Pricing in Nonconvex Markets: How to Price Electricity in the Presence of Demand Response

2023 | Information Systems Research | Citations: 0

Authors: Bichler, Martin; Knörr, Johannes; Maldonado, Felipe

Abstract: A Walrasian competitive equilibrium defines a set of linear and anonymous prices ... Expand

Abstract: A Walrasian competitive equilibrium defines a set of linear and anonymous prices where no coalition of market participants wants to deviate. Walrasian prices do not exist in nonconvex markets in general, with electricity markets as an important real-world example. However, the availability of linear and anonymous prices is important for derivatives markets and as a signal for scarcity. Prior literature on electricity markets assumed price-inelastic demand and introduced numerous heuristics to compute linear and anonymous prices on electricity markets. At these prices, market participants often make a loss. As a result, market operators provide out-of-market side-payments (so-called make-whole payments) to cover these losses. Make-whole payments dilute public price signals and are a significant concern in electricity markets. Moreover, demand-side flexibility becomes increasingly important with growing levels of renewable energy sources. Demand response implies that different flexibility options come at different prices, and the proportion of price-sensitive demand that actively bids on power exchanges will further increase. We show that with price-inelastic demand there are simple pricing schemes that are individually rational (participants do not make a loss), clear the market, support an efficient solution, and do not require make-whole payments. With the advent of demand-side bids, budget balanced prices (no subsidies are necessary) cannot exist anymore, and we propose a pricing rule that minimizes make-whole payments. We describe design desiderata that different pricing schemes satisfy and report results of experiments that evaluate the level of subsidies required for linear and anonymous prices on electricity spot markets with price-sensitive demand.History: Xiaoquan (Michael) Zhang, Senior Editor; Pallab Sanyal, Associate Editor.Funding: This work was supported by the Deutsche Forschungsgemeinschaft [Grant BI 1057/1-9].Supplemental Material: The online supplement is available at https://doi.org/10.1287/isre.2022.1139. Collapse

Topics: price management anonymity accounting

Methods: experiment optimization model linear optimization descriptive statistic case study

Developing AI Literacy of Management Students using Problem and Project based Learning

2023 | Americas Conference on Information Systems | Citations: 0

Authors: Chen, Elaine; Qin, Zhenxin

Abstract: Artificial Intelligence (AI) tools are becoming everyday tool for business of a ... Expand

Abstract: Artificial Intelligence (AI) tools are becoming everyday tool for business of all sizes. Business and management students who have good understanding of AI concepts, tools, technologies, and ethics will have an advantage in contributing to the integration of AI technologies in business. The objective of this study is to examine the effectiveness of using problem-based learning (PBL) and project-based learning (PjBL) to teach AI literacy to master's level management students in a university setting. A module on AI literacy was developed using PBL and PjBL, and a quantitative approach was employed to assess its effectiveness by measuring students' experiences and perceived AI literacy level before and after the module. The results indicate that both PBL and PjBL approaches are effective in developing AI literacy, with 69% of students reporting an increase in their AI literacy level after completing the module. The study also offers recommendations for future AI literacy education in business schools. Collapse

Topics: artificial intelligence analytical information system IT skill problem solving open source

Methods: survey simulation descriptive statistic cross sectional research survey design

Managing Missing Preference Values Through Consistency and Consensus in Distributed Linguistic Preference Relations: A Two-stage Method Based on Personalized Individual Semantics

2023 | Group Decision and Negotiation | Citations: 0

Authors: Li, Cong-Cong; Gao, Yuan; Dong, Yucheng

Abstract: Linguistic distribution, as a flexible representation structure, is often used i ... Expand

Abstract: Linguistic distribution, as a flexible representation structure, is often used in linguistic decision-making. Several approaches have been proposed for managing the missing elements in incomplete preference relations when decision makers cannot provide all the linguistic comparisons between alternatives in preference relations. However, in linguistic decision-making, words can mean different things to different people, which implies the necessity of personalizing individual semantics. This study proposes a two-stage method, including a personalized individual semantics (PIS)-based consistency model and a PIS-based consensus model, to manage PIS and missing elements in incomplete distributed linguistic preference relations (DLPRs). The proposed method combines the characteristics of the personalization of linguistic expression and estimates the missing values, guaranteeing optimum consistency and consensus at the same time in group decision-making with incomplete DLPRs. Numerical and comparison analyses were performed to illustrate the use of the two-stage method, and demonstrates the various numerical meanings of words and the features of the obtained complete DLPRs from the proposed model. Collapse

Topics: missing data usability personalization decision making

Methods: optimization model cross sectional research linear optimization

Optimal Reactive Power Dispatch Formulated as Quadratic OPF and Solved via CS-SLP

2023 | HICSS | Citations: 0

Authors: Meliopoulos, A.; Ilunga, G.; Cokkinides, G.

Abstract: Increased penetration of inverter interfaced renewable energy resources creates ... Expand

Abstract: Increased penetration of inverter interfaced renewable energy resources creates challenges and opportunities for reactive power management in the modern electricity grid. Because of the multiplicity of new resources, new computational tools and optimization models are needed in formulating and solving the Optimal Reactive Power Dispatch Problem (ORPD). In this paper, we propose (1) an object-oriented ORPD formulation based on high-fidelity modeling of each device in the network, especially those with VAR/V control capability and (2) a two-step Convex Solution-Sequential Linear Programming algorithm. The proposed method introduces two innovations: (a) high fidelity quadratized models of each component of the power system with emphasis on those components that have VAR/V control capability; and (b) an object oriented convexification of the resulting quadratic OPF problem; the solution is obtained by first solving the convex problem using public solvers for convex problems and them removing the relaxation and solving the original OPF using SLP, starting from the solution of the relaxed (convex) problem.Index Terms--Optimal Reactive Power Dispatch (ORPD), Convex relaxations, Sequential Linear Programming (SLP), Co-state Method I. Collapse

Topics: innovation management

Methods: computational algorithm linear optimization

Applying the AHP to Conflict Resolution: A Russia—NATO Case Study

2023 | Group Decision and Negotiation | Citations: 0

Authors: Minutolo, Marcel C.; Vargas, Luis G.; Guiora, Amos N.; Ray, Madhury

Abstract: In this paper, we apply the Analytic Hierarchy Process approach to conflict reso ... Expand

Abstract: In this paper, we apply the Analytic Hierarchy Process approach to conflict resolution in the context of the Russia–Ukraine conflict. We build models that illustrate the evaluation criteria, strategic and sub-criteria, and concessions for each party in this negotiation. Ratings are used to evaluate the degree to which concessions contribute or take away from successful resolution of the conflict. Afterwards, gain ratios are built to determine the benefit-cost scores so that concessions may be traded that result in equitable solutions. The approach presented here demonstrates for the first time why all concessions that parties to a conflict may offer might not trade all at once. A Max–Min optimization approach is used to maximize the gain to both parties of the conflict while minimizing the disparity in gain between the two. Collapse

Topics: evaluation criteria

Methods: trade-off analysis method analytic hierarchy process multiple criteria decision making sensitivity analysis linear optimization

Theories: theory of economic growth

Responding to Online Reviews in Competitive Markets: A Controlled Diffusion Approach

2023 | Management Information Systems Quarterly | Citations: 0

Authors: Yang, Mingwen; Zheng, Zhiqiang (Eric); Mookerjee, Vijay; Chen, Hongyu

Abstract: We study how firms respond to online customer reviews in a competitive market w ... Expand

Abstract: We study how firms respond to online customer reviews in a competitive market where they jostle with one another for sales based on online ratings. The focus of this paper is on how firms can optimally manage their ratings through management response and how review ratings affect the sales and profits of competing firms. We develop a controlled diffusion process to model the coevolution of sales and ratings as a function of the response strategy chosen to maximize profit over time. Our model considers a variety of factors, such as profit margin and customer rating sensitivity, that influence a firm's effort to manage ratings and subsequently its sales and profits. More response effort needs to be exerted to manage ratings when either the profit margin of a tour is very high or customers are very sensitive to ratings. We estimate our model using data on Ctrip's tours that include each tour's sales, reviews, prices, and tour features. We find that consumers anchor their beliefs in the mean market rating and that their purchase decisions depend on the tour's rating relative to this anchor. Thus, relative, rather than absolute, ratings matter. Our study informs firms on how competition and other primitives impact their efforts to manage ratings and hence profit. Our methodology allowed us to conduct "what-if" analyses, for example, to study what would happen to the review ratings, sales, and profits of a tour if a firm adopted a different response strategy. We were also able to provide turnaround strategies for struggling tours, i.e., factors that a loss-making tour should change if it wishes to make a positive profit. Ultimately, we conducted a competitive analysis that allowed us to modify certain parameters that affect the intensity of competition and hence the sales and the profits of competing tours. Finally, we demonstrate the flexibility of the model by extending it to incorporate multiple state variables that might affect the response strategy. Collapse

Topics: application programming interface online learning system Twitter innovation management service quality

Methods: longitudinal research time series analysis generalized autoregressive conditional heteroskedasticity model natural language processing autoregressive moving average model

Theories: co-evolution theory

Coming to Consensus on Classification in Flexible Linguistic Preference Relations: The Role of Personalized Individual Semantics

2023 | Group Decision and Negotiation | Citations: 0

Authors: Zhu, Wenfeng; Zhang, Hengjie; Xiao, Jing

Abstract: In group decision making problems, linguistic approaches are extensively utilize ... Expand

Abstract: In group decision making problems, linguistic approaches are extensively utilized to convey the preferences of decision makers. It is common for words to mean different things to different people, thereby requiring the modeling of the personalized individual semantics (PIS) of decision makers when employing linguistic approaches. This paper investigates the PIS-based ordinal classification group decision making problem, in which flexible linguistic preference relations are used to convey decision makers’ preferences. Firstly, a minimum information violation model with PIS is proposed to address the PIS issue in flexible linguistic preference relations, while simultaneously obtaining the ordinal classification of alternatives. When the information violation level derived from the minimum information violation model with PIS is unacceptable, a minimum adjustment-based ordinal classification consensus model is presented to obtain the references for decision makers to modify their preferences. Subsequently, an interactive ordinal classification consensus reaching process is devised, which aims to help decision makers to reach the predefined information violation level. Finally, to justify the validity of the proposal, a numerical example regarding research and development project selection, a comparative analysis, and a sensitivity analysis are provided. Collapse

Topics: research and development decision making

Methods: cross sectional research sensitivity analysis linear optimization computational algorithm

Negotiation Support Through Interactive Dominance Relationship Specification

2022 | Group Decision and Negotiation | Citations: 0

Authors: Frej, Eduarda Asfora; Morais, Danielle Costa; de Almeida, Adiel Teixeira

Abstract: Preference evaluation is a key aspect of multi-issue negotiation support, especi ... Expand

Abstract: Preference evaluation is a key aspect of multi-issue negotiation support, especially when the set of possible alternative offers is large. Approaches based on utility (value) functions have been used to elicit negotiators’ preferences so that they can assess alternatives and concessions. A disadvantage of eliciting preferences is the requirement that the negotiators provide precise values, which may cause errors and inconsistencies. This paper proposes a protocol for eliciting preferences, which is based on an adaptation of the Flexible and Interactive Tradeoff (FITradeoff) multicriteria method. This method allows negotiators to provide incomplete information, which is used to construct a linear programming model to determine the dominance relationship of the alternatives. During the exchange of offers, the models are refined and the dominance relationship becomes increasingly more complete. The negotiation protocol is based on reducing the current set of possible agreement packages, by removing those that are not of interest to both parties, which facilitates reaching an agreement. A Pareto-optimality analysis of the final agreement package is conducted in the post-settlement phase, also under partial information provided by the parties, which is a challenge when exact information about the weights of issues is not known. Collapse

Methods: linear optimization mathematical model regression analysis method

An Integer Programming Approach to Solving the Inverse Graph Model for Conflict Resolution with Two Decision Makers

2022 | Group Decision and Negotiation | Citations: 0

Authors: Han, Yu; Xu, Haiyan; Fang, Liping; Hipel, Keith W.

Abstract: Operational algorithms for solving the inverse problem for the graph model for c ... Expand

Abstract: Operational algorithms for solving the inverse problem for the graph model for conflict resolution are presented for the case of two decision makers (DMs) under a variety of solution concepts, including Nash stability (Nash), general metarationality (GMR), symmetric metarationality (SMR), and sequential stability (SEQ). The algorithms based on integer programming enable a DM, an analyst, or a mediator to obtain all of the preferences required to make a specified state to be an equilibrium or resolution. For the cases of Nash, GMR, and SMR, the respective inverse algorithm for the focal DM is formulated as a 0–1 integer linear programming problem even when both DMs’ preferences are unknown. For the situation of SEQ, when both DMs’ preferences are unknown, the focal DM’s algorithm is a 0–1 integer nonlinear programming problem while, under the condition that the opponent’s preferences are known, the focal DM’s 0–1 integer programming problem is linear. The usefulness of the algorithms developed is demonstrated by applying them to an illustrative dispute. Collapse

Methods: integer programming computational algorithm linear optimization integer linear programming

Theories: prisoner's dilemma

Breaker to Control Center Integrated Protection, Control and Operations Model

2022 | HICSS | Citations: 0

Authors: Ilunga, Gad Monga; Meliopoulos, A. P. Sakis; Cokkinides, George; Cai, Siyao; Pilehvar, Mohsen; Myrda, Paul; Farantatos, Evangelos

Abstract: Technological advances in electric energy system data acquisition systems, time ... Expand

Abstract: Technological advances in electric energy system data acquisition systems, time synchronization, and cyber assets used in power system substations, distribution systems, and control centers offer new opportunities to dramatically improve the practice of monitoring, protection, control, and operation of the system. We can make the computer based new technologies smarter and more intelligent to fully automate the basic protection and control functions. The challenges posed to the system from the continuous deployment of renewable resources that are typically inverter interface resources require monitoring of the system at much higher rates and development of protection and control systems that can respond in much faster rates than for conventional systems and they are immune to the characteristics of the new system, namely reduced fault currents and suppressed negative and zero sequence components of the fault currents. We propose a new system that provides validated data at fast rates (once per cycle), protective relays that are immune to the effects of inverter interfaced generation, detect anomalies, and enable the continuous operation of relays and other functions even in the presence of hidden failures in instrumentation. This system will enable the operators to meet the challenges posed by the evolving power system and provides robust solutions to the new requirements. Collapse

Topics: wide area network IT security threat information system use distributed system

Methods: computational algorithm statistical hypothesis test simulation linear optimization design science