Title: Some Topics in Behavioral Operations (and Life)
Author: J. Neil Bearden
Decision Sciences Area
I will discuss three separate (and quite unrelated) topics in behavioral operations. First, I will describe some work on dynamic pricing and revenue management. Results from several laboratory experiments on pricing decisions have revealed systematic departures from the dictates of optimal (expected revenue maximizing) pricing models. Frankly, these findings are only marginally interesting: Who cares how non-managers (i.e., students) make dynamic pricing decisions? Students are (generally) not managers; however, they are consumers.
My new work on revenue management is aimed at understanding how buyers behave in the face of dynamically priced goods. Are they strategic? How good are their strategies? How much revenue is left on the table if one uses a dynamic pricing model that supposes that costumers are myopic or non-strategic (as most published models do)? In the second part of the talk, I will present new work on the optimal length of job offer deadlines (so called “exploding offers”).
After sketching out the basic model and theoretical results, I will describe results from an experiment in which we tested the model predictions. Finally, time permitting, I will describe a decision problem similar to the one faced by students deciding to which colleges to apply (or by MBAs deciding to which firms to apply). Our behavioral findings show several systematic departures from optimality. For instance, decision makers tend to apply to too few schools (firms).