Rationality of escalating commitment in information systems project management： An inter-disciplinary perspective

Escalation of commitment has been linked to losses in information systems （IS） projects. Understanding the nature and the rationality of escalation allows the firm to promote optimal project management practices. This study takes an inter-disciplinary approach and draws on research from economics and management to create a model of irrational escalation and a model of rational escalation. The forces that contribute to irrational escalation include the responsibility of the same manager for both the project selection and project continuation decisions that create proneness to self-justification, the potential for negative framing of decision options due to large sunk costs, the proximity of project completion and the presence of organizational inertia. Identifying these irrational escalation factors helps design appropriate de-escalation techniques. The rational escalation model draws on the real option theory and the bandit process theory to identify conditions when project continuation is justified by the value of information and the value of flexibility that the firm receives from continuing the project.     

Cooption and Repression in the Soviet Union

The Soviet ruling elite, the nomenklatura, used both cooption and political repression to encourage loyalty to the communist regime. Loyalty was critical both in defusing internal opposition to the rule of the nomenklatura and in either deterring or defeating foreign enemies of the Soviet Union. The cost of coopting people into the Communist Party was a decrease in the standard of living of members of the nomenklatura, whereas the cost of political repression was the danger that members of the nomenklatura would themselves be victimized. We assume that the nomenklatura determined the extent of cooption and the intensity of political repression by equating perceived marginal benefits and marginal costs. We use this assumption to construct an account of the historical evolution of policies of cooption and political repression in the Soviet Union.     

Survival,Attrition and Biased Decision-Making

Atlantic Economic Journal - This paper considers the persistence of earnings differentials between wage earners and the self-employed through modeling overconfidence. The model examines challenges...     

Individual versus companion visitors' willingness-to-pay for the theater tickets: The case of Perm opera

Business-like approaches are applied more and more widely in nonprofit organization contexts, and theaters are no exception. Revenue generation, customer segmentation, and personalized marketing are becoming the key managerial concerns. Our study focuses on two relevant aspects of theater attendees' behavior. We examine visitors' willingness-to-pay (WTP) for theater seats (to derive revenue drivers), and its difference between two segments – single and couple visitors (to uncover the social motivation effect). These aspects taken together have never been previously studied in the nonprofit marketing context. We model WTP using the actual purchase data from Perm Opera and Ballet Theatre in Russia. Unlike most marketing studies which use stated preference for WTP evaluation, we employ the revealed preference approach. The results verify that single and couple visitors may be treated as separate segments, allowing for personalized promotion and other marketing decisions.     

Turnover in top management and de-escalation of commitment

We explore how de-escalation of commitment is linked to top management turnover and economic changes at the firm. Escalation of commitment occurs when managers continue investment in a project after receiving negative information. A major determinant of escalation is the personal responsibility effect in that managers are more likely to escalate commitment to a failing project if they were responsible for the original investments. Prior studies suggest that a change in top management facilitates de-escalation of commitment as incoming managers who do not have such commitment are able to stop investments that are discovered to be failing. Our empirical analysis based on a sample of over 3,300 firms for the period from 1992 to 2016 demonstrates the link between specific top management turnover types and economic changes at the firm consistent with the de-escalation of commitment.     

A process model of a logistics system as a basis for optimisation programme implementation

The purpose of this paper is to investigate the role of the process approach in optimisation programme implementation. It is proposed that application of a process model of a company provides overcoming of functional boundaries and, consequently, overcoming of sub-optimisation of logistics system performance. The process model of an internal logistics system of a wholesale trading company, based on the Supply Chain Operations Reference (SCOR) model, has been developed. Relations between business functions, processes and performance indicators (metrics) have been analysed. The optimisation model has been developed, and comparative analysis of possible results of optimisation of processes and functions has been conducted. Results demonstrate that optimisation of functions results in a sub-optimal solution, caused by functional boundaries, whereas optimisation of processes results in an optimal one. Research provides the rationale for process approach implementation in order to make optimal decisions regarding the logistics activities and the technique of practical implementation of an optimisation programme.     

Control and the management of a spreading invader

We consider the problem of management of an aquatic invader spreading in a lake system. We assume that each year the invader can be removed from a certain proportion of invaded lakes, which depends on the selected intensity of control. Control decisions are generated and compared for an optimally controlled system and for a static optimization across asymptotic steady states. Control close to eradication of the invasive species is always optimal for invasions with relatively high damages, low rates of density dependent spread and/or low chance of additional random introductions. Control to a highly invaded steady state is optimal for those invasions with low relative damages, high chances of random introduction and high levels of uncertainty in species location. In all other cases the optimal outcome depends upon initial conditions. Comparing the relative performance of the optimally controlled system and the static optimization demonstrates situations when the differences are small and when not. When invasions are acted upon in their later stages and across certain parameter combinations a static optimization provides a reasonable approximation of an optimally controlled system. The flip-side is that optimal policies directed at an invasion in its early stages tend to provide significantly savings. The savings vary across parameter combinations, yet in these situations little useful insight will be generated without consideration of a dynamically optimized system.     

COMPARATIVE STATICS OF A MONOPOLISTIC FIRM FACING RATE‐OF‐RETURN AND COMMAND‐AND‐CONTROL POLLUTION CONSTRAINTS

The intrinsic comparative statics properties of a general rate‐of‐return regulated, profit‐maximizing model of a monopolist facing a command‐and‐control pollution constraint are derived. Recent advances in the theory of comparative statics are used to derive the basic comparative statics of the model, which are contained in an observable negative semi‐definite matrix and possess the form of Slutsky‐like expressions. We consider several command‐and‐control pollution constraints that are commonly implemented in practice, and conclude that the intrinsic comparative statics properties of the model are qualitatively invariant to the type of command‐and‐control pollution constraint imposed. We compare our results with those extant, and find that several basic results from the standard A–J model no longer hold in our model.     

Assessing Inertia in Canadian Markets for Table Eggs

Firms may fail to adjust instantaneously to fluctuations in demand, which causes “sticky prices.” Demand can also be “sticky” due to certain types of consumer behavior. We estimate inertia in the market for shell eggs sold in Canadian supermarkets. In the absence of price information, the analysis is performed using only quantities purchased by individual consumers. From a sample of five store brands of shell eggs sold in Alberta and Ontario, we find the egg market in Alberta to show considerable inertia, while little evidence of inertia is found for the Ontario market. Implications for egg production and retail sectors are discussed. Il se peut que les entreprises ne réussissent pas è s'ajuster instantanément aux fluctuations de la demande, entraînant ainsi la rigidité des prix. Certains comportements du consommateur peuvent entraîner la rigidité de la demande. Nous avons estimé l'inertie du marché des ?ufs en coquille vendus dans les supermarchés canadiens. En l'absence d'information sur les prix, nous avons effectué l'analyse en utilisant les quantités d'?ufs achetés par des consommateurs individuels. À partir d'un échantillon de cinq marques d'?ufs en coquille vendus dans des épiceries de l'Alberta et de l'Ontario, nous avons conclu que l'inertie du marché des ?ufs en Alberta était considérable, tandis que l'inertie du marché en Ontario était faible. Nous avons examiné les répercussions de nos résultats sur la production d'?ufs et le secteur du commerce de détail.     

Does Choice Context Affect the Results from Incentive‐Compatible Experiments? The Case of Non‐GM and Country‐of‐Origin Premia in Canola Oil

We seek to design and implement a WTP elicitation instrument closely resembling an actual grocery shopping experience. An incentive-compatible choice experiment is used to elicit values for a non-GM attribute and a country-of-origin attribute of Canola oil. The choice context is varied to assess whether revealed-preference choice experiments are affected by choice variety. A median premium for non-GM Canola oil is found to approximate C$0.45 or C$0.62/liter according to the choice variety context; different country-of-origin effects are also found as choice context varies. Hypotheses as to why these significant effects of choice contexts occur are suggested.
Nous cherchons à concevoir et à mettre en application un instrument de révélation de la VDP qui ressemble étroitement aux choix que fait un consommateur lorsqu'il effectue son marché. Nous avons utilisé une méthode expérimentale compatible avec les incitations des participants afin de découvrir la valeur accordée à deux caractéristiques de l'huile de canola: non génétiquement modifiée et étiquetée selon le pays d'origine. La liste des choix est variée afin d'évaluer si les préférences révélées sont influencées par la gamme de choix. La prime médiane de l'huile de canola non génétiquement modifiée est d'environ 0,45 $CAN ou 0,62 $CAN le litre selon les choix proposés. Différents pays d'origine figurent aussi dans cette liste de choix. Nous avons formulé des hypothèses quant aux raisons pour lesquelles la gamme de choix a des effets importants.