Essays on Service Operations Systems: Incentives, Information Asymmetries and Bounded Rationalities

This dissertation is concerned with service operations systems with considerations of incentives, information asymmetries and bounded rationalities. Chapter 1 provides an overview of the dissertation.In Chapter 2, motivated by the information service operations for the agricultural sectors in the developing economies, we propose a Cournot quantity competition model with price uncertainty, wherein the marketing boards of farmers' cooperatives have the options to obtain costly private information, and form information sharing coalitions. We study the social value of market information and the incentives for information sharing among farmers.In Chapter 3, we offer a behavioral (bounded rationality) theory to explain product/technology adoption puzzle: Why superior investment goods are not widely purchased by consumers? We show that present-bias encourages procrastination, but discourages strategic consumer behavior. Advance selling is beneficial not only to the consumers as a commitment device, but also to the seller as a price discrimination instrument.In Chapter 4, motivated by the fresh-product delivery industry, we propose a model of service operations systems in which customers are heterogeneous both in terms of their private delay sensitivity and taste preference. The service provider maximizes revenue through jointly optimal pricing strategies, steady-state scheduling rules, and probabilistic routing policies under information asymmetry. Our results guide service mechanism design using substitution strategies.In Chapter 5, motivated by the puzzle of excessively long queue for low quality service in tourism and healthcare industries, we study the customers’ learning behaviors in the service operations systems, when they hold incorrect beliefs about the population distribution. We highlight a simple behavioral explanation for the blind ``buying frenzy'' in service systems with low quality: The customers under-estimate others' patience and are trapped in a false optimism about the service quality.Chapter 6 concludes the dissertation with a summary of the main results and policy recommendations