ECO550 Strayer Risk Uncertainty & Managing Incentives in JetBlue Airways Corp Discussion Select a company of your choice, any company but Southwest Airline

ECO550 Strayer Risk Uncertainty & Managing Incentives in JetBlue Airways Corp Discussion Select a company of your choice, any company but Southwest Airlines, and write a six to eight (6-8) page paper in which you:

Evaluate a company’s recent (within the last year) actions dealing with risk and uncertainty.
Offer advice for improving risk management.
For the company, you selected examine an adverse selection problem and recommend how it should minimize its negative impact on transactions.
For the company, you selected to determine the ways in which it is dealing with the moral hazard problem and suggest best practices used in the industry to deal with it.
For the company, you selected to identify a principal-agent problem and evaluate the tools it uses to align incentives and improve profitability.
For the company, you selected to examine the organizational structure and suggests ways it can be changed to improve the overall profitability.
Use at least five (5) quality academic resources in this assignment.

Note: One of your references regarding your research should have been published within the last 6 months.

Note: Wikipedia and Investopedia do not qualify as an academic resource.

Your assignment must follow these formatting requirements:

Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length. Running Head: CAUSE AND EFFECT RELATIONSHIP
Discussion: Rationale for Response
Area of discussion 1- Design of Experiment
In the process of determining the appropriate recommendation that improves the
marketing done over emails, we evaluate the effects of the response rate of a company to its
emails. It is essential to consider the design of the experiment. Experiment designs facilitate the
establishment of well-planned studies by ensuring that the data is adequately collected and is
viable for statistical analysis. This is actualized by carefully and systematically investigating the
company’s correlation between the response rate of emails to the company’s email marketing.
The study is based on the design variables such as email heading, email open and email body.
The analysis does this by considering whether the heading should be generic or detailed, it also
considers if the email should be open or not and if the body of the email should be in text or
HTML format (Mead, 1990). As a result of the study, the company can optimize the email
marketing processes to achieve robust performance.
The analysis helps establish the relationship between cost and effect by carefully
assessing the inputs and outputs. The links may behave differently for different inputs. Therefore
it is possible to identify the variables on the x-axis as independent variables and those in the yaxis as dependent variables. The design experiments should, therefore, be focused on the critical,
independent variables that the company should consider having a reasonable control over
(Pukelsheim & Society for Industrial and Applied Mathematics, 2006). This ultimately realizes
the best process changes, minimizes the energy used, conserves material usage and maximizes
the email marketing process of the company’s products. To achieve the best results, it is essential
to accommodate small process changes in the inputs without resulting in considerable differences
in the outputs.
Area of discussion 2-Graphical Display Tool
Source Data
Process 1
Generic No Text
Detailed No Text
Generic Yes Text
Detailed Yes Text
Generic No HTML
Detailed No HTML
Generic Yes HTML
Detailed Yes HTML
Process 2
Generic No Text
Detailed No Text
Generic Yes Text
Detailed Yes Text
Generic No HTML
Detailed No HTML
Generic Yes HTML
Detailed Yes HTML
The data represented above accounts for two trials that account for the same independent
variables of the company’s email marketing process. It is evident that the results of the second
trial were better favoured in comparison to those of the second trial. The evaluation results
depend entirely on the variable being evaluated. As a result, the combination of the email
heading, open and body are used in our study and their effects recorded. The contemplation of
the root cause analysis for the study variables requires the application of an effective regression
model that reflects the significance of the variables and pairs the numerical data to represent the
relationship of entries better (Joiner Associates, 1995). In this study, we utilize a scatter chart as
our correlation model to objectively determine the particular effect to the email marketing
process if the company increases its response rate to email advertisements.
Process 1
Process 2
Linear (Process 1)
Linear (Process 2)
y = -4.75x + 57.75
R² = 0.4019
y = -2.9048x + 54.321
R² = 0.1402
Scatter plot of Improving Email Response Rate Run Heading Email Open Body
Area of discussion 3- Recommendation
Scatter plots are not only useful in the graphical representation of the results but also the
forecasting process. Regression models use trend lines to represent the pattern of the data
(Freund, Wilson & Sa, 2006). From the elaborate data analysis ran above the process results
recorded in the second trial are most preferable as they result in a better trend line. It is possible
to forecast that the second process performance is better than that of the first. R² values are used
to measure how close each data point fits the regression line. It is therefore evident that the R²
value of the first process that is recorded at 0.4019 is significantly lower than that of the second
process that is recorded at 0.1402. The recommendation is, therefore favoured by the results.
Freund, R. J., Wilson, W., & Sa, P. (2006). Regression Analysis. Burlington: Elsevier.
Joiner Associates. (1995). Scatter plots: Plain & simple : learning and application guide.
Madison, WI: Joiner Associates.
Mead, R. (1990). The design of experiments: Statistical principles for practical applications.
Cambridge [England: Cambridge University Press.
Pukelsheim, F., & Society for Industrial and Applied Mathematics. (2006). Optimal design of
experiments: Originally published: New York : J. Wiley, 1993. Philadelphia, Pa: Society
for Industrial and Applied Mathematics (SIAM, 3600 Market Street, Floor 6,
Philadelphia, PA 19104.
Case Study 1: Auctions
Name of the student
Name of the professor
Types of auctions
According to Krishna (2009) auction refers to the process of purchasing and selling services or
rather merchandise whereby customers who have interest in a particular item normally place a
bid and try to counter the offer of another buyer for a similar item. Finally, the party or rather
the person who proposes the highest bid obtains the service or the merchandise being provided.
The main focus of an auction is to establish the price of a service or an item. There are various
types of auctions commonly used like Dutch auction, English auction, Vickery auction, and
sealed bid first auction.
Comparison and contrast between English auction and Dutch auction
An English auction is a type of auction where bidders can place their offers openly against each
other on a particular item. Each bidder places an offer higher than the preceding party in order to
win. The bidders normally call out their offers publicly and the auction comes to an end when
none of the bidder’s places offers any further or if a high buy out price is arrived at then the party
that offers the highest bid pays off that price. A Dutch auction on the other hand refers to the
auction whereby bidders begin by enquiring about the highest price, then it decreases to the point
that the bids placed fully cover the offer amount. A Dutch auction normally occurs when
multiple items that are similar are being sold as compared to English auction which only engages
in sale of a single item.
An English auction has a more competitive nature than the Dutch auction. In addition it is unique
in nature, this is because bidders are well conversant with the prices of one another. In English
auctions, bidders have many methods to be in the winning position like head nod, light house
bidding, cutting the bid and bid jumping. Bid jumping entails a bidder placing an offer higher
than what the next bid is expected to be with the aim of discouraging fellow bidders from placing
their offers. Lighthouse bidding on the other hand entails a bidder lifting a paddle and leaving it
on the air so that all bidders can know that they can raise their bid regardless of the price so as to
win. Cutting the bid on the other hand refers to the situation whereby a bidder places an offer
that does not exceed the amount of the preceding bid (Jiang, 2018).
English auction and Dutch auction only have one similarity that exist between them and it is the
fact that they are both auctions. The two types of auctions have various differences and they are
as follows; first English auction is utilised when a single item is being sold whereas a Dutch
auction is utilised when multiple items are being sold. Second, an English auction is normally
taken by a party that offers the highest bid whereas a Dutch auction is taken by a party that offers
the lowest bid price. Last but not least, in English auction, bidders could converse with other bids
whereas in Dutch auction, bidders are would not converse with other bids.
Comparison and contrast between sealed bid first price auction and Vickery auction
According to Fagandini & Dierickx (2018), a sealed bid first price auction refers to the type of
auction where the bidders place their bids in confidant so that no other bidders will know and the
highest bidder pays off the price. On the other hand, a Vickery auction is an auction where the
winner does not pay the price that he or she offered but the price offered by the second highest
bidder. These two auctions have one similarity which is; both of them consist of sealed bids and
the parties that offer bids do not know other parties bids. On the other hand they have one major
difference whereby the highest bidder settles the second highest bid instead of the highest bidder
settling it.
Application of auctions
One use of auctions by firms in finance, e-commerce, or e-games is to find the best price to sell
their shares. Most notably, Dutch auction is in most cases used in this process. In this case, the
price of the shares is lowered till many bids are attracted, then the firms sells the shares at this
price (Gupta, Schmitt & Stamatopoulos, 2019). Similarly, the US Treasury also makes use of the
Dutch auction to finance its debt by selling bonds, notes, and bills.
In addition, firms in finance, e-commerce, or e-games are utilizing the eBay website for auctions.
Fundamentally, eBay is basically an American multinational corporation where people buy and
sell different items. In this case, the website uses auction to sell its items to the highest bidders.
The type of auction that is normally used in this site is the English auction (Hu, Offerman & Zou,
2017). Most notably, the website makes use of an auctioning software to find the highest bidder.
Finally, auctions can be applied finance, e-commerce, or e-games is during the sale of real estate.
In real estate, the most commonly use type of auction is the sealed bid first price auction.
Fundamentally, auctioning applies in a situation where there are multiple offers. In this regard,
considering that the bidders bid higher than the seller’s asking price because of competition, the
property is normally sold to the first bidder but at a profit.
Advantages/disadvantages of auctions as revenue generators for not-for-profit
There are advantages and disadvantages to auctions as revenue generators for not- for-profit
organizations. First, according to Gálvez-Rodríguez, Caba-Perez & Lopez-Godoy, (2016),
auction enables the not-for-profit organizations to minimize the scope of its available
information, an aspect that makes the process of disclosure in the company to be under tight
control. Additionally, not-for-profit organizations make deals with limited funding either through
local grants or the government. Auctions are there normally to help the organizations to raise
funds that are needed. Besides, it is through auctions that the organizations are connected to their
existing donors in charity events. Notably, not-for-profit organizations conduct auctions during
the charity events. It is during these events that the organizations get a prime opportunity to
interact with their personal donors during the auction process (Giampietro & Emiliani, 2007).
Most notably, donors who are big advocates and champions of the event, turn up to the event
because of the auctioning event.
Moreover, the other advantage of auctions to not-for-profit organizations is that, the auction
platform grants the organizations an opportunity to share their vision. Fundamentally, what
matters most for not-for-profit organization is not their mission statement, but their vision
statement. Therefore, it during the auction process that these organizations gets an opportunity to
attract funds from their donors, by sharing their future ideas and goals with them.
However, auctions also have a number of disadvantages as revenue generators to the not-forprofit organizations. The first disadvantage is that, a lot of work is required during the auction
process, which at some point might be costly. In this regard, it very possible for the organizations
to end up incurring more expenses than the income generated during the event. The other
disadvantage is that auctions are time intensive (Giampietro & Emiliani, 2007). In this case,
much time that could be used to handle other important things in the organizations is invested in
planning the auctioning event, which is very taxing to the planners.
How auctions can be used to better uncover value and increase revenue in the company
that I aspire to work for
There are many ways in which the company that I want to work for can use auction to increase
revenue. First, considering that the company I aspire to work for is large company, it can adopt
the strategy of capturing the secondary bidders. In most cases, when an item is being auctioned,
there are two or more bidders who place their bids on the same item but become the losers. In
this case, the company should find a strategy that makes use of the money that these bidding
losers were prepared to spend on the item (Gentry, Hubbard, Nekipelov & Paarsch, 2018).
During auction, after declaring the winning bidder, the company can still consider the second and
the third bidders by reducing the price of the item to the amount that the second and the third
bidders were prepared to spend, and declare the three of them as winners. For instance if the
price of the item is $1,000, and the winning bid is $2,500, the second $2,400 and the third
$2,300, the company can consider reducing the winning bid to $2,500 and make a profit of
$3,900 instead of making a profit of $1500. At this point the company will make an additional
profit of $2400.
Additionally, the company can use auction to better uncover value and increase revenue by
determining the appropriate method of bidding. In this case, the company can choose to use
English auction or Dutch auction and explore various ways in which it can use these methods to
increase its revenue. For instance, considering that Dutch auctioning method allows bidders to
participate amongst each other, the company can consider using this method in online auction. In
this regard, being that buyers bid against each other, many buyers will be influenced to make
their bids online (Gentry, Hubbard, Nekipelov & Paarsch, 2018).
Most notably, the company will be able to increase its revenue through the total commissions
and the fees paid by the buyers to make their bids online. Besides, the company is also able to
assess the total value of its customers. Fundamentally, the more the buyers are influenced to
make their bids online, the higher the company makes profit.
Fagandini, P., & Dierickx, I. (2018). Bidding in First Price Sealed Bid Common Value Auctions:
A Computational Approach. Available at SSRN 3272827.
Gálvez-Rodríguez, M. D. M., Caba-Perez, C., & Lopez-Godoy, M. (2016). Drivers of Twitter as
a strategic communication tool for non-profit organizations. Internet Research, 26(5),
Gentry, M. L., Hubbard, T. P., Nekipelov, D., & Paarsch, H. J. (2018). Structural econometrics
of auctions: a review. Foundations and Trends® in Econometrics, 9(2-4), 79-302.
Giampietro, C., & Emiliani, M. L. (2007). Coercion and reverse auctions. Supply Chain
Management: An International Journal, 12(2), 75-84.
Gupta, D., Schmitt, M., & Stamatopoulos, I. (2019). Economies of Scope in Reverse Auctions:
An Application to Road Salt Procurement. Available at SSRN 3435185.
Hu, A., Offerman, T., & Zou, L. (2017). How risk sharing may enhance efficiency of English
auctions. The Economic Journal, 128(610), 1235-1256.
Jiang, W., Chen, J., Xu, Y., Wang, Y., & Tan, L. (2018, December). Research on the Influence
Factors of Consumer Repurchase in Dutch Auction. In International Conference on
Human Centered Computing (pp. 330-338). Springer, Cham.
Krishna, V. (2009). Auction theory. Academic press.

Purchase answer to see full

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.