Innovation Opportunities and Risks Archives

The Efficiency of Dynamic Electricity Prices

The marginal cost of electricity fluctuates hour-by-hour, yet retail customers typically face flat prices. Using data from all seven US wholesale markets and a new method to evaluate alternative rates set in advance that accounts for equilibrium price effects, we estimate efficiency gains from time-varying price schedules that better align price with cost. We have three main results. First, time-of-use rates and critical-peak pricing, the two most common time-varying rate plans, each correct about 10% of mispricing. Second, complex rate structures based on historical prices often backfire. Third, real-time pricing with price ceilings can capture most potential efficiency gains while limiting customer risk.…Read More

High-Flying Analytics: Harnessing Wearable Sensors and AI to Safeguard Military Aviators

For military aviators, functioning without fail within a high-stress work environment is a necessity. In order to complete critical missions, they make split-second decisions while piloting 44,000 lbs of hurtling machinery accelerating at up to 9G’s in high-altitude conditions. For less experienced pilots, managing the associated physical and mental fatigue is an integral and challenging component of executing flights safely and well. We collaborate with a pioneering company that innovatively outfits aviators at 22 USAF bases with wearable sensors that record both the physical stresses of sorties (flights) and the biophysical states and reactions of pilots in real time. Then, we develop analytical methods to make timely and accurate use of such novel wearable…Read More

Can Artificial Intelligence Mitigate Inventor Productivity Decline after Co-Inventor Premature Death?

Although it is well documented that disruptive events, such as an inventor’s premature death, cause a large and persistent decline in their co-inventor’s innovation performance, strategies to mitigate these negative effects remain unexplored. This project aims to understand how an inventor’s skill and proficiency in artificial intelligence (AI) could counteract the productivity decline resulting from a co-inventor’s demise. We intend to first identify the specific challenges facing inventors in staying innovative after the unexpected death of their close collaborators. Furthermore…Read More

Perceived Momentum in Media Consumption: Optimizing Binge-Watching

Every day, millions of people engage in the popular behavior called “binge-watching”, a type of media consumption where multiple episodes of the same TV show are seen in a row (Schweidel and Moe, 2016). Given how popular “binge-watching” is and how much streaming platforms are relying on it to recommend and create new content to stream, it is very important to understand whether consumers are satisfied by their binging sessions and whether recommendation systems are well calibrated in suggesting binge-worthy content that will maximize this satisfaction.…Read More

A Second Opinion: Impact of Generative AI on Information Acquisition Processes, Performance, and Service Quality

Since ChatGPT’s launch in November 2022, a surge of studies has underscored generative AI’s potential across a wide range of applications, including improving entrepreneurial performance, spurring innovation, and even providing more ethical advice. Less attention has been garnered about how AI impacts the efficiency of a decision-maker’s information search process. In the context of health care, medical providers review existing patient information (i.e., their medical history) and then must ask a series of questions to the patient or run diagnostic tests to make their diagnosis. While there is inherent uncertainty, the provider faces a trade-off between acquiring additional information from the patient to increase certainty over a diagnosis and…Read More

Career Effects of Venture Capital on High-Technology Startup Employees

Venture capital (VC) significantly contributes to job creation and innovation in high-tech startups, with around 50% of tech companies reaching IPOs in the past three decades having VC backing. While the benefits of VC on startups and regional economies are well-documented, its impact on individual career trajectories remains underexplored. This research proposal investigates how VC financing influences employee turnover and career progression within startups. VC investment can lead to higher wages and faster promotions, enhancing employee value. However…Read More

How vs. How and Why Nudges: When Stating Your Case Isn’t as Effective

Marketers and policymakers often use nudges to help consumers make welfare-increasing decisions, such as encouraging physically and mentally healthy choices. This research explores when one nudge is more effective than another. More specifically, it demonstrates nudges focusing on telling consumers how to do something are more effective than nudges telling consumers how and why to do something. This is because listing the reasons why a consumer should do something creates the potential for a mismatch between the listed reasons and a consumer’s personal reasons for considering engaging in a behavior. This mismatch, in turn, leads consumers to believe said behavior will benefit their quality of life less than they might have believed otherwise. These findings…Read More

Electric Vehicle (EV) Fleet and Charging Infrastructure: Decision-Making by Drivers

The gig economy is rapidly integrating electric vehicles (EVs) into its infrastructure, particularly within ride-hailing services such as Uber and Lyft. Algorithms play a crucial role in this ecosystem, determining customer pricing, driver compensation, and matching drivers with customers. While these algorithms have enabled efficient matching of supply and demand, they also face criticisms, including a lack of transparency, potential bias, and inefficiency. This study investigates the decision-making processes of EV drivers within the gig economy, focusing on how charging infrastructure and fleet size impact…Read More

Vertical Integration in the Video Streaming Market

Vertical integration in the video streaming market has become increasingly prevalent in recent years. Notable examples include Amazon’s merger with MGM, Walt Disney’s acquisition of Hulu, and the launch of streaming platforms by various studios such as Paramount and NBCUniversal. Many studios now license most of their shows to their vertically integrated streaming platforms, which has led to consumer complaints about the need for multiple subscriptions to access content that they…Read More

Artificial Intelligence, innovation, and product market dynamics

This research project aims to investigate the impact of artificial intelligence (AI) investments by non-tech firms (AI-adopters) on product market competition, innovation, and industry dynamics. By leveraging novel datasets, including firm-level AI-workers, product-level pricing and quantities, and textual information from company filings, this study seeks to provide new insights into how AI adoption…Read More

Private Equity, Corporate Acquirers, & Product Innovation: An Investigation of Corporate Science Acquisitions 1990-2022

Private equity has become an increasingly active player in technology acquisitions in recent years, yet most strategy scholarship has focused on the effects of corporate acquirer ownership on innovation outcomes, providing little guidance to managers on how to choose between the two M&A options. To remedy this gap, I examine how private equity and corporate acquirers differentially affect product innovation at acquired targets using hand-collected new product introduction announcements.…Read More

Exerting Effort to Choose Increases Generosity

Recently in the gifting industry, websites allow consumers to set up cash registries (e.g., honeymoon and baby fund registries) to elicit gifts in different ways. For example, consumers may set up a cash registry that lists a lump sum expense (e.g., $5,000 for a honeymoon). Alternatively, they may set up an itemized registry, that breaks up the total expense into smaller expenses, such as travel, lodging, and activities during the honeymoon.…Read More

Building Business Foresight Capabilities

The objective of this research is to study how organizations can develop superior business foresight capabilities, defined as capabilities to develop accurate beliefs about future business opportunities and threats in an industry undergoing significant disruptive change. These capabilities will be embedded among people and processes that will include the use of Artificial Intelligence (AI) technologies such as Large Language Models (LLMs).…Read More

Price Regulation in Centralized College Admission Systems: Evidence from India

This project explores the effect of government price intervention on student enrollment decisions and education quality in private higher education markets with centralized admissions. In particular, the emphasis will be on understanding changes in the enrollment patterns and educational outcomes of historically underrepresented ethnic groups (Backward Castes, Scheduled Castes, and Scheduled Tribes).…Read More

Will EFTs Drive Mutual Funds Extinct?

I study investors’ trade-off between ETFs and open-ended mutual funds in the presence of idiosyncratic liquidity risk and aggregate uncertainty. Based on a portfolio choice model, I show that ETFs and mutual funds provide liquidity at different maturities. Mutual funds (ETFs) are preferred by investors facing high (low) idiosyncratic liquidity risk and shorter (longer) investment horizons. In equilibrium, the pooling of investors into fund types based on their expected investment horizon directly emerges from the differential frictions of ETFs and mutual funds. Over the long-term, payoff complementarities in mutual funds dilute investors fund holdings and generate underperformance vis-à-vis ETFs. Yet, in the short-run, ETFs can be mispriced due to intermediary arbitrage constraints. The optimal size of the mutual fund sector relative to ETFs decreases in the illiquidity of portfolio assets but increases in the proportion of mutual fund shares held via retirement accounts.…Read More

Consumer Preferences and Firm Technology Choice

Advances in technology change the way consumers search and shop for products. Emerging is the trend of home-shopping devices such as Amazon’s Alexa and Google Home, which allow consumers to search or order products. We investigate how consumer brand and technology preferences may interact with the functionalities of technology-enabled shopping (TES) devices to determine the channel structure and market competition.…Read More

Opportunities and Risks in Belief Distribution Elicitations

Researchers and practitioners have increasingly embraced the novel practice of eliciting the entire belief distributions, as it provides a more thorough understanding of stakeholders’ beliefs. My recent paper (co-authored with Professor Joe Simmons) suggests that constructing belief distributions can sometimes inadvertently exacerbate people’s overconfidence in their predictions.…Read More

Learning by Monitoring: The Impact of Monitoring on VC Re-Investment Performance

This project aims to investigate the impact of monitoring on VC reinvestment performance. Using novel data sources, I construct a proxy for monitoring and test the causal relationship between monitoring and investment outcomes. To address the endogeneity issue regarding monitoring, I use the traveling population as an instrumental variable for VC’s monitoring intensity.…Read More

Leveraging Analytics to Maximize Innovation

Academics and practitioners will log onto an intuitive user interface and type in features of their own company (e.g., its size and industry). They will immediately be greeted with an “instant meta-analysis” that summarizes decades of academic findings related to the most important predictors of creativity and innovation in organizations.…Read More

Decision-Aware Learning for Global Health Supply Chains

Tsai-Hsuan (Angel) Chung, Phd Candidate at the Wharton School; Osbert Bastani, Penn School of Engineering; Francis Smart, PhD Candidate at the University of Montana; Jatu Abdulai*; Patrick Bayoh*; Musa Komeh*; Vahid Rostami* Abstract: This proposal aims to develop and deploy novel methods that integrate machine learning and optimization to improve…Read More