Fredrik Odegaard is an Associate Professor of Management Science at the Ivey Business School, with cross-appointment at the Department of Applied Mathematics, Western University. He received his PhD from Sauder School of Business at University of British Columbia, dual Masters degrees in Operations Research and Statistics from Stanford University, and a BSc in Purchasing and Logistics Management from Arizona State University. While at Ivey Business School he has developed several courses and taught extensively across the MBA, MSc, PhD and HBA programs. Prior to his academic career Dr. Odegaard worked as a Supply Chain Consultant for i2 Technologies and Programme Director at RR Institute of Applied Economics. Dr. Odegaard’s research focus and expertise spans Revenue Management and Health Care Operations. His research has been published in academic journals, such as Production and Operations Management, European Journal of Operational Research and Journal of Revenue and Pricing Management, as well as in practitioner oriented journals, such as Journal of Healthcare Quality and European Journal of Ultrasound. Professor Odegaard is an editorial board member of the Journal of Revenue and Pricing Management and served as the 2015-2016 President of the Canadian Operational Research Society (CORS).
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Odegaard, F.; Zheng, C. Z.,
(Forthcoming), "Surplus dissipating equilibria in the dollar auction", INFOR: Information Systems and Operational Research.
Abstract: We analyze symmetric subgame perfect equilibria of the dollar auction in its original format, without the modifications that the literature adopts to rule out overbidding in the game. The game has a continuum of subgame perfect equilibria, generating expected revenues that range from zero to the full value of the contested prize. Such multiplicity of equilibria suggests that the overbidding pattern often observed in experiments of this game might be symptoms of coordination failure among bidders, consistent with the rational choice paradigm with no need for behavioral or psychological explanations. The analysis is shown robust to extensions considering: (i) alternative tie-breaking rule that allows for multiple frontrunners, and (ii) preemptive bidding by the frontrunner.
Link(s) to publication:
http://dx.doi.org/10.1080/03155986.2019.1629771
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Maclean, K.; Odegaard, F.,
(Forthcoming), "Dynamic Capacity Allocation for Group Bookings in Live Entertainment", European Journal of Operational Research.
Abstract: A persistent problem within live entertainment is lost revenue due to unsold seats. One reason behind this problem is that venues generally permit customers, of varying group size, to freely choose seats, and thus causing a sub-optimal seating allocation with sparsely stranded single seats. Due to the experiential attribute of live entertainment, ticket requests are predominantly groups wishing sets of contiguous seats. Consequently, the sparse single seats remain unsold. To solve this operational problem we analyze a capacity based revenue management control problem that explicitly accounts for group size and customer choice. We formulate the problem as a discrete-time Markov Decision Process with the objective to maximize total expected profit. Each period, and for a given arriving group size, the manager decides which price-differentiated segments to make available. Given the offered segments, customers select seats from a particular segment or choose not to purchase any. We discuss three selection models and provide algorithms to determine the optimal solution for each. Motivated by ad hoc provisions observed in practice and due to the curse of dimensionality we provide and analyze via simulation a heuristic. Finally, based on transactional sales data from a large annual North American sporting event we showcase how the model parameters can empirically be estimated.
Link(s) to publication:
http://dx.doi.org/10.1016/j.ejor.2020.02.017
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van de Geer, R.; V. den Boer, A.; Bayliss, C.; Currie, C.; Ellina, A.; Esders, M.; Haensel, A.; Lei, X.; Maclean, K.; Martinez-Sykora, A., et al.,
2019, "Dynamic Pricing and Learning with Competition: Insights from the Dynamic Pricing Challenge at the 2017 INFORMS RM & Pricing Conference", Journal of Revenue and Pricing Management, June 18(3): 185 - 203.
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Banciu, M.; Odegaard, F.; Stanciu, A.,
2019, "Distribution-free Bounds for the Expected Marginal Seat Revenue Heuristic with Dependent Demands", Journal of Revenue and Pricing Management, April 18(2): 155 - 163.
Abstract: This paper extends the fundamental static revenue management capacity control problem by incorporating statistical dependence. A single-resource is sold through multiple fare classes each with a corresponding stochastic, but not necessarily independent, demand. We explicitly account for any level of positive or negative dependence and focus on the traditional macro-level demand model in order to provide distribution-free bounds on the foundational Expected Marginal Seat Revenue heuristics, both without and with buy-up. We illustrate for the case with three fare classes and demand drawn from: (i) normal distributions, and (ii) normal and exponential distributions.
Link(s) to publication:
https://link.springer.com/article/10.1057/s41272-018-00170-6
http://dx.doi.org/10.1057/s41272-018-00170-6
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Mahjoub, R.; Odegaard, F.; Zaric, G. S.,
2018, "Evaluation of a pharmaceutical risk-sharing agreement when patients are screened for the probability of success", Health Economics, January 27(1): e15 - e25.
Abstract: We analyze a game-theoretic model of a risk-sharing agreement between a payer and a pharmaceutical firm. The drug manufacturer chooses the price while the payer sets the rebate rate and decides which patients are eligible for treatment. The manufacturer provides the payer with a rebate for nonresponding patients. We generalize on the existing literature, by making both price and rebate rate decision variables, allowing the rebate rate to be different from 100%, and incorporating 2 types of administrative costs. We identify a threshold for the expected probability of response for classifying the drug as a mass-market or niche type and investigate the optimal solutions for both types. We also identify a threshold for the rebate rate at which the net benefits become equal for responding and nonresponding patients. Through numerical examples, we examine how various parameters impact the drug manufacturer's and the payer's optimal solution.
Link(s) to publication:
https://onlinelibrary.wiley.com/doi/abs/10.1002/hec.3522
http://dx.doi.org/10.1002/hec.3522
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Mirzai, F.; Odegaard, F.; Yan, X. H.,
2017, "Airline Switching Revenue with Price-Guarantees", Journal of Revenue and Pricing Management, June 16(3): 308 - 324.
Abstract: Many airlines permit ticket holders to change the time of their flight by paying a switching fee. For an airline, selecting a switching fee is an important strategic decision for two reasons. First, it is a supplementary but considerable revenue item for firms with a narrow profit margin. Second, the fee impacts their demand and consequently their capacity planning. Knowing that a low or high fee could cause operational challenges, such as unsold capacity or lost sales, the question that arises is what fee should be set for switching. We model a single firm which delivers two sequential homogeneous services that are priced differently a high-priced service followed by a low-priced one. The price difference triggers a demand leakage across the two services. Switching customers pay a switching fee but get reimbursed the price difference. This reimbursement is an extension of airlines' current switching practice and money-back guarantees that are common in retail industries (such as consumer electronics). We analyze the firm's revenue function and derive the optimal switching fee. We show that the variability in switching behavior of customers drives the firm's ideal switching policy. When this uncertainty increases, the firm should impose a higher switching fee. Furthermore, the optimal switching fee is rising in the resources' prices. Finally, through numerical analysis, we investigate the joint decisions of the service price and the switching fee. This analysis shows that the optimal fee is increasing in the size of the low-price service.
Link(s) to publication:
http://dx.doi.org/10.1057/s41272-016-0055-z
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Banciu, M.; Odegaard, F.,
2016, "Optimal Product Bundling with Dependent Valuations: the Price of Independence", European Journal of Operational Research, December 255(2): 481 - 495.
Abstract: In this paper we investigate the tactical problem of pricing a bundle of products when the underlying valuations of the bundle components are dependent. We use copula theory to model the joint density of reservation prices and provide analytical derivations for the prices under different bundling strategies and sharp bounds for the profit function. We discover that when only the bundle is offered and the marginal costs are relatively small, the seller is better off by bundling products that have a negative association between their valuations, while the converse is true when the marginal costs are relatively high. We also show that the net benefit of offering a full product line containing both the bundle and the components decreases for mild to strong associations between the component valuations, compared to offering just the bundle. Finally, we analyze how the typical literature assumption of independence of reservation prices impacts the seller’s profitability when in fact the valuations are dependent, and find that this gap in profitability, which we call the price of independence, can be arbitrarily large.
Link(s) to publication:
http://dx.doi.org/10.1016/j.ejor.2016.05.022
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Odegaard, F.; Wilson, J. G.,
2016, "Dynamic Pricing of Primary Products and Ancillary Services", European Journal of Operational Research, June 251(2): 586 - 599.
Abstract: Motivated by the growing prevalence for airlines to charge for checked baggage, this paper studies pricing of primary products and ancillary services. We consider a single seller with a fixed capacity or inventory of primary products that simultaneously makes an ancillary service available, e.g. a single-leg flight and checked baggage service. The seller seeks to maximize total expected revenue by dynamically setting prices on both the primary product and the ancillary service. In each period, a random number of customers arrive each of whom may belong to one of three groups: those that only want the primary products, those that would buy the ancillary service if the price is right, and those that only purchase a primary product together with the ancillary service. A multi-period dynamic pricing model is presented with computational complexity only of order equal to the number of periods. For certain distributions, close to analytical results can be obtained from which structural insights may be gleaned.
Link(s) to publication:
http://dx.doi.org/10.1016/j.ejor.2015.11.026
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Hassan-Mirzaei, F.; Odegaard, F.; Yan, X. H.,
2015, "Customer Revenue Sharing Program in Online Social Media", Omega-International Journal of Management Science, December 57(B): 123 - 144.
Abstract: Online social media (OSMs) have become a popular and growing Internet phenomenon, as exemplified by the millions of followers of websites like YouTube, Twitter, and Facebook. Given the Internet’s ease of access and the high degree of competition to attract users to these sites, a question arises as to whether OSMs should develop revenue-sharing programs as a way to reward their contributing users. We present an ex ante asymmetric duopoly OSM game, where heterogeneous users are either active or passive with respect to each OSM. The game includes two steps: First, the OSMs simultaneously announce their rewards for active users and second, based on their preference, users choose their level of contribution with respect to each OSM. We show that this game has a unique Nash equilibrium in pure strategies, and we identify the conditions under which a symmetric equilibrium exists, despite the asymmetry between the OSMs. Moreover, at equilibrium, no user chooses to contribute content exclusively to the less favourable OSM, even when the more favourable firm shares a lower reward than the less favourable firm. Furthermore, in some circumstances, a higher asymmetry can diminish the net revenue of the more favourable firm and vice versa.
Link(s) to publication:
http://dx.doi.org/10.1016/j.omega.2015.02.007
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Davison, M.; Odegaard, F.,
2015, "Do Retailers Set Optimal Prices in the Case of Retail Gasoline Market?", International Journal of Revenue Management, June 8(3/4): 241 - 259.
Abstract: How should gasoline retailers respond to other competing retailers and to changes in commodity gasoline prices to set their own prices over time? This question opens the door to an important discussion on price-setting strategies in the retail gasoline market. Retail gasoline price data, both panel and time series, is of great interest in the economic arena since it allows the testing of many theories about price formation, oligopolistic pricing, and consumer search. In this study, we present results from a unique new dataset, including daily sales, cost, and price data from 100 retail gasoline stations in a western European country. With this data, we empirically test various economic models to confirm, in full or in part, some earlier results based on North American data. We discuss a special case in which we empirically fit a model where retailers set prices partly in response to local competitors' prices.
Link(s) to publication:
http://dx.doi.org/10.1504/IJRM.2015.073818
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Anderson, C. K.; Odegaard, F.; Wilson, J. G.,
2015, "A newsvendor approach to inventory and pricing decisions in NYOP channels", Journal of Revenue and Pricing Management, February 14(1): 3 - 15.
Abstract: In opaque selling certain characteristics of the product or service are hidden from the consumer until after purchase, transforming a differentiated good into somewhat of a commodity. Opaque selling has become popular in travel service pricing as it allows firms to sell their differentiated products at higher prices to regular brand loyal customers while simultaneously selling to non-loyal customers at discounted prices. At its simplest level, the process can be regarded as a Newsvendor problem where a supplier has to make both pricing and quantity allocation decisions for a perishable good or service. As the originator of opaque selling, Priceline.com provides unique data to sellers that allows them to better utilize their opaque selling mechanism. Recently Priceline has made some changes to their mechanism that have potential impacts on how firms set prices and control inventory within the channel. In this framework, the problem has the characteristics of Newsvendor problems with multiple price points. In this article, we develop optimal pricing and inventory policies for a seller releasing inventory to an opaque sales channel. Furthermore, we investigate the impacts of Priceline’s changes upon optimal prices and inventory allocation policies. The model is empirically illustrated using Priceline data for a 3.5 star hotel.
Link(s) to publication:
http://dx.doi.org/10.1057/rpm.2014.32
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Odegaard, F.; Anderson, C. K.,
2014, "All-Pay Auctions with Pre- and Post-Bidding Options", European Journal of Operational Research, December 239(2): 579 - 592.
Abstract: Motivated by the emergence of online penny or pay-to-bid auctions, in this study, we analyze the operational consequences of all-pay auctions competing with fixed list price stores. In all-pay auctions, bidders place bids, and highest bidder wins. Depending on the auction format, the winner pays either the amount of their bid or that of the second-highest bid. All losing bidders forfeit their bids, regardless of the auction format. Bidders may visit the store, both before and after bidding, and buy the item at the fixed list price. In a modified version, we consider a setting where bidders can use their sunk bid as a credit towards buying the item from the auctioneer at a fixed price (different from the list price). We characterize a symmetric equilibrium in the biddingbuying strategy and derive optimal list prices for both the seller and auctioneer to maximize expected revenue. We consider two situations: (1) one firm operating both channels (i.e. fixed list price store and all-pay auction), and (2) two competing firms, each operating one of the two channels.
Link(s) to publication:
http://dx.doi.org/10.1016/j.ejor.2014.06.011
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Borg, S.; Palaszewski, B.; Gerdtham, U.; Odegaard, F.; Roos, P.; Gudbjornsdottir, S.,
2014, "Patient Reported Outcomes Measures and Risk Factors together in Quality Register for More Patient-Centred Diabetes Care in Sweden", International Journal of Environmental Research and Public Health, December 11(12): 12223 - 12246.
Abstract: Diabetes is one of the chronic diseases that constitute the greatest disease burden in the world. The Swedish National Diabetes Register is an essential part of the diabetes care system. Currently it mainly records clinical outcomes, but here we describe how it has started to collect patient-reported outcome measures, complementing the standard registry data on clinical outcomes as a basis for evaluating diabetes care. Our aims were to develop a questionnaire to measure patient abilities and judgments of their experience of diabetes care, to describe a Swedish diabetes patient sample in terms of their abilities, judgments, and risk factors, and to characterize groups of patients with a need for improvement. Patient abilities and judgments were estimated using item response theory. Analyzing them together with standard risk factors for diabetes comorbidities showed that the different types of data describe different aspects of a patient’s situation. These aspects occasionally overlap, but not in any particularly useful way. They both provide important information to decision makers, and neither is necessarily more relevant than the other. Both should therefore be considered, to achieve a more complete evaluation of diabetes care and to promote person-centered care.
Link(s) to publication:
http://dx.doi.org/10.3390/ijerph111212223
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Odegaard, F.; Roos, P.,
2014, "Measuring the Contributions of Workers' Health and Psychosocial Work-Environment on Production Efficiency", Production and Operations Management, December 23(12): 2191 - 2208.
Abstract: Increasingly many firms have started to implement programs intended to improve the workers' health and the psychosocial work-environment, as well as other attributes of labor quality. Motivated by the need for evaluating to what extent the programs affect a firm's productivity performance, this study discusses a model for analyzing the contribution of labor quality attributes toward firm productivity. To assess the contribution from the labor quality attributes, we model firm productivity as the outcome of two separate processes within a firm: the physical production process and the labor quality process. Firm productivity is measured by a Malmquist-like productivity index and is computed by Data Envelopment Analysis. Based on bootstrap methods we analyze potential statistical bias and provide bias-corrected productivity estimates. The labor quality attributes are first modeled at an individual worker level as latent variables using Item Response Theory, and then aggregated to a firm-level. The model is empirically validated using data from three manufacturing plants that participated in a coordinated worksite health promotion program. Over a 4-year period (20002003), we observed a general improvement in efficiency of 25%, half of which could be attributed to an improvement in workers' health and psychosocial work-environment. A key benefit with the model is that it is practical, easy to implement, and very fast to compute. The model also constructively contributes to the discourse on sustainability by providing a framework for deriving meaningful metrics and providing tangible measurements on the effect of sustainability-related issues.
Link(s) to publication:
http://dx.doi.org/10.1111/poms.12242
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Mahjoub, R.; Odegaard, F.; Zaric, G. S.,
2014, "Health-Based Pharmaceutical Pay-for-Performance Risk-Sharing Agreements", Journal of the Operational Research Society, April 65(4): 588 - 604.
Abstract: Many new drugs, such as biologics and cancer drugs, are very costly. However, their effectiveness outside of clinical trial settings is often uncertain at the time they gain market approval. This uncertainty may reflect a lack of real-world outcomes data, as opposed to clinical trials data, for a typical patient population. A risk-sharing agreement is a contract between a drug manufacturer and a healthcare payer to help manage uncertainties regarding the cost and effectiveness of those drugs. In this paper, we model a risk-sharing agreement in which a proportion of total sales is rebated. We model disease progression using a continuous time Markov chain with uncertain transition rates. We examine the performance of this risk-sharing agreement from the manufacturer’s perspective and investigate the conditions under which the manufacturer will make a profit. We illustrate with a numerical model parameterized using data from a Phase 2 clinical trial of an oncology drug that was subjected to a risk-sharing agreement in the UK.
Link(s) to publication:
http://dx.doi.org/10.1057/jors.2013.106
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