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Recent epidemiologic studies have suggested that the prophylactic use of antiviral drugs or imperfect vaccines could slow down the spread of an influenza epidemic. Since drug stockpiles are presently scattered in different countries, the outbreak of an epidemic gives rise to a game in which each country must make decisions about how best to allocate its own stockpile in order to protect its population. We develop a two-period multivariate Reed-Frost model to represent the spread of the epidemic within and across countries at its onset. Our model captures three critical sources of uncertainty: the number of initial infections, the spread of the disease, and drug efficacy. We show that for small between-country infection rates, the underlying game is supermodular and that a unique Pareto optimal Nash equilibrium exists. In this equilibrium, some countries give up all their drugs to protect the population where the epidemic first appeared, while all others keep their stockpiles for themselves. Further, we identify sufficient conditions under which the optimal solution of a central planner (such as the World Health Organization) constitutes a Pareto improvement over the decentralized equilibrium, suggesting that countries could agree on an allocation scheme which would benefitt everyone. By contrast, when the central planner's solution does not constitute a Pareto improvement, minimizing the total number of infected persons globally requires some countries to sacrifice part of their own population, which raises intriguing ethical issues. Preliminary numerical studies also indicate that similar results hold for the duration of the pandemic, with the difference that countries seem willing to give up their drug stockpiles for more sets of parameters than in the two-period case.

© 2009 INFORMS

Marketers and investors face a heated, provocative debate over whether excelling in social responsibility initiatives hurts or benefits firms financially. This study develops a theoretical framework that predicts (1) the impact of corporate social performance (CSP) on firm-idiosyncratic risk and (2) the role of two strategic marketing levers, advertising and research and development (R&D), in explaining the variability of this impact among different firms. The results show that higher CSP lowers undesirable firm-idiosyncratic risk. Notably, although the salutary impact of CSP is greater in firms with higher (versus lower) advertising, a simultaneous pursuit for CSP, advertising, and R&D is harmful with increased firm-idiosyncratic risk. For theory, the authors advance the literature on the marketing-finance interface by drawing attention to the risk-reduction potential of CSP and by shedding new light on some critical but neglected roles of strategic marketing levers. They also extend CSP research by moving away from the long-fought battle for a universal CSP impact and toward a finer-grained understanding of when some firms derive more risk-reduction benefits from CSP. For practice, the results indicate that the "goodwill refundßÂ" of CSP is not unconditional. They also empower marketers to communicate more effectively with investors (i.e., doing good to better manage the risk surrounding firm stock prices).

With the permission of the American Marketing Association

The silver lining effect predicts that segregating a small gain from a larger loss results in greater psychological value than does integrating them into a smaller loss. Using a generic prospect theory value function, we formalize this effect and derive conditions under which it should occur. We show analytically that if the gain is smaller than a certain threshold, segregation is optimal. This threshold increases with the size of the loss and decreases with the degree of loss aversion of the decision maker. Our formal analysis results in a set of predictions suggesting that the silver lining effect is more likely to occur when (i) the gain is smaller (for a given loss), (ii) the loss is larger (for a given gain), and (iii) the decision maker is less loss averse. We test and confirm these predictions in two studies of preferences, both in a nonmonetary and a monetary setting, analyzing the data in a hierarchical Bayesian framework.

© 2009 INFORMS

Jim Robertson was on his way to London on January 6, 2003 to start his new assignment. At 33, he was to be the new player in the London management team of Wisant, a technology-consulting firm that thirteen years after its foundation already looked back on a lively and uneven history. This former New Economy star was now fighting for survival in a market that had dramatically changed between 2000 and 2002. Wisant's CEO James Watson had send Jim to London to realign the managerial system of the UK subsidiary, which had experienced a significant drop in revenue over the previous 12 months.

British artist Damien Hirst is both controversial and successful. Jörg Reckhenrich, Jamie Anderson and Martin Kupp suggest that his innovative approach to life and work demonstrate strategies useful to organizations.

© 2009 The Author Journal compilation © 2009 London Business School

Industrial product service systems (IPS²) are required to meet current customer needs in order to provide solutions to current customer problems. Furthermore, adaptability to changing customer decision drivers is required in order to account for customers' preference changes over time. The purpose of this paper is to present an approach where customer preference drivers for different IPS2 are identified and their directions analyzed.

With permission of Emerald