that this inattention systematically varies across different types of multicomponent systems, leading to specific hypotheses about sellers’ pricing behavior. They first check the validity of their theoretical arguments using data from two surveys of consumers and managers. They then examine 669,557 daily price listings for 1052 high-end cameras and computers from 102 online vendors and find evidence consistent with their predictions. Using publicly available web traffic data, the authors also find that their predicted pricing behavior is aligned with better traffic response for the firm.

Software Evolution in the Presence of Externalities: A Game-Theoretic Approach

The architecture of service-oriented systems is defined by the services involved and the network of their usage interdependencies. Changes in an individual service may lead to the evolution of the overall architecture, as (a) different or new interactions may become possible and (b) existing partners may leave the network if their dependency needs are no longer satisfied. Therefore, studying the evolution of a service and the impact it may have on services and business partners that depend on it is essential to studying the evolution of software architecture in the age of service-oriented architecture (SOA). In such an environment with different and possibly independent parties, there may exist conflicting goals. For example, one party may aim for evolution, while another may desire stability. In this chapter, we model the interactions and decision-making process during the evolution of a system using a game-theoretic approach, and we explore how variations in the dependencies and the information flow between the service provider and the clients impact the provider’s decision-making process regarding the evolution of the service.The architecture of service-oriented systems is defined by the services involved and the network of their usage interdependencies. Changes in an individual service may lead to the evolution of the overall architecture, as (a) different or new interactions may become possible and (b) existing partners may leave the network if their dependency needs are no longer satisfied. Therefore, studying the evolution of a service and the impact it may have on services and business partners that depend on it is essential to studying the evolution of software architecture in the age of service-oriented architecture (SOA). In such an environment with different and possibly independent parties, there may exist conflicting goals. For example, one party may aim for evolution, while another may desire stability. In this chapter, we model the interactions and decision-making process during the evolution of a system using a game-theoretic approach, and we explore how variations in the dependencies and the information flow between the service provider and the clients impact the provider’s decision-making process regarding the evolution of the service.

A nonparametric of attribute test interaction in consumer utility using graded comparisons

Abstract This article proposes a nonparametric specification test of 2 equations of a model assumed to describe consumer responses to graded comparison survey data. Application of the test indicates, for a small sample of electrical engineers, that it is plausible to model utility as additively separable, provided respondents use what is termed a “subtractive integration rule” when making paired comparison judgements.

Leaving the Tier: An Examination of Asymmetry in Pricing Patterns in Online High Tech Shops

We analytically illustrate that maximizing profit in a market with products that quickly degrade in price motivates market leaders to make both aggressive price increases and decreases that exceed that of the market followers, flipping between attempts to capitalize on their brand name and using capturing a large majority of the market. We examine 475,866 prices and 51,260 price changes for 810 high-tech products from 26 vendors over 283 days and show that a price premium does exist for the market leaders, implying a marginal revenue advantage, but aggressive price increases and aggressive price decreases are made by market leaders, and how market followers are unable or unwilling to competitively respond to these price changes. This research adds to the discussion of market friction, tiers, and market leaders by showing how market leaders may be motivated to drastically cut prices cuts, and how such price cuts can be profit maximizing.

Leaving the Tier: Asymmetry in Pricing Patterns in Online High Tech Shops

Using simulation and empirical analysis, we examine asymmetry in pricing patterns within hightech markets, where market leaders lead in both price increases and decreases. We examine 475,866 prices and 51,260 price changes for 810 high-tech products from 26 vendors over 283 days. We show that price premiums exist for the market leaders, but these leaders also engage in aggressive price decreases where market followers are unable or unwilling to competitively respond. Surprisingly, we show that large price premiums and market power can motivate a market leader to abandon high price premiums since capturing the entire market at a lower price can lead to greater profits. This research adds to the discussion of market friction and tiers by demonstrating that, in high-tech industries, drastic price cuts from market leaders that go beyond barriers to entry and loss leading can be profit maximizing.