Mitigating shortage and distribution costs in damaged water networks

Recent events have sparked renewed interest in disaster mitigation for public infrastructures. Presidential Decision Directive 63 identifies water distribution as being among the most vital and vulnerable of our large-scale infrastructures. Water distribution networks are vulnerable to threats such as chemical and biological contamination, cyber attacks on computer-based management systems, and physical destruction from acts of nature and intentional attack. This research develops methods for configuring the undamaged portion of the water network to mitigate the consequences of physical destruction. The approach is to find a hydraulically feasible residual network that can be pressurized to meet the demand of a subset of demand sectors. Demand sectors not pressurized then receive water through truck distribution from pressurized sectors. The objective is to minimize weighted water shortage and water truck distribution costs by identifying sectors to pressurize along with an assignment of unpressurized sectors to pressurized sectors for water delivery by truck. The paper develops an optimization model, describes a solution method, and presents computational results for three example networks.     

A typology of de-coupling strategies in mixed services

A typology of a class of service systems is proposed. The typology links strategic operational objectives to the decision to de-couple work between the front and back offices of a service system. Four specific ideal types of a strategy/de-coupling mix are described; each of which has distinct operational, marketing and human resource ramifications. A type that has had significant representation in traditional literature is the “Cost Leader” type, where back-office activities are de-coupled from the front office for the purpose of lowering costs. Another traditional type representative of the craftsman legacy is the “Personal Service” type, which retains back-office tasks in the front office to pursue non-cost-oriented strategic goals. Theoretical and empirical evidence is also given for two non-traditional types: the “Kiosk” type, where all tasks remain in the front office to achieve lower costs, and the “Focused Professional” type, which de-couples front- and back-office activities to enable front-office workers to provide higher service, rather than to reduce costs. Empirically, retail bank lending systems are analyzed to support the typology.     

The true shadow price of foreign exchange

For the last half century, trade theorists, development economists, and development practitioners have been calculating what was claimed to be the shadow price of scarce foreign exchange. In fact, what they have been calculating is the social value of the receipt of a unit of a numeraire good from abroad, typically obtained from real models. In our paper, we explicitly deal with a model of a monetized economy, and we develop formulas for the social value of a unit of foreign currency, which, in general, differ from the traditional formulas.     

The online laboratory: conducting experiments in a real labor market

Online labor markets have great potential as platforms for conducting experiments. They provide immediate access to a large and diverse subject pool, and allow researchers to control the experimental context. Online experiments, we show, can be just as valid—both internally and externally—as laboratory and field experiments, while often requiring far less money and time to design and conduct. To demonstrate their value, we use an online labor market to replicate three classic experiments. The first finds quantitative agreement between levels of cooperation in a prisoner’s dilemma played online and in the physical laboratory. The second shows—consistent with behavior in the traditional laboratory—that online subjects respond to priming by altering their choices. The third demonstrates that when an identical decision is framed differently, individuals reverse their choice, thus replicating a famed Tversky-Kahneman result. Then we conduct a field experiment showing that workers have upward-sloping labor supply curves. Finally, we analyze the challenges to online experiments, proposing methods to cope with the unique threats to validity in an online setting, and examining the conceptual issues surrounding the external validity of online results. We conclude by presenting our views on the potential role that online experiments can play within the social sciences, and then recommend software development priorities and best practices.     

The Nevada Water Law of 1913: A Populist Response to Progressivism

During the latter half of the 19^th century, Americans who settled the arid West needed to compromise with their populist notions of individualism derived from the Jeffersonian ethic of the early 19^th century and adopt progressive communitarian practices in order to provide water by means of irrigation. The struggle to deal with water rights in Nevada, culminating in passage of the Nevada Water Law of 1913, particularly illustrated this conflict between individualism and communitarianism.     

Regret in auctions: theory and evidence

The sealed-bid first-price auction of a single object in the case of independent privately-known values is the simplest auction setting and understanding it is important for understanding more complex mechanisms. But bidders bid above the risk-neutral Nash equilibrium theory prediction. The reasons for this “over bidding” remain an unsolved puzzle. Several explanations have been offered, including risk aversion, social comparisons, and learning. We present a new explanation based on regret and a model that explains not only the observed over bidding in sealed-bid first-price auctions, but also behavior in several other settings that is inconsistent with risk aversion. The authors gratefully acknowledge support from the National Science Foundation.