INFORMS Open Forum

  • 1.  Welcome to "Management Science Review Blog"

    Posted 02-01-2018 20:37

    The objective of this blog is to reach outside the INFORMS community to the general public so that decision makers in government and industry are exposed to some of the most exciting work published by the journal. The challenge is to translate scientific research to the general public in a way that is meaningful and insightful for that audience.

     

    For this purpose, the editorial board will identify 2-3 "Featured Articles" every issue and will collaborate with the authors to prepare a synopsis of their papers that is accessible to the general public. I am pleased to introduce the two featured articles for the first issue of 2018:

    "Risk Targeting and Policy Illusions-Evidence from the Announcement of the Volcker Rule" by Jussi Keppo and Josef Korte.

    Almost eight years ago, the Volcker Rule was codified as part of the Dodd–Frank Act in an attempt to separate allegedly risky trading activities from commercial banking. In the paper "Risk Targeting and Policy Illusions-Evidence from the Announcement of the Volcker Rule," Jussi Keppo and Josef Korte present new evidence that those banks most affected by the Volcker Rule have indeed reduced their trading books much more than others after the announcement of the rule. However, there are no corresponding effects on overall risk-taking-if anything, affected banks take more risks and use their remaining trading accounts less for hedging. This indicates that risk-taking at banks is like a balloon-if you squeeze one end, the other end bubbles and bulges. These findings help in designing more effective banking regulation.

    Read the full article at https://doi.org/10.1287/mnsc.2016.2583.

    "Information Sharing, Advice Provision, or Delegation: What Leads to Higher Trust and Trustworthiness?" by Özalp Özer, Upender Subramanian, and Yu Wang.

    Customers (e.g., individuals or businesses) often seek their suppliers' expertise and assistance to make better-informed decisions. For example, investors rely on financial advisors to decide on their investments; patients rely on physicians to decide their treatment plans; consumer goods retailers (e.g., Target, Walmart) rely on suppliers (e.g., P&G, Kraft) to make in-store merchandising decisions such as the management of shelf-space (as in a category captain arrangement) and inventory (as in a VMI agreement).  However, in most cases, the interests of the supplier and the customer often can never be fully aligned and it may not be fully possible to verify whether the supplier acted in the customer's best interests. As evidenced by recent events, such as physicians receiving kickbacks from pharmaceutical companies (e.g., Valeant kickback scheme) and pushing aggressive treatment plans for their own benefit, or financial advisors recommending investments not in their client's best interests (e.g., Madoff investment scandal), or suppliers manipulating retailers' product displays to obtain more shelf space for their products than truly justified (e.g., US Tobacco antitrust case), customers have legitimate reasons to be concerned about whether they are being taken undue advantage of by their suppliers. Hence, most successful healthcare providers, financial advisors and vendors look for means to promote and prove themselves as trustworthy to obtain their customers' trust. In the paper "Information Sharing, Advice Provision, or Delegation: What Leads to Higher Trust and Trustworthiness?" – Özalp Özer, Upender Subramanian, and Yu Wang show how, why and when the design of assistance process affects trusting and trustworthy behavior that promote cooperation and better outcomes for both the supplier and the customer. These findings help in designing more effective product and service value chains, including retail distribution channels, health care, and financial services.

    Read the full article at https://doi.org/10.1287/mnsc.2016.2617.

    Read more about these articles in the Management Science Review blog.

    The editorial board and the authors welcome your thoughts on these papers.

     



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    David Simchi-Levi
    Professor of Engineering Systems
    Massachusetts Institute of Technology
    Cambridge MA
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