Essays on Operations Management

Author:

Sharma, Rashmi

Graduate Program:

Business Administration

Degree:

Doctor of Philosophy

Document Type:

Dissertation

Date of Defense:

June 12, 2018

Committee Members:

Aydin Alptekinoglu, Dissertation Advisor/Co-Advisor
Anthony Mark Kwasnica, Committee Chair/Co-Chair
Nicholas C Petruzzi, Committee Member
John Andrew Petersen, Committee Member
Anthony Mark Kwasnica, Outside Member
Aydin Alptekinoglu, Committee Chair/Co-Chair

Keywords:

Operations Management
Behavioral Decision Making
Incentive Design
Salesforce
Experimental Economics

Abstract:

In this dissertation, I investigate the role of monetary and non-monetary incentive plans on agents’ decisions in various business contexts. I focus on the effect of behavioral regularities, which are commonly observed in individual behavior, on the performance of various incentive plans. In Chapter 2, I study the impact of incentive plans on the decisions made by sales agents who have the authority to set prices. I show that even when different incentive plans offer the same expected compensation, agents deviate from normative decisions in a systematic way in all plans, which results in differences in effectiveness of the plans for the firm. In Chapter 3, I incorporate various theories of consumer purchase and return behavior into a retailer’s decision-making framework, to identify optimal sales incentives and refund policies. I find that when the firm can impose penalties on both the salesforce and the consumers for product returns, the firm uses these penalties as either substitutes or complements under different market conditions. Finally, in Chapter 4, I study the effect of rank feedback and rank order contests on ordering decisions in a newsvendor task, a context where decision biases have been found to be persistent. I find that contests do not lead to improvements, but the sub-optimality in newsvendor orders is significantly reduced when agents receive rank feedback. These findings suggest that social comparisons play a crucial role in organizational decision-making.