“Do You Want to Bet? New Service Operations Business Models Leveraging Consumers’ Present-Biased Preferences” by Prof. Hsing Cheng
Prof. Hsing Cheng
Department of Information Systems and Operations Management
Warrington College of Business
University of Florida
New service operations business models betting on consumers not fulfilling their obligations in the future, a human tendency identified in economics and marketing literature, have been proliferating recently. Of critical interest is whether these new service operations business models generate a higher profit than the traditional retailer model? Our research shows that consumers’ valuation of the underlying product or service, how naïve consumers are in believing meeting the requirement in the
future (i.e., their present-biased preferences), and how differently consumers treat losses versus gains (i.e., the loss aversion effect) are three key factors affecting the profitability of these new service operations models.