News

October 11: Vivien Surman (QSMS Seminar)

Vivien Surman from BME, Management department, will be presenting her paper “Characterizing clusters of students and supervisors based on an empirical study in the case of project work courses on October 11th at 10 AM, room QA405. One-to-one meetings with the speaker can be arranged; please contact the seminar organizers, Dr. Noémie Cabau (cabau.noemie@gtk.bme.hu) and Dr. Arseniy Samsonov (samsonov.arseniy@gtk.bme.hu).  

Abstract:  The purpose of this research is to describe the different clusters of students completing project work courses and to characterize lecturers acting as supervisors as well. The existence of different student groups setting different requirements against the supervising process has been emerged by supervisor focus group interviews in the improvement process of a service quality framework for project work courses. Cluster analyses based upon data from this service quality framework have proved the presence of three well-definable student groups. At the same time, the specific attributes of the supervisors including age, experience, grade distribution have also been gathered and analysed. The student classification is based on feedbacks of 1500 students. Supervisor characterization results from the analyses of 800 previously finished project work courses. As a result, it could be confirmed that both the students and the supervisors could be classified into well-defined groups in the case of project work courses. Finally, the characteristics of the identified groups of students and that of supervisors have been compared with statistical methods, highlighting connections between the groups. As these project work courses are remarkable cornerstones of total higher education student experience, characterizing the service quality features of the supervision process is vital. On the long run, the successful pairing of student groups with supervisor groups having specific features could be carried out for the sake of successful student accomplishment and for standardizing the supervision process as well. 

Luca Sandrini and Robert Somogyi’s project awarded a NET Institute Summer Grant

News Media Bargaining Codes, Luca Sandrini and Robert Somogyi’s joint project, was awarded a NET Institute Summer Grant.

The project investigates the welfare effects of a policy intervention that mandates digital platforms (notably Facebook and Google) to negotiate compensation with news publishers for the excessive loss in advertising revenues that the latter are experiencing. By introducing the News Media and Digital Platforms Mandatory Bargaining Code, the Australian government was the first to legislate such a policy. This research project aims to understand the effect of such regulations on consumers and news quality. The analysis distinguishes two main scenarios. First, if the news quality is insensitive to the policy (news publishers do not adjust their investments upon receiving a transfer), the codes increase welfare and never harm consumers. Second, a poorly designed transfer can be inefficient if news publishers set news quality endogenously. However, even an inefficient policy never harms consumers. Furthermore, the research provides some guidance on designing an efficient transfer scheme.

The first draft of the paper analyzing these issues will be available in the Fall as a NET Institute Working Paper. The NET Institute funds a number of scientific research projects in the area of network industries, including wired and wireless networks, “virtual networks,” electronic commerce, telecommunications, the Internet, platforms, and two-sided markets. It is expected that funded research will eventually be published in top academic research journals. The NET Institute’s board of directors consists of:

October 4: Dov Samet (QSMS Seminar)

Dov Samet from the Coller School of Management at Tel Aviv University will be presenting his paper “Desirability” on October 4th at 10 AM, room QA405. One-to-one meetings with the speaker can be arranged; please contact the seminar organizers, Dr. Noémie Cabau (cabau.noemie@gtk.bme.hu) and Dr. Arseniy Samsonov (samsonov.arseniy@gtk.bme.hu).  

Abstract:  We propose a model of an agent’s probability and utility that is a compromise between Savage (1954) and Jeffrey (1965). In Savage’s model the probability-utility pair is associated with preferences over acts which are assignments of consequences to states. The probability is defined on the state space, and the utility function on consequences. Jeffrey’s model has no consequences, and both probability and utility are defined on the same set of propositions. The probability-utility pair is associated with a desirability relation on propositions. Like Savage we assume a set of consequences and a state space. However, we assume that states are comprehensive, that is, each state describes a consequence, as in Aumann (1987). Like Jeffrey, we assume that the agent has a preference relation, which we call desirability, over events, which by definition involves uncertainty about consequences. For a given probability and utility of consequences, the desirability relation is presented by conditional expected utility, given an event. We axiomatically characterize desirability relations that are represented by a probability-utility pair. We characterize the family of all the probability-utility pairs that represent a given desirability relation.

September 20: Anastas Tenev (QSMS Seminar)

Anastas Tenev from the Institute of Economics at Corvinus University will present his paper “Information Design for Weighted Voting” (co-authored with Toygar T. Kerman) on September 20th at 10 AM, room QA405. One-to-one meetings with the speaker can be arranged; please contact the seminar organizers, Dr. Noémie Cabau (cabau.noemie@gtk.bme.hu) and Dr. Arseniy Samsonov (samsonov.arseniy@gtk.bme.hu).  

Abstract:  We consider a sender who wishes to persuade multiple receivers to vote in favor of a proposal and sends them correlated messages that are conditional on the true state of the world. The receivers share a common prior, wish to implement the outcome that matches the true state, and have homogeneous preferences, but are heterogeneous in their voting weights. Given a weight profile, an optimal signal can be represented by a tractable linear programming problem. We employ insights from cooperative game theory and interpret the voting problem as a simple game to analyze optimal communication for various voting situations. While public communication is optimal under weak, oligarchic, or dictatorial games, the sender can significantly benefit from private communication under symmetric, strong, or non-weak proper games. To the best of our knowledge, this is the first attempt to analyze a weighted voting application of Bayesian persuasion. 

Aslan Fatma receives OTKA postdoctoral grant

Title of project: Complex Collective Decision Problems: 

Summary: 

Theories of allocations deal with the problem of allocating a set of goods (objects) between a set of individuals given the agents’ preferences over the possible outcomes. In most real-life allocation problems, a central planner implements a mechanism by collecting information about the agents’ preferences. Some practical examples are the reallocation of dorm rooms to students by the housing office of a university, the decision of which patients will receive kidneys by the health authorities, and the allocation of teachers to public schools by the ministry of education.  

The problem is how to aggregate agents’ announced preferences to achieve a collective decision (i.e., a final allocation) that respects certain desired criteria. This project investigates allocation problems of purely indivisible goods with complex outcomes where complexity stems from some interdependencies in preferences. 

Although the results are applicable to other settings with similar structures, a natural application this project considers is the (re)assignment problem of teachers to public schools. The interdependencies in individuals’ preferences come from the fact that there is a significant proportion of couples in the population of teachers; each partner cares not only about the “quality” of her new position but also about how far this position is from her partner’s.  

In this project, we aim to (i) design new reallocation mechanisms for public school teachers whose objective is to comply with the couples’ concern about the proximity; (ii) empirically quantify the gains these mechanisms would bring in a real-life teacher assignment setting. 

About the Grant: 

The “OTKA” postdoctoral excellence program (PD_22) granted support to early-stage researchers with doctoral degrees to help them to stay in research and build a career by joining a research group and cooperating with experienced researchers in Hungary for a period of three years. This year, applicants submitted 301 project proposals with a total of HUF 8 billion in request, and 4 projects in Economics have been decided to support. 

https://nkfih.gov.hu/palyazoknak/nkfi-alap/tamogatott-projektek-pd22

Robert Somogyi receives OTKA young researcher grant

Robert Somogyi’s OTKA young researcher (FK_22) project is titled ‘Pricing and regulation in the digital economy’. The main goal of this research project is the analysis of pricing practices in the digital world. The Internet is playing an ever more important role in our lives. In this research project, we investigate hidden fees on online price-comparison websites on the one hand, and the social welfare effects of the special market structure of some online platforms on the other hand. The importance of the first topic lies in the fact that many online platforms use hidden fees, which can reduce consumer welfare in the presence of naive consumers. In addition, we find in our preliminary results that the presence of online platforms makes shrouding incentives stronger. Therefore competition authorities worried about hidden fees should be especially worried about the presence of online intermediaries. The importance of the second topic was highlighted for example by the public debate about Facebook switching off news content by Australian news websites for a few days in February 2021. Through a series of research papers, we first aim to understand price-setting in digital markets, and second, we aim to compare different policy interventions to protect consumers when needed in these markets.

https://nkfih.gov.hu/palyazoknak/nkfi-alap/tamogatott-projektek-fk22

30 August: Dhandabani S (QSMS seminar)

The QSMS Research Group (BME) will be hosting two seminars this August 2022. One-to-one meetings with the speakers can be arranged; please contact the seminar organizers, Dr. Noémie Cabau (cabau.noemie@gtk.bme.hu) and Dr. Arseniy Samsonov (samsonov.arseniy@gtk.bme.hu).  

Dhandabani S from the Indian Institute of Technology Madras (Decision Engineering Lab, Department of Management Studies) will be presenting his paper Modeling interactions between vertically cooperative and horizontally competitive newsvendor on the 30th of August 2022 at 4PM, Room QA406. 

Abstract:  Consider a market served by both the supplier and the retailer, a typical example of a dual-channel supply chain. Supplier holds a fixed number of perishable inventories and shares them with the retailer for better reach. Also, because of the price matching guarantee, both the parties agree on a uniform retail price for customers, and it is set by the supplier along with the wholesale price. We assume that both the parties are profit-maximising newsvendors, i.e., retailer and supplier are quantity-setting and price-setting newsvendors, respectively. However, given the nature of the setting, their decisions are dependent on each other. As a result, none of them can control the environment solely and both set out to maximise their own profits, which calls for a game-theoretic perspective on the coopetitive (vertically cooperative and horizontally competitive) two-newsvendor setting. We model the interactions between the supplier and retailer as a Stackelberg game, with the supplier being the leader and the retailer being the follower. Given the price[1]sensitive nature of the demand, the retailer estimates her optimal quantity as a function of retail and wholesale prices as a function of the reaction curve. Exploiting the backward induction, the supplier leverages the retailer’s optimal quantity to base its pricing decisions. As the optimal solution becomes intractable for a generic demand uncertainty, focusing only on additive demand uncertainty, we derive sufficient optimality conditions for the supplier’s profit function to be concave with respect to both the retail and wholesale prices. Furthermore, we compute the best feasible set of quantity and price points that satisfy the already established restrictions and assumptions. Finally, extensive sensitivity analysis of the model parameters yields the following several managerial insights, out of which a few novel and counterintuitive are as follows: (i) supplier’s expected profit decreases with the capacity, (ii) the more the variation, supplier’s gain increases whereas retailer’s gain decreases, (iii) with a highly sensitive market, both the parties’ profits decrease, and (iv) retailer’s profit is concave with respect to the market potential. 

23 August: Mikhail Freer (QSMS seminar)

The QSMS Research Group (BME) will be hosting two seminars this August 2022. One-to-one meetings with the speakers can be arranged; please contact the seminar organizers, Dr. Noémie Cabau (cabau.noemie@gtk.bme.hu) and Dr. Arseniy Samsonov (samsonov.arseniy@gtk.bme.hu).  

Mikhail Freer from the University of Essex (Department of Economics) will be presenting his paper Constitutional Design (co-authored with César Martinelli) on the 23rd of August 2022 at 4PM, Room QA406.  

Abstract: Constitution is the cornerstone of any democracy: defining both the basic rights of citizens and the rules of the political process. However, most political economy literature frequently overlooks the constitution as a whole, focusing on bargaining between legislator and executive. This paper expands the scope and considers all three branches of power in the constitutional mechanism. First, we show that the constitutional mechanism (even with the accountability of the executive and legislator) cannot be credible without the presence of the “fourth power” (civic society). However, this fourth power is not directly governed by the constitution, and to restore the credibility of the constitution, the two key features are (1) society is affected by the outcomes of legislative bargaining, and (2) the judiciary is responsive to public opinion. However, these features are not enough to restore the “efficiency” of the constitution; to do so, we need to ensure that society does not stop pressuring the government with just the resignation of the corresponding official but gets a more direct involvement in the further legislative bargaining. 

Koltai’s paper published in The Int. J. Manag. Educ.

The paper titled “Performance evaluation of teams in business simulation games with weight restricted data envelopment analysis models.” (joint with Tamás, A.) has been published in The International Journal of Management Education.

Business simulation games are widely used in higher education, management training, and executive management development programmes. The evaluation of the performance of participants is generally subjective and is based on the trainer’s perception of the importance of several evaluation criteria. In this paper, data envelopment analysis (DEA) is proposed for such evaluation. Input-oriented constant return-to-scale DEA models are used for evaluating the performance of teams participating in business simulation games (BSG). A car engine manufacturing game played by MBA master students is used to illustrate the proposed method. Weight restrictions are applied to obtain efficiency scores which can be used as an alternative to financial measures. The relationship between the efficiency measure and the financial measure is statistically analyzed. The main conclusion of the presented research is that if weight restriction parameters are properly set, DEA results can provide reliable and detailed information about participants’ performance, about the shortcomings of decisions made during the games, and about possible ways to improve performance.

The paper presents the first application of DEA in the area of performance evaluation in BSG, consequently it can be considered a significant extension of the DEA application domain.

Koltai, T. and Tamás, A. (2022). Performance evaluation of teams in business simulation games with weight restricted data envelopment analysis models. The International Journal of Management Education, Volume 20, Issue 3, p. 17.

https://doi.org/10.1016/j.ijme.2022.100688

Kóczy’s paper published in AnOR

Kóczy’s paper titled “Core-stability over networks with widespread externalities” has been published in the Annals of Operations Research.

The Covid-19 epidemic highlighted the significance of externalities: contacts with other people affect the chances of getting infected for our entire network. We study endogenous network formation where not only players or pairs but larger coalitions can, cooperatively change the network. We introduce a model for coalitional network stability for networks with widespread externalities. The network function form generalises the partition function form of cooperative games in allowing the network to be taken into account. The recursive core for network function form games generalises the recursive core for such environments. We present two simple examples to illustrate positive and negative externalities. The first is of a favour network and show that the core is nonempty when players must pay transfers to intermediaries; this simple setting also models economic situations such as airline networks. The second models social contacts during an epidemic and finds social bubbles as the solution.

Kóczy, L.Á. Core-stability over networks with widespread externalities. Ann Oper Res (2022). https://doi.org/10.1007/s10479-022-04669-5