Incentivizing Compliance Behaviors with Investment Goods in Pandemic Preparedness and Resilience

Ailing,Xu1; Yuhan,Miao2; Ying-Ju,Chen1; Qiao-Chu,He2; Zuo-Jun Max,Shen3

2024-03-04

10.1080/24725854.2024.2305732

IISE Transactions   影响因子和分区

2472-5854

2472-5862

To understand non-compliance behaviors in investment goods in pandemic preparedness and resilience, we resort to a form of bounded rationality that people suffer from a lack of self-control due to "present bias", and differ in their sophistication levels (the degree to which they are aware of such compliance barriers). We focus on (i) the manufacturer's pricing strategy under an advance selling framework, and (ii) the subsidy policy to mitigate under-adoption, to generate operational insights. We show that subsidizing the manufacturer is more cost-effective than subsidizing consumers, because the latter subsidy will not fully trickle down to consumers when the manufacturering manipulates prices in response. In particular, when the subsidy program is budget-constrained, the manufacturer subsidy should be provided only in the spot period. In contrast, when the budget constraint is relaxed, subsidies in both periods should be provided. Surprisingly, such a subsidy program has non-monotone impacts on consumers' adoption quantities. Intuitively, this is because the spot-period subsidy induces consumers' non-compliance behaviors in the advance period. In response, the manufacturer/seller will shift to a pricing strategy that may further reduce the advance-selling quantity. This result provides a natural explanation to reconcile the mixed effects of adoption subsidies.

Compliance behaviors present bias subsidy policy design

SCI ; EI

英语

通讯

Engineering ; Operations Research & Management Science

Engineering, Industrial ; Operations Research & Management Science

WOS:001177989700001

Informa UK Limited

人工提交

1.School of Business and Management (ISOM), The Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong SAR, China
2.Business Administration, Southern University of Science and Technology, Shenzhen, China
3.Department of Industrial and Manufacturing Systems Engineering & Business School, The University of Hong Kong, Pokfulam, Hong Kong SAR, China

Ailing,Xu,Yuhan,Miao,Ying-Ju,Chen,et al. Incentivizing Compliance Behaviors with Investment Goods in Pandemic Preparedness and Resilience[J]. IISE Transactions,2024,56(7):1-22.

Ailing,Xu,Yuhan,Miao,Ying-Ju,Chen,Qiao-Chu,He,&Zuo-Jun Max,Shen.(2024).Incentivizing Compliance Behaviors with Investment Goods in Pandemic Preparedness and Resilience.IISE Transactions,56(7),1-22.

Ailing,Xu,et al."Incentivizing Compliance Behaviors with Investment Goods in Pandemic Preparedness and Resilience".IISE Transactions 56.7(2024):1-22.