Management Science

Organizations rely on their employees to produce many high-quality ideas for the improvement of products, processes, and strategies. Evaluators such as managers and technical experts need to not only assess these ideas but also face expectations to contribute ideas of their own. We investigate this task duality by asking how idea evaluation activities affect evaluators’ ideation performance. Alth…

We analyze a model where dealers provide market liquidity by intermediating trades between clients. They exert unobservable search effort to improve intermediation profit. This moral-hazard friction limits their ability to raise external finance and compete with each other, constraining market liquidity even for safe assets and more so for those with higher search costs. Dealers mitigate this fri…

This paper examines how the need for immediate cash by smallholder farmers may lead to undesirable selling decisions that hurt their revenue and analyzes the efficacy of government loan policies in tackling this challenge. We develop a game-theoretic model to characterize the base scenario of no loan, uncovering the impacts of cash needs on farmers’ revenue. We then examine how a government loan,…

We analyze the market quality of centralized crypto exchanges and decentralized blockchain-based venues (DEXs) using a unique and comprehensive data set. Focusing on two fundamental aspects, transaction costs and deviations from the no-arbitrage condition, we estimate the causal effect of gas fees on DEX market quality. We show that these fixed costs impose a significant burden on relatively smal…

Do digital technologies reinforce managerial hierarchies or, instead, make them less relevant? We propose that the answer to this question depends on the nature of the technology: specifically, its relative impact on managers’ capacity to supervise and on subordinates’ need for supervision. Applying this framework to collaborative work management (CWM) technologies that facilitate real-time colla…

We study a two-stage newsvendor model where the initially uncertain mean demand is revealed midstream, allowing for a second, costlier order to be placed. The two-stage process is relevant to many retailers who have access to two supply options: a long-lead, low-cost option where orders need to be placed under much demand uncertainty, and a short-lead, high-cost option after a signal is revealed …

We study infinite-horizon Markov decision processes (MDPs) with fast–slow structure, in which some state variables evolve rapidly (fast states), whereas others change more gradually (slow states). This structure commonly arises in practice when decisions must be made at high frequencies over long horizons and when slowly changing information still plays a critical role in determining optimal acti…

Multisided platforms crucially rely on indirect network effects. When trying to strengthen these effects, platform owners face a fundamental challenge, namely, designing incentives to enhance developer effort and simultaneously ensuring the release of high-quality products on the platform. This paper highlights the costs associated with lowering royalty rates to boost developer effort, as such re…

In an environment where demand is unknown to the firm, it is important to investigate how capacity adjustment and dynamic pricing can be integrated so that the firm can learn about the demand on the fly while making capacity and pricing decisions. In this paper, we design learning algorithms for the joint capacity and pricing management problem. To evaluate the performance of our algorithms, we c…

Outcomes-based reimbursement rewards health providers with better health outcomes with higher payments. Such reimbursement policies require several design choices, including the type of contract (e.g., capitation or fee-for-service), measure (e.g., population- or provider-level outcomes), and whether to contract with individual providers or larger groups. We explore which outcomes-based reimburse…

S&P 500 is commonly used in empirical finance and macroeconomics as a measure of overall capital market sentiment, and the associated VIX is taken as an indicator of economic uncertainty. While both assume that the S&P 500 index is objectively constructed, we show that its membership decisions have a nontrivial amount of discretion unexplained by its published methodology. Importantly, we…

The economic literature on delegation focuses on the subordinate’s improved motivation when liberated from managerial intervention in decision making. However, many managers motivate employees while proactively intervening in the decision-making process. We build a principal-agent model to analyze when managerial intervention is, and is not, motivational to the agent. Although managerial interven…

This study evaluates the effect of generative artificial intelligence (AI) on software developer productivity via randomized controlled trials at Microsoft, Accenture, and an anonymous Fortune 100 company. These field experiments, run by the companies as part of their ordinary course of business, provided a random subset of developers with access to an AI-based coding assistant suggesting intelli…

Social referral programs, in which individuals recommend products or services within their networks in return for rewards, have been widely adopted across digital platforms. This study explores the impact of incorporating uncertainty into the rewards of such programs, focusing on how senders and recipients perceive and react to uncertain rewards. We run a randomized experiment involving more than…

In economies without monetary transfers, token systems serve as an alternative to sustain cooperation and increase efficiency. This paper studies whether a token-based economy can be effective in marketplaces with thin exogenous supply. We consider a marketplace in which at each time period one agent requests a service, one agent provides the service, and one token (artificial currency) is used t…

We study serial supply chain problems where a product is transported from a supplier to a warehouse (inbound transportation), and then from the warehouse (outbound transportation) to a retailer such that demand for a given planning horizon is satisfied. We consider heterogeneous vehicles of varying capacities for transportation in each time period, and the objective is to plan inbound and outboun…

Project-based organizations allow employees in ostensibly similar roles to acquire very different experiences by working on different kinds of projects. We study how people build careers in these contexts, examining when employees choose to diversify their experience—both in terms of project content and collaborators—and how the resulting diversification affects their career advancement. Using lo…

Studying a large set of macroeconomic announcements (MAs) and disentangling their news content, we show that a portfolio of stocks that pays off around MAs that negatively impact the aggregate stock market commands a positive risk premium. Adding this portfolio to a position in the aggregate market substantially increases Sharpe ratio while reducing MA risk exposure, which implies a rejection of …

I document the advertised corporate culture among start-up firms from an online job board. Two corporate culture types emerge: one that concerns the well-being of employees (worker-centered culture) and another that emphasizes other values, such as customers, firms, and markets (firm-centered culture). The worker-centered culture attracts 20% more applications than the other culture type. Firms a…

In this work, we aim to analyze a clinical study sponsor’s decisions regarding monetary payments to participants and compensation for providers (investigators and coordinators) for their efforts to improve participant retention in the study. To this end, we first consider a centralized model where the sponsor decides the monetary payments to participants and the providers’ efforts. We then identi…