Some Unorthodox Thinking and Observations
Prof. ZHU Leon Yang
Professor of Operations Management
Cheung Kong Graduate School of Business (CKGSB)
In this talk, I will share two recent studies on very different subjects. In the first study, I try to connect the behavioral bias in economics with the bias-variance tradeoff in statistics via the James-Stein Shrinkage. Specifically, James–Stein shrinkage demonstrates that, by aggregating unrelated tasks and leveraging supposedly irrelevant information, the decision maker may improve an unbiased decision by “shrinking” it toward an arbitrarily chosen reference point. This revelation points to the difference between probability theory and statistical inference, leading to novel interpretations of “rational vs. irrational” and testable hypotheses for estimation problems. In the second study, motivated by an online platform that deliberately limited its set of suppliers, we develop an analytical model that addresses the underlying market frictions. We identify circumstances where the classic reputation mechanism is insufficient and demonstrate that by accepting only a subset of suppliers, the platform can support a welfare-enhancing equilibrium even if all the suppliers are homogeneous and the customers can transact with suppliers outside the platform. Our work enriches the market frictions–based perspective by showing how it can guide platform design in governing economic exchanges.
Leon Yang Zhu is a Professor of Operations Management at the Cheung Kong Graduate School of Business. Before joining CKGSB, Leon was a tenured full professor at the Data Sciences and Operations Department of the Marshall School of Business, University of Southern California. He received his Ph.D. in Industrial and Systems Engineering, M.A. in Economics from the University of Florida, and Bachelor’s degree from Shanghai Jiaotong University. Before joining Marshall, he was a Postdoc and lectured at the University of California, Berkeley.
Professor Zhu has been accepted by or published in various academic journals, including the Academy of Management Review, American Economic Review, Journal of Economic Theory, Management Science, Manufacturing and Service Operations Management, Operations Research, Production and Operations Management, and Rand Journal of Economics. He also serves as Associate Editor or Senior Editor for Operations Research, Manufacturing & Service Operations Management, and Production and Operations Management, among others.
