Knowledge that Transforms

Concerns that the European General Data Protection Regulation (GDPR) would adversely affect the ability of news and media websites to create new quality content have not been thoroughly investigated in the literature. We construct a longitudinal data set of European Union (EU) and U.S. news and media websites to study how online content providers responded to the GDPR over time and whether potential restrictions on online tracking enforced by the regulation affected their downstream outcomes. We find robust evidence that both EU and U.S. news and media websites responded to the regulation by altering their data collection practices, but did so differently, with EU websites reducing tracking and implementing consent mechanisms at higher rates than their U.S. counterparts. Although we detect a reduction in average page views per user on EU relative to U.S. websites, we do not find evidence of negative impacts, in both the short and long term, on EU websites’ provision of new content or on several proxies for quality of that content, such as social media engagement metrics, various traffic measures, and articles’ text analytics. We also find no evidence of differences in survival rates across EU and U.S. news and media websites, and no evidence that monetization strategies changed at higher rates on EU relative to U.S. websites. The analysis suggests that EU online content providers did implement changes to their data collection practices in response to the GDPR but were able to use data minimization and consent mechanism strategies that allowed them to keep producing content and engage audiences at degrees on par with their U.S. counterparts. This paper was accepted by D. J. Wu, information systems. Funding: The authors gratefully acknowledge support from the Alfred P. Sloan Foundation, CARNOT Télécom & Société numérique, DATAIA Convergence Institute (as part of the Programme d’Investissement d’Avenir [Grant ANR-17-CONV-0003] operated by Institut Mines Telecom, Business School Project YPOOG), the French National Research Agency [Grant ANR-21-CE23-0031-02], and the National Science Foundation [Awards 2237327, 2237328, and 2237329]. Supplemental Material: The online appendices and data files are available at https://doi.org/10.1287/mnsc.2022.03186 .

We study the interaction between algorithmic advice and human decisions using high-resolution hotel-room pricing data. We document that price setting frictions, arising from adjustment costs of human decision makers, induce a conflict of interest with the algorithmic advisor. A model of advice with costly price adjustments shows that, in equilibrium, algorithmic price recommendations are strategically biased and lead to suboptimal pricing by human decision makers. We quantify the losses from the strategic bias in recommendations using as structural model and estimate the potential benefits that would result from a shift to fully automated algorithmic pricing. This paper was accepted by Axel Ockenfels, Special Issue on the Human-Algorithm Connection. Funding: D. Garcia gratefully acknowledges that this research was funded in part by the Austrian Science Fund [Grant FWF-FG6]. A. K. Wagner gratefully acknowledges financial support from the Anniversary Fund of the Oesterreichische Nationalbank [Project 18878]. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.03740 .

We explore the role of auditor reputation in driving the value of smart contract audits (SCAs) within the decentralized finance (DeFi) ecosystem. Given the lack of regulatory oversight and the risk of cybersecurity breaches against the protocols comprising the DeFi ecosystem, a marketplace has emerged for voluntary on-demand assurance to identify vulnerabilities in smart contracts’ coded logic. After documenting that market participants value SCAs and exploring the protocol attributes associated with the demand for smart contract audits, we show that auditor reputation can be established through both advertising (i.e., engagement on Twitter) and the delivery of a high-quality audit, which significantly shape the extent to which an SCA is valued. Additional analyses suggest that the value of an SCA is maximized when both high advertising and high audit quality are present, highlighting the complementary role of these two factors in enhancing auditor reputation. Furthermore, we find that events conceivably damaging the reputation of the auditor (i.e., breaches of protocols recently audited) generate a negative spillover to the auditor’s other recent clients. Overall, our study provides novel insights about the role of auditor reputation in emerging audit markets. This paper was accepted by Suraj Srinivasan, accounting. Supplemental Material: The online appendices and data files are available at https://doi.org/10.1287/mnsc.2023.02245 .

We study how three components of university science—university publications, PhD graduates, and university patents—influence both upstream and downstream innovation in U.S. publicly traded firms that conduct R&D. To measure the relevance of university science to corporate innovation activity, we use machine-learning algorithms and bibliometric data to link university publications, PhD dissertations, and university patents to corporate publications and patents. Identification exploits firm-specific exposure to shifts in federal agency R&D budgets. We find that university science affects corporate innovation primarily through PhD graduates and university patents: PhD graduates raise firm innovation, whereas university patents substitute for corporate patents and lower the need for internal research. In contrast, university publications elicit little direct contemporaneous response on average; however, this pattern varies substantially across sectors and firm capabilities, with stronger complementarities in the life sciences and among firms operating near the technology frontier. Because established firms account for more than three-quarters of all business R&D, understanding how their innovation responds to university publications, PhD graduates, and university patents is central to assessing the broader impact of university science on corporate innovation. This paper was accepted by Anita McGahan, strategy. Funding: This work was supported by Qualcomm Incorporated, the Coller Foundation, the Alfred P. Sloan Foundation [Grant G-2023-21022], the Fuqua School of Business, the Freeman School of Business, and The Henry Crown Institute of Business Research. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2024.05723 .