The economics of process transparency

Harish Guda, Milind Dawande and Ganesh Janakiraman

Production and Operations Management, 2023, vol. 32, issue 6, 1812-1829

Abstract: We propose and analyze a novel framework to understand the role of noninstrumental information sharing in service operations management, that is, information shared by the firm not to affect consumers' actions, but to better manage their experience in the firm's process. The operations of the firm are organized as a process, consisting of a sequence of tasks, each of random duration. The firm shares real‐time information with the consumer about the progress of their flow unit in the firm's process via a process tracker. The consumer is delay‐sensitive and experiences gain–loss utility (loss aversion and diminishing sensitivity) over time due to changes in beliefs about anticipated delay, as he awaits completion of the process. We analyze when providing such real‐time progress information via process trackers help, or can possibly hurt a consumer. Our work draws upon the recent literature on belief‐based/news utility in Economics. We find that in the presence of loss aversion alone, not sharing progress information is beneficial. In the presence of loss aversion and diminishing sensitivity, if low delays are likely, then sharing information is beneficial; otherwise, not sharing information is preferred. Our findings inform a service firm's post‐sales transparency strategy.

Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/poms.13942

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:popmgt:v:32:y:2023:i:6:p:1812-1829

Ordering information: This journal article can be ordered from
http://onlinelibrary ... 1111/(ISSN)1937-5956

Access Statistics for this article

Production and Operations Management is currently edited by Kalyan Singhal

More articles in Production and Operations Management from Production and Operations Management Society
Bibliographic data for series maintained by Wiley Content Delivery ().