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Magazine article
Informationen zur politischen Bildung 344 (3): 52–61
Henning Christian Lahmann, Philipp Otto (2020)
Keyword(s)
digital transformation, human rights, cyberwar, surveillance, espionage, cybercrime, autonomous weapons systems
Over the past two decades, the progressing digital transformation has brought along a growing number of challenges in the context of security: internet crime, cyberwar and espionage, surveillance and autonomous weapons systems. While increased security measures seem indispensable, they need to be weighed against individual human rights guarantees. This chapter provides an overview of the pertinent questions.
Volume
344
Journal Pages
52–61
Working Paper
SSRN Working Paper
Gishan Dissanaike, Wolfgang Drobetz, Paul P. Momtaz, Jörg Rocholl (2020)
Subject(s)
Economics, politics and business environment; Finance, accounting and corporate governance
Keyword(s)
mergers and acquisitions, acquirer returns, law and finance, takeover law, law enforcement
JEL Code(s)
G30, G34, G38, K20, K22
This paper examines the impact of takeover law enforcement on corporate acquisitions. We use the European Takeover Directive as a natural experiment, which harmonizes takeover law across countries, while leaving its enforcement to the discretion of individual countries. We exploit this heterogeneity in enforcement quality across countries in a difference-in-differences-in-differences model, while employing an overall inductive research approach, following Karpoff and Whittry’s (2018) recommendation. We find that acquirer returns increase in countries with improvements in takeover law, driven by better target selection and lower cost of financing. The increase in acquirer returns is lower in weak enforcement jurisdictions, which we identify by developing a novel Takeover Law Enforcement Index (TLEI). The findings show that takeover law can mitigate agency conflicts, but its true value depends on its enforcement. Our results are robust to a number of robustness tests.
Pages
56
Subject(s)
Human resources management/organizational behavior; Strategy and general management
Keyword(s)
Success, ideology, influence
ISSN (Print)
0015-6914
Subject(s)
Management sciences, decision sciences and quantitative methods; Product and operations management; Technology, R&D management
Keyword(s)
Data, machine learning, data product, pricing, incentives, contracting
This paper explores how firms that lack expertise in machine learning (ML) can leverage the so-called AI Flywheel effect. This effect designates a virtuous cycle by which, as an ML product is adopted and new user data are fed back to the algorithm, the product improves, enabling further adoptions. However, managing this feedback loop is difficult, especially when the algorithm is contracted out. Indeed, the additional data that the AI Flywheel effect generates may change the provider's incentives to improve the algorithm over time. We formalize this problem in a simple two-period moral hazard framework that captures the main dynamics between machine learning, data acquisition, pricing, and contracting. We find that the firm's decisions crucially depend on how the amount of data on which the machine is trained interacts with the provider's effort. If this effort has a more (resp. less) significant impact on accuracy for larger volumes of data, the firm underprices (resp. overprices) the product. Interestingly, these distortions sometimes improve social welfare, which accounts for the customer surplus and profits of both the firm and provider. Further, the interaction between incentive issues and the positive externalities of the AI Flywheel effect have important implications for the firm's data collection strategy. In particular, the firm can boost its profit by increasing the product's capacity to acquire usage data only up to a certain level. If the product collects too much data per user, the firm's profit may actually decrease. As a result, the firm should consider reducing its product's data acquisition capacity when its initial dataset to train the algorithm is large enough.
Pages
48
ISSN (Print)
1866–3494
Journal Article
Management Science 66 (10): 4359–4919
2018 POMS HOCM Best Paper Award
Saed Alizamir, Francis de Véricourt, Shouqiang Wang (2020)
Subject(s)
Health and environment; Management sciences, decision sciences and quantitative methods
Keyword(s)
Information design, Bayesian persuasion game, dynamic programming, statistical decision, global health, disaster management
The World Health Organization seeks effective ways to alert its member states about global pandemics. Motivated by this challenge, we study a public agency’s problem of designing warning policies to mitigate potential disasters that occur with advance notice. The agency privately receives early information about recurring harmful events and issues warnings to induce an uninformed stakeholder to take preemptive actions. The agency’s decision to issue a warning critically depends on its reputation, which we define as the stake- holder’s belief regarding the accuracy of the agency’s information. The agency faces then a trade-off between eliciting a proper response today and maintaining its reputation in order to elicit responses to future events.
We formulate this problem as a dynamic Bayesian persuasion game, which we solve in closed form. We find that the agency sometimes strategically misrepresents its advance information about a current threat in order to cultivate its future reputation. When its reputation is sufficiently low, the agency downplays the risk and actually downplays more as its reputation improves. By contrast, when its reputation is high, the agency sometimes exaggerates the threat and exaggerates more as its reputation deteriorates. Only when its reputation is moderate does the agency send warning messages that fully disclose its private information.
Our study suggests a plausible and novel rationale for some of the false alarms or omissions observed in practice. We further test the robustness of our findings to imperfect advance information, disasters without advance notice, and heterogeneous receivers.
Copyright © 2020, INFORMS
Volume
66
Journal Pages
4359–4919
Journal Article
Sustainability 12 (20): 8420
Herwig Buchholz, Thomas Eberle, Manfred Klevesath, Alexandra Juergens, Douglas Beal, Alexander Balc, Joanna Radeke (2020)
Subject(s)
Ethics and social responsibility
Keyword(s)
Impact valuation, impact assessment, corporate sustainability performance, Sustainable Business Value, SBV model
JEL Code(s)
M14
How can a company commit to maximizing stakeholder value while maintaining financial performance? Companies increasingly have the ambition to provide stakeholder value to their owners and shareholders, employees, consumers, suppliers, partners, the environment, and future generations. However, such companies often face difficulties in demonstrating the value they bring to stakeholders, due to the lack of universal methods for assessing their impact. Besides the practical need to develop a method for impact valuation, we researched the existing literature and discovered the lack of a holistic method to evaluate all impacts of a company using a common currency with flexible adaptations at different levels. We developed a new method called Sustainable Business Value (SBV) to address these gaps and enable companies to evaluate their impacts. We tested the SBV in two pilots. The SBV method differs from currently used methods, including sustainability reporting, sustainability rating and indices, and sustainability accounting. SBV can be used for decision-making, portfolio management, benchmarking, stakeholder communication, investor communication, and business development and also provides a comprehensive perspective of a company’s impact across six standardized dimensions. However, further development and standardization of proxies and cross-industry standards are needed.
Volume
12
Journal Pages
8420
ISSN (Online)
2071-1050
Working Paper
SSRN Working Paper
Katja Kisseleva, Aksel Mjos, David T. Robinson (2020)
Subject(s)
Finance, accounting and corporate governance
Keyword(s)
returns, investment, entrepreneurship, venture capital, early-stage financing
JEL Code(s)
G11, G23, G24, G32
This paper uses highly detailed administrative records from the Norwegian Tax Authority to provide direct measures of the returns from investing in newly established, innovative companies. We trace out the entire funding and pricing histories of each firm and study performance measures at the transaction and investment levels. Many investments result in total loss, but returns exhibit extreme right-skewness. Cross-sectional analysis shows that different investor types earn widely differing returns even in the same investment. This arises not just because they invest on different terms, but because they make different decisions about holding or selling shares. The opaqueness and uncertainty implied by this heterogeneity is indicative of the market frictions associated with early-stage investment in innovation.
Pages
52
ESMT Working Paper
ESMT Working Paper No. 18-04 (R1)
Subject(s)
Management sciences, decision sciences and quantitative methods
Keyword(s)
Service operations, rational inattention, strategic customers, rational queueing, information costs, system throughput, social welfare
Problem description: Classical models of queueing systems with rational and strategic customers assume queues to be either fully visible or invisible while service parameters are known with certainty. In practice, however, people only have “partial information” on the service environment in the sense that they are not able to fully discern prevalent uncertainties. This is because assessing possible delays and rewards is costly as it requires time, attention, and cognitive capacity which are all limited. On the other hand, people are also adaptive and endogenously respond to information frictions. Methodology: We develop an equilibrium model for a single-server queueing system with customers having limited attention. Following the theory of rational inattention, we assume that customers optimize their learning strategies by deciding the type and amount of information to acquire and act accordingly while internalizing the associated costs. Results: We establish the existence and uniqueness of a customer equilibrium and delineate the impact of service characteristics and information costs. We numerically show that when customers allocate their attention to learn uncertain queue length, limited attention of customers improves throughput in a congested system that customers value reasonably highly, while it can be detrimental for less popular services that customers deem rather unrewarding. This is also reflected in social welfare if the firm's profit margin is high enough, although customer welfare always suffers from information costs. Managerial implications: Our results shed light on optimal information provision and physical design strategies of service firms and social planners by identifying service settings where they should be most cautious for customers' limited attention. Academic/practical relevance: We propose a microfounded framework for strategic customer behavior in queues that links beliefs, rewards, and information costs. It offers a holistic perspective on the impact of information prevalence (and information frictions) on operational performance and can be extended to analyze richer customer behavior and complex queue structures, rendering it a valuable tool for service design.
Pages
42
ISSN (Print)
1866–3494
Book Chapter
In IT-Sicherheitsrecht, edited by Gerrit Hornung, Martin Schallbruch, Baden-Baden: Nomos.
Subject(s)
Information technology and systems
Keyword(s)
international law, cybersecurity, united nations, use of force, intervention, sovereignty, internet governance, arms control, cyber operations
The chapter summarises the current state of the application of international law to cyberspace and reviews attempts to find consensus among the community of states. While virtually all states agree that international law applies to state conduct in cyberspace, the 'how' remains a hotly contested issue. The chapter focuses on the prohibition of the use of force, the prohibition of intervention, and the principle of sovereignty and assesses their legal status vis-à-vis cyber operations. It follows a brief treatment of further international efforts to increase transnational cybersecurity, such as internet governance and arms control treaties.
Secondary Title
IT-Sicherheitsrecht
ISBN
978-3-8487-5764-0
Book
Baden-Baden: Nomos
Gerrit Hornung, Martin Schallbruch (2020)
Subject(s)
Information technology and systems
Keyword(s)
IT security, international law, cybersecurity
ISBN
978-3-8487-5764-0