Cloud Computing Spot Pricing Dynamics: Latency and Limits to Arbitrage

2016 | Information Systems Research | Citations: 24

Authors: Cheng, Hsing Kenneth; Li, Zhi; Naranjo, Andy

Abstract: This study examines cloud computing spot pricing dynamics and the influence of l ... Expand

Abstract: This study examines cloud computing spot pricing dynamics and the influence of latency on those pricing dynamics. Using the Amazon Elastic Compute Cloud U.S. East and West market spot instance pricing and latency intraday data from April 9, 2010, to May 22, 2011, we find considerable time variation in spot instance prices, and prices are often persistently higher in the West. Bivariate vector autoregressive model results show that within-market autoregressive pricing effects are larger than across-market effects. We also document that over 70% of the relative price discovery occurs in the East market. Our regression results further show that East–West latency differentials have a significantly positive effect on East–West pricing differentials. Latency creates a dynamic pricing wedge that widens or narrows conditional on the latency differentials. Using an error correction model, the speed of adjustment from long-run pricing convergence errors causes the short-run price differential to narrow, but the adjustment does not completely offset the price differential. Collapse

Topics: price management Linux Unix cloud computing dynamic pricing

Methods: descriptive statistic longitudinal research regression analysis method instrumental variables estimation time series analysis

Theories: transaction cost economics

Testing Three-Way Complementarities: Performance Pay, Monitoring and Information Technology

2009 | International Conference on Information Systems | Citations: 0

Authors: Aral, Sinan; Brynjolfsson, Erik; Wu, Lynn

Abstract: We find three-way complementarities among IT, performance pay, and monitoring pr ... Expand

Abstract: We find three-way complementarities among IT, performance pay, and monitoring practices. We model these practices as a tightly-knit incentive system that produces the largest productivity premium when implemented in concert. We assess our model by combining fine-grained data on Human Capital Management (HCM) software adoption with detailed survey data on performance pay and monitoring practices at 90 firms from 1995-2006. HCM adoption is associated with a disproportionately large productivity premium when it is implemented within a system of organizational incentives that includes both monitoring and performance pay, but has little benefit when adopted alone. We find no evidence of reverse causality: the complementarities appear when the software goes live, not when the purchase decision is made. Furthermore, we can distinguish two components of performance pay: motivation (inducing employees to increase effort), and talent selection (attracting higher quality employees). We find that the complementarities are entirely explained by talent selection. Collapse

Topics: productivity human resource management technology adoption enterprise resource planning enterprise information system

Methods: survey descriptive statistic cross sectional research logistic regression statistical hypothesis test

Are online auction markets efficient? An empirical study of market liquidity and abnormal returns

2009 | Decision Support Systems | Citations: 3

Authors: Kauffman, Robert J.; Spaulding, Trent J.; Wood, Charles A.

Abstract: Technological advances have facilitated investment in collectibles through onlin ... Expand

Abstract: Technological advances have facilitated investment in collectibles through online auction markets, where information regarding product characteristics, current and historical prices, and product availability is available to millions of market participants. However, market inefficiencies may still exist, where prices do not reflect market information and where savvy speculators can profit. Using unit root and variance ratio tests, we examine 8538 rare stamp and 56,997 rare coin auctions to evaluate the efficiency of online markets. In particular, we study market liquidity, abnormal returns and weak-form efficiency. We find an inverse relationship between market efficiency and liquidity. Bidder competition intrinsic to liquidity increases the chances that uninformed bidders drive up item prices, leading to the observed market inefficiencies. Collapse

Topics: online auction electronic market information system use electronic commerce software agent

Methods: robust regression nonparametric test econometric modeling longitudinal research sensitivity analysis