Decision Science Digest: November 16, 2022

BALTIMORE, MD, November 16, 2022 –

EDITOR’S NOTE: Decision Science Digest is a periodic communique highlighting recent peer-reviewed research published by INFORMS, the largest association for the decision and data sciences, across its 17 journals. This issue highlights four press releases based on the findings of new peer-reviewed articles. 

• New Research Finds Airbnb’s Encourage Residential Real Estate Investments (INFORMS journal Marketing Science)
• New Policy Increases Equity and Service Across Nonprofits and Nongovernmental Organizations (INFORMS journal Manufacturing & Service Operations Management)
• Your Political Affiliations Are Affecting Whether You Get a Loan, New Research Says How  (INFORMS journal Management Science)
• Are Reviews Helping or Hurting Buying Decisions? New Research Interprets Consumer Response to Top Ratings (INFORMS journal Information Systems Research)

To Buy or Not to Buy: The Impact of Short-term Rentals Like Airbnb

New research finds short-term rental (STR) platforms, such as Airbnb, encourage residential real estate investments. The study, “The Effect of Short-term Rentals on Residential Investment,” published in the INFORMS journal Marketing Science, finds in the first year following the start of the regulation, STR regulations reduce Airbnb listings by 8.9% and residential permits by 10.8%. Residential permits also decline discontinuously across jurisdictional boundaries in which one side of the boundary has an STR regulation and the other side does not. The effect is especially felt in accessory dwelling units, which decline by 16.5% across regulatory boundaries. These results imply that STRs incentivize residential investment and especially so for housing units that are well suited for short-term renting. Link to full article.

Equity in Nonprofit and Nongovernmental Organizations: Why First Come, First Served is NOT the Way to Go

The main goal of many nonprofit or nongovernmental organizations is to increase the number of customers who receive service and social welfare. However, the limited number of employees, volunteers and service locations results in long wait times, and helping customers in remote areas is difficult. New research in the INFORMS journal Manufacturing & Service Operations Management develops a distance-based service priority policy that would reduce waiting time for customers who travel farther for the service by giving them higher service priority, thereby providing them with a new incentive to seek service. The policy, outlined in the paper, “Distance-based Service Priority: An Innovative Mechanism to Increase System Throughput and Social Welfare,” significantly attracts more customers to a service. The increase can be up to 50% compared with the ordinary first-come, first-served service discipline. The policy can also achieve higher social welfare, however, that may come at the cost of reduced customer welfare. Link to full article.

Lending Decisions Based on Political Views: What You Don’t Know That Could be Hurting Your Chances

Perceived political distance between investors and borrowers in an online lending market affects who investors choose to fund. New research in the INFORMS journal Management Science finds investors from comparatively conservative states consider political distance when making lending decisions, but investors from comparatively liberal states do not. Lending activity drops by as much as 11.6% when the investor’s state is more conservative than the borrower’s state. We also find that political distance between investors and borrowers reduces the likelihood that a borrower’s listing will be funded, thereby limiting the ability of the market to fulfill its function. The paper, “Do Political Differences Inhibit Market Transactions? An Investigation in the Context of Online Lending,” illustrates that the relationship of political distance to lending activity is not significant for experienced investors. It may be that investors stop considering political distance after they learn from experience that it does not predict loan performance.  Link to full article.

The Impact of Top Reviews on Consumer Buying Decisions

When consumers consult “top” reviews to decide whether they are ready to make a purchase decision, they may face different types of inconsistencies among the reviews, which impacts whether consumers purchase right away or wait and do more research. In the paper, “Decide Now or Later: Making Sense of Incoherence Across Online Reviews,” published in the INFORMS journal Information Systems Research, researchers find that when different reviewers disagree on their opinions about the same feature of a product, consumers are more likely to defer the purchase decision and consult more reviews before they decide. This effect is weaker when reviewers provide specific details about their needs or use of the product along with their opinions. More specifically, the use of four top reviews can increase the likelihood of reading more reviews by 20%. In contrast, when the contextual details behind reviewers’ opinions are available, the difference is only 2%. Link to full article.

About INFORMS  

INFORMS advances and promotes the science and technology of decision-making to save lives, save money and solve problems. As the largest association for the decision and data sciences, INFORMS members support organizations and governments at all levels as they work to transform data into information, and information into insights that lead to more efficient, effective, equitable and impactful results. INFORMS’ 10,000+ members are comprised of a diverse and robust international community of practitioners, researchers, educators and students from a variety of fields. 

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Contact:

Ashley Smith

443-757-3578

[email protected]

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