The Economics of Process Transparency
37 Pages Posted: 3 Dec 2020 Last revised: 5 Aug 2021
Date Written: October 19, 2020
We propose and analyze a novel framework to understand the role of non-instrumental information sharing in service operations management, i.e., information shared by the firm not to affect consumers’ actions, but to better manage their experience in the firm’s process. To this end, we model the interactions between a service provider (firm) and a consumer. 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. We analyze when providing such real-time progress information via process trackers help, or can possibly hurt, a delay-sensitive consumer. Our work draws upon the recent literature on belief-based/news utility in Economics. Our findings inform a service firm’s post-sales transparency strategy.
Keywords: Belief-Based Utility, Delay Disclosure, Process Analysis, Gain-Loss Utility, Information Design
JEL Classification: M11, M30, D81
Suggested Citation: Suggested Citation