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Disputes over transactions on two-sided platforms are common and usually arbitrated through platforms' customer service departments or third-party service providers. This paper studies crowd-judging, a novel crowdsourcing mechanism whereby users (buyers and sellers) volunteer as jurors to decide disputes arising from the platform. Using a rich data set from the dispute resolution center at Taobao, a leading Chinese e-commerce platform, we aim to understand this innovation and propose and analyze potential operational improvements with a focus on in-group bias (buyer jurors favor the buyer, likewise for sellers). Platform users, especially sellers, share the perception that in-group bias is prevalent and systematically sways case outcomes as the majority of users on such platforms are buyers, undermining the legitimacy of crowd-judging. Our empirical findings suggest that such concern is not completely unfounded: on average, a seller juror is approximately 10% likelier (than a buyer juror) to vote for a seller. Such bias is aggravated among cases that are decided by a thin margin and when jurors perceive that their in-group's interests are threatened. However, the bias diminishes as jurors gain experience: a user's bias reduces by nearly 95% as experience grows from zero to the sample median level. Incorporating these findings and juror participation dynamics in a simulation study, the paper delivers three managerial insights. First, under the existing voting policy, in-group bias influences the outcomes of no more than 2% of cases. Second, simply increasing crowd size through either a larger case panel or aggressively recruiting new jurors may not be efficient in reducing the adverse effect of in-group bias. Finally, policies that allocate cases dynamically could simultaneously mitigate the impact of in-group bias and nurture a more sustainable juror pool. This paper was accepted by Vishal Gaur, operations management. Funding: S. A. Yang and A. Zhang acknowledge the support of the Hong Kong General Research Fund [Grant "Decentralizing Platform Governance: Innovations from China; Project 17614921]. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4818. [ABSTRACT FROM AUTHOR]

Unemployment risk influences workers' incentives to invest in firm-specific human capital. This paper investigates the impact of unemployment risk on chief executive officers (CEOs)' risk-taking incentive compensation. Exploiting state-level changes in unemployment benefits, we find that after unemployment insurance benefits become more generous, boards increase the convex payoff structure of CEO pay to encourage risk taking. The increase in CEOs' convexity payoff is stronger in firms with more independent and diverse boards, higher ownership of long-term shareholders, and in industries requiring highly skilled labor. Our findings suggest that boards internalize workers' interests in firms' risk-taking decisions and executive compensation is one mechanism used. This paper was accepted by David Simchi-Levi, finance. Funding: K. Zhang acknowledges financial support from the National Natural Science Foundation of China [Grants 72272099 and 71902115]. Supplemental Material: Data and the online appendix are available at https://doi.org/10.1287/mnsc.2023.4714. [ABSTRACT FROM AUTHOR]

In several transportation systems, vehicles can choose where to meet customers rather than stopping in fixed locations. This added flexibility, however, requires coordination between vehicles and customers that adds complexity to routing operations. This paper develops scalable algorithms to optimize these operations. First, we solve the one-stop subproblem in the ℓ 1 space and the ℓ 2 space by leveraging the geometric structure of operations. Second, to solve a multistop problem, we embed the single-stop optimization into a tailored coordinate descent scheme, which we prove converges to a global optimum. Third, we develop a new algorithm for dial-a-ride problems based on a subpath-based time–space network optimization combining set partitioning and time–space principles. Finally, we propose an online routing algorithm to support real-world ride-sharing operations with vehicle–customer coordination. Computational results show that our algorithm outperforms state-of-the-art benchmarks, yielding far superior solutions in shorter computational times and can support real-time operations in very large-scale systems. From a practical standpoint, most of the benefits of vehicle–customer coordination stem from comprehensively reoptimizing "upstream" operations as opposed to merely adjusting "downstream" stopping locations. Ultimately, vehicle–customer coordination provides win–win–win outcomes: higher profits, better customer service, and smaller environmental footprint. This paper was accepted by Chung Piaw Teo, optimization. Funding: This research was supported by the National Natural Science Foundation of China [Grants 72288101, 52221005 and 52220105001]. Supplemental Material: The e-companion and data are available at https://doi.org/10.1287/mnsc.2023.4739. [ABSTRACT FROM AUTHOR]

Battery swapping for electric vehicle refueling is reviving and thriving. Despite a captivating sustainable future where swapping batteries will be as convenient as refueling gas today, a tension is mounting in practice (beyond the traditional "range anxiety" issue): On one hand, it is desirable to maximize battery proximity and availability to customers. On the other hand, capacitated urban power grids may curb decentralized charging at a slow speed. To reconcile this tension, some cities are embracing an emerging infrastructure network: Decentralized swapping stations replenish charged batteries from centralized charging stations. It remains unclear how to design such a network or whether pooling charging demands will save costs or batteries. In this paper, we model this new urban infrastructure network. This task is complicated by non-Poisson swaps and by the intertwined stochastic operations of swapping, charging, stocking, and circulating batteries among swapping and charging stations. We tackle these complexities by deriving analytical models, which enrich the classical batched repairable-inventory theory. We next propose a joint location and repairable-inventory model for citywide deployment of hub charging stations, with a nonconvex nonconcave objective function. We solve this problem exactly by exploiting submodularity and combining constraint-generation and parameter-search techniques. Even for solving convexified problems, our algorithm brings a speedup of at least three orders of magnitude relative to the Gurobi solver. The major insight is twofold: The benefit of pooling charging demands alone is not enough to justify the adoption of the "swap-locally, charge-centrally" network; instead, the main justification is that faster charging accessible at centralized charging stations significantly reduces the system-wide battery stock level. In a broader sense, this work deepens our understanding of how mobility and energy are coupled toward enabling smart cities. This paper was accepted by Chung Piaw Teo, optimization. Funding: Y. Zhang acknowledges the support from the National Natural Science Foundation of China [Grants 71871023, 72271029, and 72061127001]. W. Qi acknowledges the support from the National Natural Science Foundation of China [Grants 72272014 and 72188101] and the Natural Sciences and Engineering Research Council of Canada [Grant RGPIN-2019-04769]. N. Zhang acknowledges the support from the China Scholarship Council [202106030140]. Supplemental Material: The data files and online appendices are available at https://doi.org/10.1287/mnsc.2023.4731. [ABSTRACT FROM AUTHOR]

On-demand delivery through sharing platforms represents a rapidly expanding segment of the global workforce. The emergence of sharing platforms enables gig workers to choose when and where to work, allowing them to do so in a flexible manner. However, such flexibility brings notorious challenges to platforms in managing the gig workforce. Thus, understanding the incentive and behavioral issues of gig workers in this new business model is inherently meaningful. This paper investigates how the incentive mechanisms of sharing platforms—earnings, ratings, and penalties—affect the working decisions of gig workers and their nuanced relationships. To achieve this goal, we use data from one leading on-demand delivery platform with more than 50 million active consumers in China and implement a two-stage Heckman model with instrumental variables to estimate the impact of earnings, ratings, and penalties. We first show that better ratings motivate gig workers to work more. However, interestingly, when ratings are employed together with earnings, the two positive effects of ratings and earnings can be substitutes for each other. Second, we reveal that higher past penalties discourage workers from working more, whereas, interestingly, workers with higher past penalties tend to be more sensitive toward an increase in earnings. Finally, we conduct follow-up surveys to understand the underlying mechanisms of the observed moderating effects from both psychological and economic perspectives. The ultimate goal of this work is to provide managerial implications to help platform managers understand how earnings, ratings, and penalties work together to affect gig workers' working decisions and how to manage high- and low-quality workers. This paper was accepted by David Simchi-Levi, entrepreneurship and innovation. Funding: This work was supported by the National Natural Science Foundation of China [Grants 72192823, 72172169, 71821002, 91646125, 72071206, 72231011, 72025405, and 72088101] and Program for Innovation Research at the Central University of Finance and Economics. Supplemental Material: The data files and online appendices are available at https://doi.org/10.1287/mnsc.2023.4761. [ABSTRACT FROM AUTHOR]

This paper studies how liquidity management affects asset markets and aggregate economic performance. We explore the connection between liquidity allocation and capital allocation. The policy that changes the liquidity premia on assets has broad implications for private-sector behavior and market efficiency. Liquidity tightening, that is, a reduction in the aggregate quantity of liquid debt, is associated with credit loosening, that is, an increase in funds raised through the issuance of private liquid debt. A positive liquidity premium on debt is required for capital-allocation efficiency, while a zero-liquidity premium is required for liquidity-allocation efficiency. The optimal policy balances these two considerations. Government purchase of private debt is needed to support low interest rates. The analysis is extended to incorporate the liquidity differential between public and private debt and partially liquid capital. This paper was accepted by Lukas Schmid, finance. Funding: This work was supported by the National Natural Science Foundation of China [Grant 71973058]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2022.4559. [ABSTRACT FROM AUTHOR]

In after-sales product support, both literature and practice have highlighted the advantages of paying for performance under performance-based contracts (PBC) over the more traditional transaction-based contracts (TBC) that tie supplier payments to each repair incident. Although PBC is believed to better align incentives in the supply chain when the supplier's private effort is difficult to verify, emerging technologies can make the repair process more transparent, which can eliminate the supplier's moral hazard problem. Meanwhile, fast growth of service outsourcing for established products makes information asymmetry with regards to product failure rates a new challenge for maintenance, repair, and overhaul (MRO) operations. To analyze this changing environment, we build a stylized adverse selection model and explore which contract is more efficient in dealing with information asymmetry. We assume that equipment failure rates are only known by the customer, whose outside options are type dependent. The uninformed supplier has to design appropriate mechanisms to overcome the disadvantages of this information structure while maximizing profits. We show that the two contracts demonstrate different screening ability, and TBC may be preferred over PBC. Type-dependent outside options can lead to countervailing incentives, making PBC immune to information asymmetry and enabling it to achieve the first-best outcome. When the differential of outside options has a relatively stronger effect compared with the differential of failure rates, TBC can bring the supplier a higher ex ante payoff than PBC. Our paper brings to light a heretofore unknown advantage of TBC, and we demonstrate when these contracts are likely to be observed in the third-party MRO market. This paper was accepted by Vishal Gaur, operations management. Funding: This work was supported by the Fishman-Davidson Center at the Wharton School, Erasmus Research Institute of Management, and the National Natural Science Foundation of China [Grant 71801228]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2022.4606. [ABSTRACT FROM AUTHOR]

Although the literature on network effects has focused on single-network firms, many industries feature multinetwork firms that play more complex dynamic pricing games. In this paper, we estimate the network effect at the smartphone operating system (OS) level and study multi-OS telecommunication carriers' dynamic pricing strategies in an oligopolistic setting, using data on the U.S. smartphone industry. We find a positive OS network effect. Counterfactual analysis indicates that if the carriers were single-OS sellers, they would increase the phone prices of large OSs and lower the prices of small OSs, which reduces the consumer surplus by $6.99 billion. Further analyses show that the multi-OS carriers choose lower prices for large OSs than for small OSs because of their preference for OS concentration. This paper was accepted by Eric Anderson, marketing. Funding: This work was supported by the National Natural Science Foundation of China [Grants 72203217, 71803205, and 72192803] and the fund for building world-class universities (disciplines) of Renmin University of China. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2022.4530. [ABSTRACT FROM AUTHOR]

Personal data have become a key input in internet commerce, facilitating the matching between millions of customers and merchants. Recent data regulations in China, Europe, and the United States restrict internet platforms' ability to collect and use personal data for personalized recommendation and may fundamentally impact internet commerce. In collaboration with the largest e-commerce platform in China, we conduct a large-scale field experiment to measure the potential impact of data regulation policy and to understand the value of personal data in internet commerce. For a random subset of 555,800 customers on the Alibaba platform, we simulate the regulation by banning the use of personal data in the home page recommendation algorithm and record the matching process and outcomes between these customers and merchants. Compared with the control group with personal data, we observe a significantly higher concentration in the algorithmic recommendation of products in the treatment group and a very sharp decrease in the matching outcomes as measured by both customer engagement (click-through rate and product browsing) and market transaction (sales volume and amount). The negative effect is disproportionate and more pronounced for niche merchants and customers who would benefit more from e-commerce. We discuss the potential economic impact of data regulation on internet commerce as well as the role of personal data in generating value and fostering long-tail innovations. This paper was accepted by Chris Forman, information system. Funding: Z. Yuan wants to acknowledge financial support from NSFC [Grants 72203202, 72192803 and 72141305]. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2023.4828. [ABSTRACT FROM AUTHOR]

Because of many firms' lack of collateral, banks have imposed loan limits as a form of risk-control regulations of bank financing. In response, loan insurance has emerged as a useful instrument to lift loan limits. To study the joint value of bank loans and loan insurance, this article investigates a supply chain composed of one supplier and one capital-constrained buyer who takes out a bank loan and potentially purchases loan insurance. The analysis reveals that both the supplier and the buyer can benefit from the bank financing with loan insurance in an insurance-cooperation region wherein the supplier is willing to reduce the wholesale price to entice the buyer to purchase insurance. Further still, in the insurance-cooperation region, worse contract terms of the bank loan benefit the supplier, whereas worse policy terms of loan insurance help the buyer. Such benefits can lead to a higher order quantity than the capital-abundant one and partially coordinate the entire supply chain. However, when production cost is low, the supplier and the buyer can encounter a Stackelberg prisoner's dilemma, in which both firms no longer cooperate with each other, and both are worse off. Nevertheless, a government subsidy for the insurance premium can not only reduce the Stackelberg prisoner's dilemma, but also improve the social welfare although it is not always optimal for the government to provide that subsidy. The main qualitative results are robust in a variety of extensions. This paper was accepted by Jayashankar Swaminathan, operations management. Funding: The first author acknowledges support from the National Natural Science Foundation of China (NSFC) [Grant 72171162] and the Humanity and Social Science Youth Foundation of Ministry of Education of China [Grant 20YJC630148], and the second author acknowledges support from the NSFC [Grant 72232001]. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4827. [ABSTRACT FROM AUTHOR]

We study the behavior of an individual avoiding peer information from a natural field experiment of charity crowdfunding. The unique experimental design enables us to employ an instrumental variable strategy to identify how the behavior influences individual giving to and promotion of charity campaigns. We find that, even with free access, 89% of individuals chose not to seek peer information. These individuals were less likely, whereas their peers were more likely to give and help promote in the past. The behavior would reduce the total distribution of campaigns by 8.5% and the total donation amount by 7.7%. A stylized model is used to illustrate how the pressure from peer comparison drives the individuals not to seek the information and how this behavior could influence giving and promoting behaviors of a group of marginal individuals. This paper was accepted by Yan Chen, behavioral economics and decision analysis. Funding: The project was supported by the National Natural Science Foundation of China [Grants 72103110]. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2023.4807. [ABSTRACT FROM AUTHOR]

In this paper, we consider a container leasing firm that has elementary and premium containers, which are downward substitutable and for use by elementary contract customers (ECCs), premium contract customers (PCCs), as well as walk-in customers (WICs). ECCs can be satisfied by elementary containers or premium ones at discounted prices while PCCs only accept premium containers. WICs can be satisfied by any type of container at different prices. The objective is to maximise the expected total rental revenue by managing its limited capacity. We formulate this problem as a discrete-time Markov Decision Process and show the submodularity and concavity of the value function. Based on this, we show that the optimal policy can be characterised by a series of rationing thresholds, a series of substitution thresholds and a priority threshold, all of which depend on the system states. We further give conditions under which the optimal policy can be simplified. Numerical experiments are conducted to show the impact of the substitution of two items on the revenue, to compare the performance of the optimal policy with those of the commonly used policies and to investigate the influence of arrival rates on the optimal policy. Last, we extend the basic model to consider different rental durations, ECCs' acceptance behaviour and endogenous prices for WICs. This paper was accepted by Jayashankar Swaminathan, operations management. Funding: This work was supported by National Natural Science Foundation of China/Research Grants Council of Hong Kong Joint Research Scheme [Grant 71661167009, N_PolyU531/16], National Natural Science Foundation of China [Grants 72171016, 71831001], and British Academy\Leverhulme Small Research [Grant SRG19\190059]. This work was also supported by Zhejiang Shuren University Research [Grant KXJ0121605] and Beijing Logistics Informatics Research Base. Supplemental Material: The e-companion and data files are available at https://doi.org/10.1287/mnsc.2022.4425. [ABSTRACT FROM AUTHOR]

Recent years have seen considerable debate about the practicability of a global quantity/price commitment to control carbon emissions and tackle environmental issues. In this paper, we study the impact of the cap-and-trade policy (quantity commitment) and the carbon tax policy (price commitment) on a firm's technology investment and production decisions. The main feature captured in our model is that there exist correlated uncertainties between the sales market (demand uncertainty) and the permit trading market (permit price volatility) under the cap-and-trade policy. The correlation relationship stands on the following intuition. The demands for final products affect firms' production output, which generates the needs of emission permits and influences the permit price. We show that under the cap-and-trade policy, with the uncertainty of the future emission price, the firm could flexibly adjust its production quantity to enhance its profit, resulting in low incentives to invest in clean technology. However, as the (positive) correlation between the sales market and the permit trading market increases, the production flexibility is constrained so that the firm has to increase its technology investment to hedge against the future risk of a high emission price. Making a comparison between the cap-and-trade and carbon tax policies, we find that when the correlation coefficient is moderate, the carbon tax policy generates a multiwin situation (i.e., more technology investment, higher expected profit and consumer surplus, and fewer carbon emissions). Case studies are provided to illustrate the implications and model variants are examined to check the robustness of the main results. Overall, our analysis sheds light on recent debate over carbon pricing and identifies the important role of correlated uncertainties in carbon policy design. This paper was accepted by Charles Corbett, operations management. Funding: This work was supported by the stable support plan program of Shenzhen Natural Science Fund [Program Contract 20200925160533002] and the National Natural Science Foundation of China [Grant 72101105]. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2022.4365. [ABSTRACT FROM AUTHOR]

Do people have well-defined social preferences waiting to be applied when making decisions? Or do they have to construct social decisions on the spot? If the latter, how are those decisions influenced by the way in which information is acquired and evaluated? These temporal dynamics are fundamental to understanding how people trade off selfishness and prosociality in organizations and societies. Here, we investigate how the temporal dynamics of the choice process shape social decisions in three studies using response times and mouse tracking. In the first study, participants made binary decisions in mini-dictator games with and without time constraints. Using mouse trajectories and a starting time drift diffusion model, we find that, regardless of time constraints, selfish participants were delayed in processing others' payoffs, whereas the opposite was true for prosocial participants. The independent mouse trajectory and computational modeling analyses identified consistent measures of the delay between considering one's own and others' payoffs (self-onset delay, SOD). This measure correlated with individual differences in prosociality and predicted heterogeneous effects of time constraints on preferences. We confirmed these results in two additional studies, one a purely behavioral study in which participants made decisions by pressing computer keys, and the other a replication of the mouse-tracking study. Together, these results indicate that people preferentially process either self or others' payoffs early in the choice process. The intrachoice dynamics are crucial in shaping social preferences and might be manipulated via nudge policies (e.g., manipulating the display order or saliency of self and others' outcomes) for behavior in managerial or other contexts. This paper was accepted by Yan Chen, behavioral economics and decisions analysis. Funding: F. Chen acknowledges support from the National Natural Science Foundation of China [Grants 71803174 and 72173113]. Z. Zhu acknowledges support from the Ministry of Science and Technology [Grant STI 2030-Major Projects 2021ZD0200409]. Q. Shen acknowledges support from the National Natural Science Foundation of China [Grants 71971199 and 71942004]. I. Krajbich acknowledges support from the U.S. National Science Foundation [Grant 2148982]. This work was also supported by the James McKeen Cattell Fund. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4732. [ABSTRACT FROM AUTHOR]

One million international students study in the United States each year, and the majority of them compete in global labor markets after graduation. I conducted a large-scale field experiment and a companion employer survey to study how employers in China value U.S. college education. I sent more than 27,000 fictitious online applications to business and computer science jobs in China, randomizing the country of college education. I find that U.S.-educated applicants are on average 18% less likely to receive a callback than applicants educated in China, with applicants from very selective U.S. institutions underperforming those from the least selective Chinese institutions. The United States-China callback gap is smaller at high-wage jobs, consistent with employers fearing U.S.-educated applicants have better outside options and would be harder to hire and retain. The gap is also smaller at foreign-owned firms, consistent with Chinese-owned firms knowing less about American education. Controlling for high school quality, test scores, or U.S. work experiences does not attenuate the gap, suggesting that the gap is not driven by employer perceptions of negative selection. A survey of 507 hiring managers at college career fairs finds consistent and additional supporting evidence for the experimental findings. This paper was accepted by Yan Chen, behavioral economics and decision analysis. Funding: This work was supported by the Industrial Relations Section at Princeton University and the Prize Fellowship in Social Sciences awarded by Princeton School of Public and International Affairs. Supplemental Material: The data files and online appendices are available at https://doi.org/10.1287/mnsc.2023.4745. [ABSTRACT FROM AUTHOR]

We study how a data-rich firm can benefit by unilaterally sharing its customer data with a data-poor competitor when the data can be used for price discrimination. By sharing data on the segment of market that is more loyal to the competitor and keeping the data on the competitor's most loyal segment to itself, the firm can induce the competitor to raise its price for consumers on which it does not have data. Such data sharing is an example of a fat-cat strategy as it softens price competition that follows data sharing. Although consumer surplus decreases as a result of data sharing, total surplus can increase when the sharing firm concedes its market share to the competitor, which improves the quality of consumer–firm matching. This paper was accepted by Joshua Gans, business strategy. Funding: C. Choe and C. Wang gratefully acknowledge financial support from the Australian Research Council [Grant DP210102015]. J. Cong would like to acknowledge the financial support from the National Natural Science Foundation of China [Grants 72003035, 72192845] and Shanghai Pujiang Program [Grant 2019PJC007]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2023.4689. [ABSTRACT FROM AUTHOR]

Whereas trust is the cornerstone of any market's functioning, it is of particular importance in markets that are unregulated, illiquid, and opaque, such as the art market. This study examines the role of authenticity, as captured by provenance information in auction catalogs, on the probability of auctioned oil paintings, watercolors, and prints being sold; their price formation; and returns. Auction catalogs include four authenticity dimensions: pedigree (ownership "blockchain," descendance information; type of past owners, such as renowned collectors; and past sales records), exhibition history (e.g., in famous museums or galleries), literature coverage (e.g., in catalogues raisonnés or authoritative press), and certification (e.g., artist's physical testimonial, expert opinions). We find that trust, proxied by provenance information, increases the probability of a work being sold by up to 4%, leads to hammer price premiums up to 54%, and increases annualized returns by 5%–16%. To address potential endogeneity problems between the provision of provenance and past prices/price expectations, we perform quasi-natural experiments in difference-in-differences settings on auction houses' provenance policy changes following authenticity litigation and on a contamination effect of the discovery of fakes and forgeries on the oeuvre of forged artists. We also test transactions less affected by past prices, such as estate sales following the death of a collector. The findings on the relation between provenance and prices are robust to artist reputation, artistic style, auction house reputation, art market liquidity, and artist career timing. This paper was accepted by Tomasz Piskorski, finance. Funding: Y. Li gratefully acknowledges supports from the National Natural Science Foundation of China [Grant 72204257] and the Area Studies Fund of Renmin University of China [Grant AS2022002]. This study is partially funded by the Tilburg Alumni Fund. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2022.4633. [ABSTRACT FROM AUTHOR]

International Financial Reporting Standard (IFRS) 9 is of practical relevance to banks because it requires intense monitoring of borrowers to record timely loan losses. Using data from 50 countries, we find that accounting-driven bank monitoring due to IFRS 9 adoption reduces firms' reliance on bank debt relative to public debt. This finding is consistent with firms experiencing more costly bank monitoring after a shift in regulatory reporting that requires banks to monitor borrowers more intensely. In further analyses, we find that the negative effect of IFRS 9 adoption on bank debt reliance is more pronounced with more stringent regulatory supervision of banks, consistent with regulatory stringency exacerbating costly bank monitoring for firms. We also find that the negative effect is stronger when firms can more easily switch from bank debt to public debt financing, consistent with the relevance of switching costs in firms' decisions to avoid costly bank monitoring. This paper was accepted by Suraj Srinivasan, accounting. Funding: This work was supported by the National Natural Science Foundation of China [Grant 71802205], the Program for Innovation Research, and the Program for Young Talents Cultivation [Grant QYP202103] in Central University of Finance and Economics. Supplemental Material: Data and the online appendix are available at https://doi.org/10.1287/mnsc.2022.4628. [ABSTRACT FROM AUTHOR]

This paper examines whether the massive Chinese anticorruption campaign ensnares corrupt firms, contains a political component, and reduces corporate corruption. Consistent with the campaign's stated objectives, investigated executives are more likely to come from Chinese firms with characteristics commonly associated with measures of poor governance, self-dealing, and inefficiencies. However, affiliations with prominent investigated political leaders increase investigation likelihood, while university affiliations with current central leadership decrease investigation likelihood, possibly indicating political partiality. Except for reported entertainment expenditures and chief executive officer pay, there has been little evidence of a substantial overall decrease in measures of potential corporate corruption. This paper was accepted by Tomasz Piskorski, finance. [ABSTRACT FROM AUTHOR]

Policy makers in many developing countries use maximum price or markup policies to control pharmaceutical costs, which represent 20%–60% of their overall healthcare expenditure. We study the price effect of price ceiling policies by exploiting a major policy shift in China: the elimination of longstanding ceilings on retail drug prices. We collect weekly price and characteristics data on more than 4,500 drug stock keeping units (SKUs) from a leading pharmacy chain. By comparing the rate of discontinuous price jumps across drugs with and without price ceilings during the years before and after the policy change, we find that while price ceilings are effective in containing the prices of some drugs, they can lead to higher prices for others, particularly if the ceilings are set at the national level irrespective of local economic conditions. About 5% of nationally controlled drugs (or more than 125 drugs) had inflated prices because of price ceilings, with an average price inflation of 10%. We attribute this perverse price effect to focal point pricing and asymmetric information about production costs. Further supporting this view, we find the perverse price effect most prominent in lower-income regions where the centrally set price ceilings are arbitrarily high considering their poorer economic conditions. Moreover, drugs with highly concentrated production and less elastic demand face heightened risks of inflated prices under price ceilings. Finally, based on a sample of drugs with available price ceiling data, we find that drugs with manufacturer-specific ceilings are 100% more likely to be priced at or near their ceilings and 70% more likely to experience price drops once the ceilings are removed compared with other drugs with regular ceilings. Overall, this paper documents the unintended perverse effect of price ceilings in pharmaceutical markets and sheds lights on the ongoing debate of drug price regulation. This paper was accepted by Stefan Scholtes, healthcare management. [ABSTRACT FROM AUTHOR]

This paper studies how globalization affects the corporate tax policies of U.S. manufacturing firms. Using U.S.-granting China Permanent Normal Trade Relations as a quasi-natural experiment, we find a significant increase in tax reduction activities for firms facing higher exposure to Chinese imports. The effect is more pronounced for firms with higher managerial slack. We also find that the effect is stronger for firms in less diversified products market and faster changing industries. We also show that U.S. firms facing higher Chinese import competition are more likely to engage in other tax-motivated activities: acquisition of subsidiaries in low-tax regions and suspected transfer pricing. Furthermore, we explore the 2017 tax cut and the recent U.S.-China trade dispute and find that firms engage less in tax reduction activities after the 2017 tax cut and after the tariff increase for Chinese imports. This paper was accepted by Kay Giesecke, finance. [ABSTRACT FROM AUTHOR]

As the industrial Internet-of-things (IIoT) is becoming increasingly valuable, manufacturers are eager to establish IIoT-based platforms for preventative maintenance (PM). These platforms reposition the roles of manufacturers and reshape the patterns of the after-sales service market. Manufacturers can adopt either the competitive strategy by introducing improved after-sales services to compete with independent maintenance, repair, and operations firms (MROs) or the "coopetitive" strategy by simultaneously opening the platform to these MROs. However, relevant research on this topic remains scarce. Hence, our study fills this gap by investigating a manufacturer's decision for the IIoT-based platform and the subsequent relationship with an MRO. First, we find that even when the product value is relatively low and the IIoT adoption increases PM cost; interestingly, it is sometimes beneficial for the manufacturer to establish the platform. Next, we find that even if the royalty revenue is lower than the increased IIoT costs, the manufacturer may sometimes still adopt the coopetitive strategy of opening the platform. Moreover, with the opening of the platform, the manufacturer pays more technology investment, even in the competitive market. Furthermore, whenever the manufacturer opens the platform, the MRO can profit more by accessing the platform. Hence, there is sometimes a win-win equilibrium with the IIoT adoption. In addition, we find that the opening of the platform sometimes causes less customer surplus but generates more social welfare. Following the IIoT adoption, our findings offer insightful takeaways for the manufacturer's decisions on the establishment and opening of the platform, the MRO's reaction, and policymakers' welfare policies. This paper was accepted by Jeannette Song, operations management. Funding: This work was supported by the National Natural Science Foundation of China [Grants 71922009, 72188101, 71871080, and 72071057]. Supplemental Material: The data files and online appendices are available at https://doi.org/10.1287/mnsc.2023.4733. [ABSTRACT FROM AUTHOR]

We present the first systematic approach to detect fake transactions on cryptocurrency exchanges by exploiting robust statistical and behavioral regularities associated with authentic trading. Our sample consists of 29 centralized exchanges, among which the regulated ones feature transaction patterns consistently observed in financial markets and nature. In contrast, unregulated exchanges display abnormal first significant digit distributions, size rounding, and transaction tail distributions, indicating widespread manipulation unlikely driven by a specific trading strategy or exchange heterogeneity. We then quantify the wash trading on each unregulated exchange, which averaged more than 70% of the reported volume. We further document how these fabricated volumes (trillions of dollars annually) improve exchange ranking, temporarily distort prices, and relate to exchange characteristics (e.g., age and user base), market conditions, and regulation. Overall, our study cautions against potential market manipulations on centralized crypto exchanges with concentrated power and limited disclosure requirements and highlights the importance of fintech regulation. This paper was accepted by David Simchi-Levi, Special Section of Management Science: Blockchains and Crypto Economics. Funding: This research was partly funded by the Ewing Marion Kauffman Foundation [Grant G-201907-6995], the National Natural Science Foundation of China [Grants 72192802, 72192800, and 72192801], Ripple's University Blockchain Research Initiative (UBRI), and the FinTech at Cornell Initiative. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2021.02709. [ABSTRACT FROM AUTHOR]

Outpatient care providers usually allow patients to access service via scheduling appointments or direct walk-in. Patients choose strategically between these two access channels (and otherwise balking) based on the trade-off of appointment delay and in-clinic waiting. How to manage outpatient care with such dual access channels, taking into account patient strategic choice behavior, is a challenge faced by providers. We study three operational levers to address this management challenge: service capacity allocation between these two channels, appointment delay information revelation via the choice and design of online scheduling systems, and a walk-in triage system that restricts the use of walk-in hours only for acute care. By studying a stylized queueing model, we find that neither a real-time online scheduling system (which offers instant access to appointment delay information at time of booking) nor an asynchronous online system (which does not directly provide delay information) can be universally more efficient. Although real-time systems appear more popular in practice, asynchronous systems sometimes can result in higher operational efficiency. Under the provider's optimal capacity allocation, which scheduling system is more efficient hinges on two key factors: the patient demand–provider capacity relationship and patient willingness to wait. For the walk-in triage system, we find that it may or may not be beneficial to adopt; the provider's own cost trade-off between lost demand and overtime work is the key determinant. Our research highlights that there is no one-size-fits-all model for outpatient care management, and the best use of operational levers critically depends on the practice environment. This paper was accepted by Jayashankar Swaminathan, operations management. Funding: S. Wang's work was supported in part by the National Natural Science Foundation of China [Grants 72001220 and 71931008]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2023.4676. [ABSTRACT FROM AUTHOR]

This study tests whether modulating a brain region associated with cognitive control using noninvasive brain stimulation affects the disposition effect. A participant trades stocks in an experimental asset market while their level of cognitive control is exogenously manipulated by applying weak current stimulation to a control-related cortical region. We find that the stimulation significantly affects the participant's cognitive control and tendency to exhibit the disposition effect. This result is also obtained for financial professionals. We thus provide evidence that cognitive control is important for the disposition effect. This paper was accepted by Bruno Biais, finance. Funding: X. Niu acknowledges financial support from the National Natural Science Foundation of China [Grant 72203132], Taishan Scholar Program of Shandong Province [Grant tsqn201909013], and Natural Science Foundation of Shandong Province [Grant ZR2022QG048]. J. Li acknowledges financial support from the National Social Science Foundation of China [Grant 20AZD044], Natural Science Foundation of Shandong Province [Grant ZR2022MG068], and Project of Humanities and Social Sciences of Shandong University [Grant 21RWZD15]. Q. Cao acknowledges financial support from the Social Science Foundation of Jiangsu Province [Grant 21GLC006]. The authors also acknowledge financial support from the Major Project of the National Natural Science Foundation of China [Grant 72192842]. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2022.4596. [ABSTRACT FROM AUTHOR]

We study the relationship between new intermediaries and regulatory arbitrage, analyzing marketplace credit around a tightening of mortgage loan-to-value (LTV) caps in several cities in China in 2013. Using novel data covering over 20% of Chinese marketplace credit as well as the universe of loans and loan applications at a leading online lending platform, we provide evidence consistent with home buyers borrowing online to bypass the tighter LTV cap. Our findings point to new, lightly regulated financial intermediaries as a driver of household leverage, suggesting that they can open nonnegligible regulatory arbitrage channels. This paper was accepted by Victoria Ivashina, finance. Supplemental Material: Data and the online appendix are available at https://doi.org/10.1287/mnsc.2022.4592. [ABSTRACT FROM AUTHOR]

Buy-one-get-one (BOGO) promotions have become popular. With BOGO, the first unit is sold for the regular price, and the second unit is discounted. We analyze BOGO in manufacturer–retailer supply chains. We identify conditions under which BOGO outperforms price reduction (PR) and everyday low price (EDLP) policies. We find that, for some products, whether consumers stockpile or not, if BOGO and PR have the same market size, BOGO has a larger retailer profit and the same or larger manufacturer profit because BOGO induces more consumers to buy and consume two units. When consumers stockpile, the retailer sets prices to prevent such behavior, and the retailer's share of supply chain profits is largest under BOGO, whereas consumer surplus with BOGO is smaller than PR. We also find that BOGO reduces double marginalization. When PR expands market size more than BOGO, BOGO's effectiveness diminishes. When consumers stockpile without increasing consumption and/or production cost is high, EDLP is best. Our results are robust to multiperiod with single-promotion-period settings. A large number of regular-price periods following a promotion period increases stockpiling, which erodes the retailer's profit and favors EDLP. If promotions are offered for consecutive periods, a larger number of promotion periods increases PR's efficacy relative to BOGO. Time-inconsistent consumers increase stockpiling and make PR outperform BOGO. Heterogeneous consumers' holding cost and marginal utility prevent retailers from perfectly discriminating among consumers who make profit-reducing choices. Compared with retailers' BOGO, manufacturers' BOGO increases double marginalization and decreases retailers' and manufacturers' profits and consumer surplus. This paper was accepted by Jayashankar Swaminathan, operations management. Funding: This work was partially supported by the National Science Foundation of China [Grants 71972026, 72101102]. Y. Li's work was supported by the China Scholarship Council [Grant 201806070094]. Supplemental Material: The online companion and data are available at https://doi.org/10.1287/mnsc.2022.4638. [ABSTRACT FROM AUTHOR]

We show that superstitions—beliefs without scientific grounding—impact the investment and risk-taking of Chinese firms. We focus on widely held beliefs in bad luck during one's "zodiac year," which occurs on a 12-year cycle around a person's birth year, to study superstitions and risk taking. We first show a direct correspondence between zodiac year and risk taking via survey data: respondents are two percentage points more likely to favor no-risk investments if queried during their zodiac year. Turning to corporate decision making, we find that return volatility declines in the chairman's zodiac year, suggesting a reduction in risk taking overall. Focusing on specific types of risk taking, investment in R&D and corporate acquisitions both decline during the chairman's zodiac year; returns around acquisition announcements are also lower, suggesting real allocative consequences of zodiac year beliefs. This paper was accepted by Gustavo Manso, finance. Funding: W. Huang thanks the Major Project of National Social Science Foundation of China [Grant 17ZDA090] and the "National Program for Special Support of Eminent Professions" for financial support. Y. Pan thanks the National Natural Science Foundation of China [Grant 71790601] for financial support. Y. Wang thanks the National Natural Science Foundation of China [Grant 72172090] for financial support. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2022.4594. [ABSTRACT FROM AUTHOR]

Operational risk has been among the three most significant types of risks in the financial services industry, and its management is mandated by Basel II regulations. To inform better labor decisions, this paper studies how workload affects banks' operational risk event occurrence. To achieve this goal, we use a unique data set from a commercial bank in China that contains 1,441 operational risk events over 16 months. We find that workload has a U-shaped impact on operational risk error rate. More specifically, the error rate of operational risk events decreases first, as workload increases, and then increases. Furthermore, when workload is low, employees tend to make performance-seeking risks; however, when workload is high, employees tend to exhibit quality degradation due to cognitive multitasking. Based on the causal relationship between workload and operational risk events from the empirical analysis, we discuss staffing policies among branches aimed at reducing operational risk losses. We find that employing a flexible staffing rule can significantly reduce the number of operational risk events by 3.2%–10% under different scenarios. In addition, this significant performance improvement can be achieved by adding even a little bit of flexibility to the process by allowing employees to either switch their business lines in the same branch or switch branches within the same business lines on a quarterly basis. This paper was accepted by Vishal Gaur, operations management. [ABSTRACT FROM AUTHOR]

We leverage an exogenous shock—the crackdown on corrupt Chinese officials beginning in 2012—and examine how the allocation of research subsidies and innovative outcomes were affected. We argue that the staggered removal of provincial heads on corruption charges during China's anticorruption campaign and the unanticipated departures of local government officials responsible for innovation programs led to plausibly exogenous reductions in corruption. After both events, the allocation of subsidies became more sensitive to firm merit than to corruption and subsidies became more strongly associated with future innovation. Anticorruption efforts and officials' career incentives improved the efficacy of subsidy programs. This paper was accepted by Toby Stuart, entrepreneurship and innovation. Funding: This work was supported by the Harvard Business School, Toulouse Network on Information Technology, Major projects of the National Social Fund of China [Project 22ZDA047], and National Natural Science Foundation of China [Grants 71790601, 71722012]. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2022.4611. [ABSTRACT FROM AUTHOR]

Government bonds might provide reference entities that reduce corporate bond yields. We study China's 2017 issuance of two U.S. dollar (USD)-denominated sovereign bonds when there were (effectively) no outstanding USD sovereigns. We find that Chinese corporate USD bonds experienced a four- to nine-basis-point decline in yield spreads, whereas corporate renminbi (RMB) bonds did not. The effect was stronger for corporate bonds with maturities similar to those of the USD sovereigns. Further consistent with the reference effect, USD-denominated corporate bonds experienced declines in bid-ask spreads and volatility; corporate bond yield spread changes became more sensitive to sovereign yield innovations; and the less-informed foreign mutual funds significantly increased their holdings of offshore USD Chinese corporate bonds. Limited evidence indicates that new corporate bond maturities shifted toward the sovereign bonds' maturity after their issuance. This paper was accepted by Lukas Schmid, finance. Funding: B. Wang received financial support from Hong Kong Institute for Monetary Research. C. Y. Hong received financial support from the National Natural Science Foundation of China [Grant 72003125]. Supplemental Material: The internet appendix and data are available at https://doi.org/10.1287/mnsc.2022.4499. [ABSTRACT FROM AUTHOR]

We show that firms strategically alter their disclosures when investors' access to information via search engines is interrupted. We conduct a textual analysis and exploit an exogenous event—Google's 2010 surprising withdrawal from mainland China, which significantly hampered domestic investors' ability to search for foreign information but did not affect their cost to access domestic information. Following Google's exit, Chinese firms' announcements on foreign transactions become more bullish relative to domestic transactions. Optimism in disclosure is especially rosy if the press releases are conveying negative news or are issued by poorly governed firms. This effect is mitigated in the presence of foreign investors or analysts affiliated with foreign brokers who are not subject to foreign information censorship by the government. The increase in search cost also appears to leave domestic news media and financial analysts more vulnerable to the influence of corporate disclosure. These optimistic announcements allow insiders to harvest higher returns from selling their shares and are associated with a higher likelihood of corporate misconduct. This paper was accepted by Gustavo Manso, finance. Funding: This work was supported by the National Natural Science Foundation of China [Grants 71272072 and 71572042]. X. Yu gratefully acknowledges financial support from the Arthur M. Weimer Fellowship. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2022.4521. [ABSTRACT FROM AUTHOR]

We study the effects of implicit government guarantee (IGG) on Chinese state-owned enterprises (SOEs). We find that SOEs reduce their investments by 2.4% of book assets, on average, relative to matched non-SOEs after the first SOE default in China's onshore bond markets in 2015. The investment reduction concentrates among SOEs that are financially constrained, yet SOEs financed by large state banks are hardly affected. Bondholders require more stringent default protection in newly issued SOE bonds. We also find that the investment reduction is more pronounced for SOEs with severe agency problems and that SOEs experienced more positive market reactions to acquisition announcements after 2015. Our results suggest that the reduction in IGG has confounding effects on Chinese firms. Although the weakening of IGG may help mitigate overinvestment, it exacerbates financial constraints of those with limited access to alternative sources of financing. This paper was accepted by Lucas Schmid, finance. Funding: Z. Zhang acknowledges the funding support by Research Grants Council of Hong Kong [Project 11503318]. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2022.4483. [ABSTRACT FROM AUTHOR]

Media dissemination plays an important role in facilitating price discovery. Political pressure that restricts media dissemination can hinder this function and affect investors' perceptions. This paper studies the magnitude of newspaper censorship in China and its economic consequences using a setting of tunneling scandals. We find significant evidence of censorship of tunneling-related negative news at the national and local levels. We further show that news that survives censorship reduces information asymmetry and improves pricing efficiency. Censorship blocks informative tunneling news and delays incorporation of tunneling reporting into prices. This paper was accepted by Brian Bushee, accounting. [ABSTRACT FROM AUTHOR]

We consider a mixed duopoly service system with two service providers (SPs): one private and the other public. The public SP's objective is welfare maximization, whereas the private SP is profit driven. Customers are heterogeneous in terms of their quality tastes and choose from three options, namely, joining the private queue, joining the public queue, and balking (or taking an outside option). We first consider the scenario where the private SP provides a premium service and the public SP provides a regular service. Paradoxically, we find that although the public SP's objective is welfare maximization, welfare in the system can be less than that obtained with only profit-seeking private SPs. We further demonstrate that the maximum social welfare is achieved by partially privatizing the public SP, that is, by including both welfare and profit maximization as arguments in its objective function. In extreme cases in which the public SP's capacity is very small, fully privatizing the public SP can be socially desirable. We then consider the alternate setting where the public SP provides a premium service and the private SP provides a regular service and obtain similar conclusions. These findings, however, rely on the assumption that an outside option exists for balking customers, and one should be cautious in generalizing to no-balking situations. This paper was accepted by Jayashankar Swaminathan, operations management. Funding: W. Zhou was supported by the National Natural Science Foundation of China [Grants 71925002 and 71731006]. W. Huang acknowledges the financial support from the National Natural Science Foundation of China [Grants 71801096 and 72101090] and the Guangdong Basic and Applied Basic Research Foundation [Grant 2022A1515011983]. V. N. Hsu was supported by the General Research Fund of the Hong Kong Research Grants Council [Grant CUHK14526216]. P. Guo received financial support from the Hong Kong Research Grants Council [Grant 15502820]. Supplemental Material: The e-companion and data are available at https://doi.org/10.1287/mnsc.2022.4424. [ABSTRACT FROM AUTHOR]

Corporate bonds with large increases in implied volatility over the past month underperform those with large decreases in implied volatility by 0.6% per month. In contrast to existing studies that show implied volatility changes carry information about fundamental news, our evidence suggests that implied volatility changes contain information about uncertainty shocks to the firm. Our results are consistent with the notion that informed traders with new information about firm risk prefer to trade in the option market and the corporate bond market underreacts to this information. This paper was accepted by Haoxiang Zhu, finance. Funding: We thank the Canadian Derivatives Institute for financial support. J. Cao and X. Zhan acknowledge generous financial support of the Research Grant Council of the Hong Kong Special Administrative Region, China [Grants GRF 14501720, 14500919]. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2022.4379. [ABSTRACT FROM AUTHOR]

This paper illustrates how supply chain (SC) analytics could provide strategic and operational insights to evaluate the risk-based allocation of regulatory resources in food SCs, for management of food safety and adulteration risks. This paper leverages data on 89,970 tests of aquatic products extracted from a self-constructed data set of 2.6 million food safety tests conducted by the China Food and Drug Administration (CFDA) organizations. The integrated and structured data set is used to conduct innovative analysis that identifies the sources of adulteration risks in China's food SCs and contrasts them with the current test resource allocations of the CFDA. The analysis highlights multiple strategic insights. Particularly, it suggests potential gaps in the current CFDA testing allocation by SC location, which is heavily focused on retail and supermarkets. Instead, the analysis indicates that high-risk parts of the SC, such as wholesale and wet markets, are undersampled. Additionally, the paper highlights the impact that SC analytics could have on policy-level operational decision making to regulate food SCs and manage food safety. The hope is that the paper will stimulate the interest of academics with expertise in these areas to conduct more work in this important application domain. This paper was accepted by Charles Corbett, operations management. [ABSTRACT FROM AUTHOR]

This paper examines the relation between air pollution and individual investors' trading behavior and performance. Using unique data on stock trades by 87,504 individuals from 34 cities in China, we find a negative relation between air pollution and trade performance. This result is obtained after controlling for investor-year fixed effects and date fixed effects, as well as local weather conditions. More strikingly, abnormal trade performance decreases monotonically with the levels indicating the severity of air pollution. Furthermore, we find evidence suggesting that air pollution makes investors more susceptible to the disposition effect and attention-driven buying behavior. Overall, the results highlight a hitherto-unexplored cost that ambient air pollution imposes on stock market investors. This paper was accepted by Tylor Shumway, finance. [ABSTRACT FROM AUTHOR]

We investigate a data-driven multiperiod inventory replenishment problem with uncertain demand and vendor lead time (VLT) with accessibility to a large quantity of historical data. Different from the traditional two-step predict-then-optimize (PTO) solution framework, we propose a one-step end-to-end (E2E) framework that uses deep learning models to output the suggested replenishment amount directly from input features without any intermediate step. The E2E model is trained to capture the behavior of the optimal dynamic programming solution under historical observations without any prior assumptions on the distributions of the demand and the VLT. By conducting a series of thorough numerical experiments using real data from one of the leading e-commerce companies, we demonstrate the advantages of the proposed E2E model over conventional PTO frameworks. We also conduct a field experiment with JD.com, and the results show that our new algorithm reduces holding cost, stockout cost, total inventory cost, and turnover rate substantially compared with JD's current practice. For the supply chain management industry, our E2E model shortens the decision process and provides an automatic inventory management solution with the possibility to generalize and scale. The concept of E2E, which uses the input information directly for the ultimate goal, can also be useful in practice for other supply chain management circumstances. This paper was accepted by Hamid Nazerzadeh, big data analytics. Funding: This research was supported by the National Key Research and Development Program of China [Grant 2018YFB1700600] and National Natural Science Foundation of China [Grants 71991462 and 91746210]. Supplemental Material: The online data are available at https://doi.org/10.1287/mnsc.2022.4564. [ABSTRACT FROM AUTHOR]

We develop a game-theoretic model to study the incentive for competing manufacturers to share supplier audit information. Based on the audit information, each manufacturer decides whether to source from a common supplier who has uncertain responsibility violation risk or to switch to a backup supplier who has no responsibility violation risk but charges a higher price. When supplier responsibility violation occurs, some consumers boycott the manufacturers involved. Audit information allows a manufacturer to reduce the uncertainty about the risk of the common supplier. We show that audit information sharing may make the manufacturers' sourcing strategies more or less differentiated. As a result, the information-sharing decision is not monotone in the model parameters. We fully characterize the manufacturers' equilibrium audit information-sharing and sourcing decisions and establish conditions under which audit information sharing induces the manufacturers to adopt more or less responsible sourcing strategies. We also show that a manufacturer could be better off when the cost premium of sourcing from the backup supplier or the risk of the common supplier becomes higher or the audit information becomes less accurate. We consider several extensions of the base model and demonstrate that the main insights remain mostly valid. This paper was accepted by Charles Corbett, operations management. Funding: A. Y. Hawas supported by the Wei Lun Foundation. W. Shang was supported by the Research Grants Council of Hong Kong [GRF Project LU 13501415]. Y. Wang was supported by National Natural Science Foundation of China [Grant 71901209]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2022.4358. [ABSTRACT FROM AUTHOR]

Recent studies have proposed a large set of powerful anomaly-based factors in the stock market. This study examines the role of investor inattention in the corresponding anomalies underlying these factors and other underreaction-related anomalies. Using media coverage as a proxy for investor attention, we show that the anomalies underlying many recently proposed prominent factors are much more pronounced among firms with low media coverage in portfolio-formation periods. In addition, we find many other prominent anomalies that previous literature has attributed to underreaction also tend to perform much better among firms with low media coverage. The average Fama-French five-factor alpha spread of these anomalies is about 0.97% per month among firms with low news coverage and only 0.24% per month among firms with high news coverage. Moreover, most of the alpha spread comes from the short leg of the anomalies and from the firms that are more difficult to arbitrage. Overall, our evidence indicates that investor inattention at least partially drives many of the recently proposed factors. This paper was accepted by Haoxiang Zhu, finance. Funding: L. Tao received financial support from the National Natural Science Foundation of China [Grant 72171050], the Ministry of Education Project of Humanities and Social Sciences [Grant No. 17YJCZH161], and the University of International Business and Economics Fund for Distinguished Young Scholars [Grant No. 18JQ07]. J. Yu acknowledges financial support from the National Natural Science Foundation of China [Grant No. 71790591]. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2022.4332. [ABSTRACT FROM AUTHOR]

Although many central banks in the 21st century have become more transparent, Chinese monetary policy communications have been relatively opaque, suggesting that financial market participants must commit significant resources to predicting the central bank's actions. We conduct a novel systematic textual analysis of the discussion in the quarterly reports of China fund managers, from which we infer their near-term expectations for monetary policy. We construct an aggregate index of manager expectations and show that, as a forecast of Chinese monetary policy, it compares favorably with both market- and model-based alternative projections. We also show that fund managers act on these expectations and correctly anticipating shifts in Chinese monetary policy improves fund performance. Our results imply that manager skill is an important determinant of fund returns, providing the first evidence from China on a question for which studies of asset management in other countries have reached conflicting conclusions. Finally, we find that expectations are more accurate for funds that commit more analytical resources, have higher management fees, or have stronger managerial educational background. This paper was accepted by Victoria Ivashina, finance. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2022.4330. [ABSTRACT FROM AUTHOR]

We investigate how historical price information (e.g., accessed through price trackers) influences consumers' purchase decisions and thus affects a firm's dynamic pricing strategy. We first show that when consumers with heterogeneous tastes are not informed about historical prices, the monopolist charges a high regular price for most of the time and periodically holds low-price sales. Then we consider the case in which a small fraction of consumers (such as price tracker users) become informed of historical prices. At the new equilibrium, the monopolist lowers the regular price and advances sales, implying shorter price cycles, more frequent sales, and a positive spillover effect of price tracker users' informational advantage on the rest of uninformed consumers. We conclude with a discussion of the impact of price trackers on firms and other relevant managerial implications of the model. This paper was accepted by Dmitri Kuksov, marketing. Funding: Y. Chen thanks the National Science Foundation of China [Grant 71972043] for the support. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2022.4309. [ABSTRACT FROM AUTHOR]

Existing research on word-of-mouth considers various descriptive statistics of rating distributions, such as the mean, variance, skewness, kurtosis, and even entropy and the Herfindahl-Hirschman index. But real-world consumer decisions are often derived from visual assessment of displayed rating distributions in the form of histograms. In this study, we argue that such distribution charts may inadvertently lead to a consumer-choice bias that we call the histogram distortion bias (HDB). We propose that salient features of distributions in visual decision making may mislead consumers and result in inferior decision making. In an illustrative model, we derive a measure of the HDB. We show that with the HDB, consumers may make choices that violate well-accepted decision rules. In a series of experiments, subjects are observed to prefer products with a higher HDB despite a lower average rating. They could also violate widely accepted modeling assumptions, such as branch independence and first-order stochastic dominance. This paper was accepted by Chris Forman, information systems. Funding: This work was supported by the National Natural Science Foundation of China [Grants 72131001 and 92146003] and the Research Grants Council, University Grants Committee [GRF 14500521, GRF 14501320, GRF 14503818, and TRS:T31-604/18-N]. Supplemental Material: Data and the online appendices are available at https://doi.org/10.1287/mnsc.2022.4306. [ABSTRACT FROM AUTHOR]

In a crisis, regulators and private investors can find it difficult, if not impossible, to tell whether banks facing runs are insolvent or merely illiquid. We introduce such an information constraint into a global-games-based bank run model with multiple banks and aggregate uncertainties. The information constraint creates a vicious cycle between contagious bank runs and falling asset prices and limits the effectiveness of traditional emergency liquidity assistance programs. We explain how a regulator can set up committed liquidity support to contain contagion and stabilize asset prices even without information on banks' solvency, rationalizing some recent developments in policy practices. This paper was accepted by Agostino Capponi, finance. Funding: This work was supported by the National Natural Science Foundation of China [Project 71803024]. Z. Li also acknowledges financial support from "Innovation and Talent Base for Digital Technology and Finance" of China [Project B21038]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2021.4258. [ABSTRACT FROM AUTHOR]

Specifying a proper input distribution is often a challenging task in simulation modeling. In practice, there may be multiple plausible distributions that can fit the input data reasonably well, especially when the data volume is not large. In this paper, we consider the problem of selecting the best from a finite set of simulated alternatives, in the presence of such input uncertainty. We model such uncertainty by an ambiguity set consisting of a finite number of plausible input distributions and aim to select the alternative with the best worst-case mean performance over the ambiguity set. We refer to this problem as robust selection of the best (RSB). To solve the RSB problem, we develop a two-stage selection procedure and a sequential selection procedure; we then prove that both procedures can achieve at least a user-specified probability of correct selection under mild conditions. Extensive numerical experiments are conducted to investigate the computational efficiency of the two procedures. Finally, we apply the RSB approach to study a queueing system's staffing problem using synthetic data and an appointment-scheduling problem using real data from a large hospital in China. We find that the RSB approach can generate decisions significantly better than other widely used approaches. This paper was accepted by Noah Gans, stochastic models and simulation. [ABSTRACT FROM AUTHOR]

The problems of nonconcave utility maximization appear in many areas of finance and economics, such as in behavioral economics, incentive schemes, aspiration utility, and goal-reaching problems. Existing literature solves these problems using the concavification principle. We provide a framework for solving nonconcave utility maximization problems, where the concavification principle may not hold, and the utility functions can be discontinuous. We find that adding portfolio bounds can offer distinct economic insights and implications consistent with existing empirical findings. Theoretically, by introducing a new definition of viscosity solution, we show that a monotone, stable, and consistent finite difference scheme converges to the value functions of the nonconcave utility maximization problems. This paper was accepted by Agostino Capponi, finance. Funding: M. Dai acknowledges financial support from the National Natural Science Foundation of China [Grants 12071333 and 11671292] and the SingaporeMinistry of Education [Grants R-146-000-243-114, R-146-000-306-114, R-146-000-311-114, and R-703-000-032-112]. X. Wan is supported by the National Natural Science Foundation of China [Grants 71850010, 72171109, 71972131, and 72271157]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2021.4228. [ABSTRACT FROM AUTHOR]

Using a large sample of unlisted industrial firms in China, we find that a decrease in local governments' land transfer revenues leads to lower tax avoidance by firms within their jurisdiction. Our cross-sectional variation tests suggest that the tax-avoidance-reduction effect is stronger in cities with higher land finance dependence and government intervention, as well as where the political leaders have stronger promotion incentives. However, the effect is moderated for politically connected firms. Further analysis reveals that intensified tax enforcement is the mechanism through which land transfer revenue losses result in decreased tax avoidance. Our study offers novel evidence on a previously underexplored determinant of corporate tax avoidance through the lens of land finance. This paper was accepted by Gustavo Manso, finance. Funding: The authors acknowledge financial support from the National Natural Science Foundation of China [Grants 72002105, 71972089 and 72132002]. T. Chen is grateful for the financial support from the Singapore Ministry of Education Academic Research Fund [Grant 2015-T2-1-118, RG166/18] and the Natural Science Foundation of Guangdong Province, China [Grants 2018A03031043 and 2019A1515011635]. C. (C.) Zeng acknowledges the start-up research fund from the Hong Kong Polytechnic University [Grant A0035237]. Supplemental Material: Data and the online appendix are available at https://doi.org/10.1287/mnsc.2021.4191. [ABSTRACT FROM AUTHOR]

This study identifies information accessibility as a determinant of corporate innovation. Using the sudden termination of Google's search services in China, we find a persistently large negative effect on the intensity and quality of innovation among firms relying on foreign knowledge. The results are stronger for firms in industries dominated by foreign technology, in regions with local web filters, and for firms with fewer alternative sources of foreign information. We also find that the affected firms cite fewer foreign patents and their innovation efficiency declines after Google's exit. Overall, the results are consistent with the view that access to information is an important driver of technological progress. This paper was accepted by Kay Giesecke, finance. Funding: D. Kong acknowledges financial support from the National Natural Science Foundation of China [Grants 71802160, 71991473, and 71772178] and the Major Project of National Social Science Foundation of China [Grant 21ZDA010]. C. Lin acknowledges financial support from the National Natural Science Foundation of China [Grant 71790601]. L. Wei acknowledges financial support from the Research Grant Council of the Hong Kong Special Administrative Region, China [Project T35/710/20R]. J. Zhang acknowledges financial support fromthe PRC Ministry of Education Youth Project for Humanities and Social Science Research [Grant 18XJC630008]. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2021.4224. [ABSTRACT FROM AUTHOR]

We show that executive ownership is a significant driver of the demand for credit following credit expansion policies. Our focus on credit demand is in contrast to most studies that have focused on credit supply factors such as bank capital. Our identification exploits the large and unexpected Chinese credit expansion in 2008. This setting offers a unique advantage as in 2008 the Chinese government had almost complete control over the banking sector and it directed the banks to increase credit supply. Thus, in this setting, demand, rather than supply, largely drives the observed changes in firms' borrowing. We provide extensive robustness tests to validate our results. This paper was accepted by Kay Giesecke, finance. [ABSTRACT FROM AUTHOR]