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Product Recommendation Strategy and Seller-Biased Recommendations We now segue from bundling economics to the theory of strategic product recommendation, and the nuances that arise when a product or service provider rethinks its approach about how to push a more profitable product to consumers, who exhibit heterogeneity with respect to their fit with it. The optimal strategy depends both on the search cost faced by consumers as well as the accuracy of information the seller possesses about consumer preferences. Using a recommendation system, for example, a seller can nudge potential consumers to a high-margin product, instead of simply recommending the product that would have offered them the highest utility [[28]]. In a two-channel scenario, a larger bundle discount entices more consumers to buy both channels but also results in a higher lost revenue as consumers who would have purchased both in any case can now do so at a lower price. [Extracted from the article]

Bundling is considered to be an effective pricing strategy for zero-marginal-cost information goods. Yet, in many information-goods markets, the effectiveness of bundling remains hard to ascertain. This is because information goods exhibit other characteristics as well, which can potentially interfere with a manufacturer's bundling decision. For instance, they are also prone to piracy, and it is not obvious what impact, if any, piracy can have on the efficacy of bundling. To address this issue rigorously, we reexamine the classic bundling problem with the backdrop of piracy and show that piracy can severely diminish the appeal of bundling to a monopolist seller. Evidently, bundling abets piracy and, in certain situations, so much so that the losses from piracy more than nullify the traditional benefits of bundling. This insight is in fact fairly generalizable. The implication for manufacturers of digital goods is that they need to take piracy into consideration in their bundling decision. In particular, they should consider refraining from bundling when the illegal products are close substitutes for the legal ones. [ABSTRACT FROM AUTHOR]

Controlling digital piracy has remained a top priority for manufacturers of information goods, as well as for many governments around the world. Among the many forms taken by digital piracy, we focus on an increasingly common one--namely, online piracy--that is facilitated by torrent sites and cyberlockers who bring together consumers of pirated content and its suppliers. Motivated by recent empirical literature that makes a clear distinction between antipiracy efforts that restrict supply of pirated goods (supplyside enforcement) and ones that penalize illegal consumption (demand-side enforcement), we develop a simple economic model and discover some fundamental differences between these two types in terms of their impacts on innovation and welfare. All in all, supply-side enforcement turns out to be the 'longer arm'--it has a more desirable economic impact in the long run. Our results have clear implications for manufacturers, consumers, and policy makers. History: Accepted by Chris Forman, information systems. Supplemental Material: The online supplement is available at https://doi.org/10.1287/mnsc.2017.2984. Keywords: online piracy * supply-side enforcement * demand-side enforcement * innovation * welfare, 1. Introduction Piracy of digital goods--ranging from movies, music, and TV shows to video games and computer software--has become an important issue facing their manufacturers and, at times, consumers and [...]

To increase transparency of healthcare quality, the Centers for Medicare and Medicaid Services (CMS) initiated the Physician Quality Reporting System (PQRS). However, the impact of PQRS on physicians is unclear, particularly as related to their online reputation. Is there an association between a physician's online reputation and her adherence to clinical guidelines stipulated in the PQRS? Is online reputation associated with use of electronic health records (EHR)? To investigate these questions, we combine data on online physician reviews with the PQRS data on clinical guideline adherence and EHR use. Unlike prior research, which primarily uses clinical outcomes as proxies for care quality, our study uses adherence to clinical guidelines, a process measure that reflects physician conformance with evidence-based clinical practices. In addition, we focus on EHR use at the physician level, in contrast to the usual approach of examining it at the aggregate institutional level. Consistent with the economic theory of credence goods, we observe no significant relationship between physicians' adherence to clinical guidelines and their online reviews. Although there is some evidence of association between EHR use and their overall rating, similar relationships are not consistently observed for individual dimensional ratings. Overall, the online reputation of a physician exhibits minimal association with her actual clinical activities — and is mostly driven by latent topics in the textual reviews — implying that the ability of online reviews to inform prospective patients of care quality might be quite limited. Therefore, patients should be cautious when using online physician reviews, and policymakers should increase the accessibility of PQRS and other similar data to help patients make informed physician choices. [ABSTRACT FROM AUTHOR]

Effective patch management is critical to ensure the security of information systems that modern organizations count on today. Facing numerous patch releases from vendors, an information technology (IT) manager must [...]

In this paper, we study the economic impact of piracy on the supply chain of information goods. When information goods are sold to consumers via a retailer, in certain situations, a moderate level of piracy seems to have a surprising positive impact on the profits of the manufacturer and the retailer while, at the same time, enhancing consumer welfare. Such a "win-win-win" situation is not only good for the supply chain, but is also beneficial for the overall economy. The economic rationale for this surprising result is rooted in how piracy interacts with double marginalization. We explain this rationale and develop useful insights for management and policy. [ABSTRACT FROM AUTHOR]

The literature on business process design has focused on issues such as bottlenecks, workflow configuration (series versus parallel), replacing an existing workflow with a shorter one, etc. One important issue [...]

The role of education and enforcement in ensuring compliance with a law or policy has been debated for more than a century now. We reopen this debate in the context of security circumvention by employees, currently a leading cause of information security and privacy breaches. Drawing on prior literature, we develop a microeconomic framework that captures employees' circumventing behavior in the face of security controls. This allows us to obtain interesting insights that have implications for how an organization should employ anticircumvention measures. First, unless circumvention is rampant, education and enforcement often work better in combination, and not in isolation. Second, there are incentives for an organization to tolerate circumvention to an extent, even when education and enforcement are cheap. Finally, education and enforcement may be strategic complements or substitutes in different parts of the parameter space. When they are complements, if a change in cost parameters compels the organization to increase one, it would also require an increase in the other in lockstep. In contrast, when they are substitutes, an increase in one is associated with a decrease in the other. This paper was accepted by Chris Forman, information systems. [ABSTRACT FROM AUTHOR]