Regret and Regulation

We analyse the welfare effect of governmental regulation for individuals who consider anticipated regret in their decision-making process. Although governmental policies by directing choice, distort individual decisions in the private market, they can alleviate individuals’ pain associated with the feeling of regret. We analyse this trade-off and provide conditions under which the implied reduction of regret justifies regulation. Furthermore, we demonstrate our findings on tax deduction for non-insured losses, a well-studied social policy in insurance. Last, we consider heterogenous individuals and alternative social welfare functions and show that our results hold in these extended settings.     

User,Use & Utility Research

Business and Information Systems Engineering (BISE) is at a turning point. Planning, designing, developing and operating IT used to be a management task of a few elites in public ad-ministrations and corporations. But the continuous digitization of nearly all areas of life changes the IT landscape fundamentally. Success in this new era requires putting the human perspective – the digital user – at the very heart of the new digitized service-led economy. BISE faces not just a temporary trend but a complex socio-technical phenomenon with far-reaching implications. The challenges are manifold and have major consequences for all stakeholders, both in information systems and management research as well as in practice. Corporate processes have to be re-designed from the ground up, starting with the user’s perspective, thus putting usage experience and utility of the individual center stage. The digital service economy leads to highly personalized application systems while organizational functions are being fragmented. Entirely new ways of interacting with information systems, in particular beyond desktop IT, are being invented and established. These fundamental challenges require novel approaches with regards to innovation and development methods as well as adequate concepts for enterprise or service system architectures. Gigantic amounts of data are being generated at an accelerating rate by an increasing number of devices – data that need to be managed. In order to tackle these extraordinary challenges we introduce ‘user, use & utility’ as a new field of BISE that focuses primarily on the digital user, his or her usage behavior and the utility associated with system usage in the digitized service-led economy. The research objectives encompass the development of theories, methods and tools for systematic requirement elicitation, systems design, and business development for successful Business and Information Systems Engineering in a digitized economy – information systems that digital users enjoy using. This challenge calls for leveraging insights from various scientific disciplines such as Design, Engineering, Computer Science, Psychology and Sociology. BISE can provide an integrated perspective, thereby assuming a pivotal role within the digitized service led economy.     

Economic Impacts of Inbound Tourism under Different Assumptions Regarding the Macroeconomy

On what is taken to be the 'Standard View', increased tourism expenditure from inbound markets has direct, indirect and induced effects on a host destination, leading to increased production, income and employment. Strong links between tourism and other sectors of business reduce import leakages from tourism expenditure thereby enhancing the multiplier effects of the injected expenditure on domestic output, value added and employment. The usual technique for analysing these effects is input-output analysis. This paper argues that economy-wide effects must be taken into account in determining the impacts of increased tourism expenditure on a destination, and that the 'Standard View' is superficial and very often misleading. An expanding tourism industry tends to 'crowd out' other sectors of economic activity, reducing the demand for traditional exports and import competing industries. The extent of these 'crowding out' effects depends, in turn, on the workings of labour markets, changes in prices and the real exchange rate, and the macroeconomic policy context. It is argued that these mechanisms can only properly be taken into account using Computable General Equilibrium (CGE) models rather than input-output modelling. The paper then looks at applications of CGE modelling to tourism growth in both nations and regions, classifying the various studies according to assumptions made about labour markets and government policies. The discussion has relevance for estimating the economic contribution of tourism in all destinations. The paper concludes with some observations regarding the use of CGE modelling in tourism contexts internationally and issues for further research.     

MODELING UNCERTAIN FORECAST ACCURACY IN SUPPLY CHAINS WITH POSTPONEMENT

We examine a situation where a manufacturer operates in a two‐mode production environment. The first mode could involve overseas vendors and manufacturing facilities. If additional units are later required, the company must use its second mode—more expensive last‐minute domestic vendors and manufacturing sites. We develop a new methodology for analyzing the impact of forecast accuracy on the decision to postpone production. We examine the interaction of forecast accuracy, shortage vs. holding costs, transportation costs and the cost of postponing production in the supply chain of a single product facing uncertain demand. Our model can be used to analyze the cost of important changes, such as increasing forecast accuracy, reducing the cost of backorders, lowering the cost of delaying production, or lowering transportation costs. Our model allows a firm to understand its overall cost structure so that it can accurately evaluate the impact of improved forecast accuracy and lowered costs in the context of postponement.