IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v34y1988i2p230-239.html
   My bibliography  Save this article

Information Cost and Innovation Adoption Policies

Author

Listed:
  • Richard Jensen

    (Department of Economics, University of Kentucky, Lexington, Kentucky 40506)

Abstract

A firm's manager must decide whether to adopt an innovation of uncertain profitability or to obtain some information and then decide to adopt or reject the innovation. Obtaining information can involve either waiting to receive some costless information or buying some additional information as well. The optimal policy for this decision problem may not have a reservation property. That is as the probability of success rises from 0 to 1, the optimal policy may be: wait, buy, wait, buy, and adopt. This suggests a complexity in managerial decision-making regarding innovations of uncertain profitability when there are both costless and costly information sources available to the manager.

Suggested Citation

  • Richard Jensen, 1988. "Information Cost and Innovation Adoption Policies," Management Science, INFORMS, vol. 34(2), pages 230-239, February.
    • Handle: RePEc:inm:ormnsc:v:34:y:1988:i:2:p:230-239
    DOI: 10.1287/mnsc.34.2.230
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.34.2.230
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.34.2.230?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fonseca, Tiago & Lima, Francisco & Pereira, Sonia C., 2018. "Understanding productivity dynamics: A task taxonomy approach," Research Policy, Elsevier, vol. 47(1), pages 289-304.
    2. Beck, Jonathan, 2008. "Diderot´s rule," Discussion Papers, Research Unit: Competition and Innovation SP II 2008-13, WZB Berlin Social Science Center.
    3. Fazıl Paç, M. & Savin, Sergei & Velu, Chander, 2018. "When to adopt a service innovation: Nash equilibria in a competitive diffusion framework," European Journal of Operational Research, Elsevier, vol. 271(3), pages 968-984.
    4. Scott A. Shane & Karl T. Ulrich, 2004. "50th Anniversary Article: Technological Innovation, Product Development, and Entrepreneurship in Management Science," Management Science, INFORMS, vol. 50(2), pages 133-144, February.
    5. Kyungsuk Lee & Taewoo Roh, 2020. "Proactive Divestiture and Business Innovation: R&D Input and Output Performance," Sustainability, MDPI, vol. 12(9), pages 1-19, May.
    6. Mehrez, A. & Yuan, Y. & Gafni, A., 1995. "The search for information -- A patient perspective on multiple opinions," European Journal of Operational Research, Elsevier, vol. 85(2), pages 244-262, September.
    7. Antonio Martins-Neto & Nanditha Mathew & Pierre Mohnen & Tania Treibich, 2024. "Is There Job Polarization in Developing Economies? A Review and Outlook," The World Bank Research Observer, World Bank, vol. 39(2), pages 259-288.
    8. Li, Ying & Jin, Yanhong H., 2009. "Racing to market leadership: Product launch and upgrade decisions," International Journal of Production Economics, Elsevier, vol. 119(2), pages 284-297, June.
    9. Tetsuya Kasahara, 2015. "Strategic Technology Adoption Under Dispersed Information and Information Learning," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 12(06), pages 1-18, December.
    10. Lin, Sheng-Wei, 2016. "The critical success factors for a travel application service provider evaluation and selection by travel intermediaries," Tourism Management, Elsevier, vol. 56(C), pages 126-141.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:34:y:1988:i:2:p:230-239. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.