Essays on economic analysis of IT-enabled markets

Abstract

This paper is consisted of two studies that analyze the consumer behaviors of the IT-enabled markets concentrating in energy and media sectors. In the first study, I propose a contract design that enhances service reliability from resolving information asymmetry in demand response availability through self-selection of menus. The power sector has utilized demand-resource as a mean for reliability management through incentivized program, but has had challenges in securing the reliability of the contract. With insights from the adverse selection model, this study reveals that self-selecting from menu of contracts according to DR availability induces distortion in both low and high type participants and increases the overall demand response. This study also provides insight towards service delivery industries where demand management is challenging due to externality in social cost of production. The second study includes an empirical study on the effects of thumbnail images on view counts in online video platforms. Thumbnail image is one of the most common forms of video visualization that let viewers to catch a glimpse of the content before watching the whole video. In this paper, we conduct an exploratory research on how extracted image features of thumbnails affect video views by controlling other external factors with a rich data set from the largest video-hosting platform, YouTube. The results show that certain image features of a video thumbnail positively or negatively affect view count of the video and that such effects are heterogeneous across video categories. By examining diverse components of a thumbnail image, this research provides practical guidance to video creators on the design of custom thumbnail images and contributes to a stream of literatures on behavioral response to images in social media by extending the context to the online video platform.