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We study the incentives of a digital business to collect and protect users’ data. The users’ data the business collects improve the service it provides to consumers, but they may also be accessed, at a cost, by strategic third parties in a way that harms users, imposing endogenous users’ privacy costs. We characterize how the revenue model of the business shapes its optimal data strategy: collection and protection of users’ data. A business with a more data-driven revenue model will collect more users’ data and provide more data protection than a similar business that is more usage driven. Consequently, if users have small direct benefit from data collection, then more usage-driven businesses generate larger consumer surplus than their more data-driven counterparts (the reverse holds if users have large direct benefit from data collection). Relative to the socially desired data strategy, the business may over- or undercollect users’ data and may over- or underprotect it. Restoring efficiency requires a two-pronged regulatory policy, covering both data collection and data protection; one such policy combines a minimal data protection requirement with a tax proportional to the amount of collected data. We finally show that existing regulation in the United States, which focuses only on data protection, may even harm consumer surplus and overall welfare. This paper was accepted by Itai Ashlagi, revenue management and market analytics.

A novel binary decision architecture (BDA) for broadcast news audio classification task is presented in this paper. The idea of developing such architecture came from the fact that the appropriate combination of multiple binary classifiers for two-class discrimination problem can reduce a miss-classification error without rapid increase in computational complexity. The core element of classification architecture is represented by a binary decision (BD) algorithm that performs discrimination between each pair of acoustic classes, utilizing two types of decision functions. The first one is represented by a simple rule-based approach in which the final decision is made according to the value of selected discrimination parameter. The main advantage of this solution is relatively low processing time needed for classification of all acoustic classes. The cost for that is low classification accuracy. The second one employs support vector machine (SVM) classifier. In this case, the overall classification accuracy is conditioned by finding the optimal parameters for decision function resulting in higher computational complexity and better classification performance. The final form of proposed BDA is created by combining four BD discriminators supplemented by decision table. The effectiveness of proposed BDA, utilizing rule-based approach and the SVM classifier, is compared with two most popular strategies for multiclass classification, namely the binary decision trees (BDT) and the One-Against-One SVM (OAOSVM). Experimental results show that the proposed classification architecture can decrease the overall classification error in comparison with the BDT architecture. On the contrary, an optimization technique for selecting the optimal set of training data is needed in order to overcome the OAOSVM.

International audience; For an efficient integration of autonomous vehicles on roads, human-like reasoning and decision making in complex traffic situations are needed. One of the key factors to achieve this goal is the estimation of the future behavior of the vehicles present in the scene. In this work, we propose a new approach to predict the motion of vehicles surrounding a target vehicle in a highway environment. Our approach is based on an LSTM encoder-decoder that uses a social pooling mechanism to model the interactions between all the neighboring vehicles. The originality of our social pooling module is that it combines both local and non-local operations. The non-local multi-head attention mechanism captures the relative importance of each vehicle despite the inter-vehicle distances to the target vehicle, while the local blocks represent nearby interactions between vehicles. This paper compares the proposed approach with the state-of-the-art using two naturalistic driving datasets: Next Generation Simulation (NGSIM) and the new highD Dataset. The proposed method outperforms existing ones in terms of RMS values of prediction error, which shows the effectiveness of combining local and non-local operations in such a context.

We model the decision making process used by Experts at the Canadian Innovation Centre to classify early stage venture proposals based on potential commercial success. The decision is based on thirty-seven attributes that take values in { - 1 , 0 , 1 } . We adopt a conjunctive decision framework due to Astebro and Elhedhli (2005) that selects a subset of attributes and determines two threshold values: one for the maximum allowed negatives (n) and one for minimum required positives (p). A proposal is classified as a success if the number of positives is greater than or equal to p and the number of negatives is less than or equal to n over the selected attributes. Based on a data set of 561 observations, the selection of attributes and the determination of the threshold values is modeled as a large-scale mixed integer program. Two solution approaches are explored: Benders decomposition and Tabu search. The first, was very slow to converge, while the second provided high quality solutions quickly. Tabu search provides excellent classification accuracy for predicting commercial successes as well as replicating Experts’ forecasts, opening the venue for the use of Tabu search in scoring and classification problems.

The trajectories of social processes (e.g., peer pressure, imitation, and assimilation) that take place on social networks depend on the structure of those networks. Thus, to understand a social process or to predict the associated outcomes accurately, marketers would need good knowledge of the social network structure. However, many social networks of relevance to marketers are large, complex, or hidden, making it prohibitively expensive to map out an entire social network. Instead, marketers often need to work with a sample (i.e., a subgraph) of a social network. In this paper we evaluate the efficacy of nine different sampling methods for generating subgraphs that recover four structural characteristics of importance to marketers, namely, the distributions of degree, clustering coefficient, betweenness centrality, and closeness centrality, which are important for understanding how social network structure influences outcomes of processes that take place on the network. Via extensive simulations, we find that sampling methods differ substantially in their ability to recover network characteristics. Traditional sampling procedures, such as random node sampling, result in poor subgraphs. When the focus is on understanding local network effects (e.g., peer influence) then forest fire sampling with a medium burn rate performs the best, i.e., it is most effective for recovering the distributions of degree and clustering coefficient. When the focus is on global network effects (e.g., speed of diffusion, identifying influential nodes, or the “multiplier” effects of network seeding), then random-walk sampling (i.e., forest-fire sampling with a low burn rate) performs the best, and it is most effective for recovering the distributions of betweenness and closeness centrality. Further, we show that accurate recovery of social network structure in a sample is important for inferring the properties of a network process, when one observes only the process in the sampled network. We validate our findings on four different real-world networks, including a Facebook network and a co-authorship network, and conclude with recommendations for practice.

Modeling consumer heterogeneity helps practitioners understand market structures and devise effective marketing strategies. In this research we study finite mixture specifications for modeling consumer heterogeneity where each regression coefficient has its own finite mixture, that is, an attribute finite mixture model. An important challenge of such an approach to modeling heterogeneity lies in its estimation. A proposed Bayesian estimation approach, based on recent advances in reversible jump Markov Chain Monte Carlo (MCMC) methods, can estimate parameters for the attribute-based finite mixture model, assuming that the number of components for each finite mixture is a discrete random variable. An attribute specification has several advantages over traditional, vector-based, finite mixture specifications; specifically, the attribute mixture model offers a more appropriate aggregation of information than the vector specification facilitating estimation. In an extensive simulation study and an empirical application, we show that the attribute model can recover complex heterogeneity structures, making it dominant over traditional (vector) finite mixture regression models and a strong contender compared with mixture-of-normals models for modeling heterogeneity.The appendices for this paper are available at the following URL: http://ssrn.com/abstract=2370423