CORS / Optimization Days 

HEC Montréal, May 29-31, 2023


HEC Montreal, 29 — 31 May 2023

Schedule Authors My Schedule

FiO Fairness in Operations

May 31, 2023 10:30 AM – 12:10 PM

Location: Saine Marketing (green)

Chaired by Rim Hariss

3 Presentations

  • 10:30 AM - 10:55 AM

    Subscription vs. Spot Pricing in On-Demand Economy

    • Ming Hu, presenter, Rotman School of Management, University of Toronto
    • Taojie Qin, Southwestern University of Finance and Economics
    • Zhoupeng (Jack) Zhang, Rotman School of Management, University of Toronto

    We aim to unveil the prevalence of spot pricing in on-demand economy over subscription, another long-adopted pricing scheme in service settings. We develop a game-theoretic queueing framework to model the matching between consumers and workers on a platform. Unlike subscription, the spot pricing empowers the platform owner to dynamically control the system congestion and eventually extract more surplus from consumers. Such a real-time revenue-congestion management complements the process of incentivizing gig workers and price-segments heterogeneous consumers, further enhancing the platform owner’s profit. Interestingly, when both schemes can be applied simultaneously, a hybrid model can yield higher profit than pure spot pricing.

  • 10:55 AM - 11:20 AM

    An Operational Perspective on Microfinancing in Developing Countries

    • Elaheh Rashidinejad, presenter, Rotman School of Management, University of Toronto
    • Opher Baron, Rotman School of Management, University of Toronto
    • Gonzalo Romero, Rotman School of Management, University of Toronto

    We consider a Newsvendor with financing and effort framework. We assume that a BOP entrepreneur effort has a multiplicative effect on the random demand for her product. Furthermore, she starts with zero initial budget and borrows a loan to operate her business. The bank may face bankruptcy cost.
    We examine two relevant cases: First, a social bank that operates as an external lending institution and cannot collect the entire debt in the presence of business losses. Second, a community bank that consists of peers in a community gathering their savings to form a bank and using their social ties to collect the debt eventually. We study these banks under profit-maximizing or zero-profit objectives.
    We find that the effort exerted by the entrepreneur is the main driver of her utility in equilibrium. Further, the main determinants of the effectiveness of these microfinancing setups are the bankruptcy cost and the product's critical fractile. We establish conditions under which the zero-profit (profit-maximizing) community bank improves individual and social welfare than the zero-profit (profit-maximizing) social bank.
    Our work provides insight for policymakers when designing microfinancing structures to maximize social impact and help alleviate poverty.

  • 11:20 AM - 11:45 AM

    Designing Online Platforms to Incentivize Outcomes

    • Rim Hariss, presenter, Desautels Faculty of Management
    • Shreyas Sekar, Rotman School of Management

    Recently, there has been a growing concern that the adopted policies by online platform can exacerbate the biases present in the data and lead to outcomes that favour specific groups of popular users. This can affect the long-term health of the marketplace by endangering users’ trust in the platform and lead to lopsided growth.This work tackles the problem of designing data-driven policies for online platforms that lead to diverse/fair outcomes. We focus on one lever used by the platform: pricing/revenue sharing. We adopt a two-pronged approach: 1) Use publicly available data from platforms such as Spotify to quantify how current policies lead to undesirable outcomes that only benefit some users; 2) Design policies for revenue sharing that benefit a broad spectrum of users operating on the platform.