It is commonly believed that piracy of information goods leads to lower profits, which translate to lower incentives to invest in innovation and eventually to lower-quality products. Manufacturers, policy makers, and researchers all claim that inadequate piracy enforcement efforts translate to lower investments in product development. However, we find many practical examples that contradict this claim. Therefore, to examine this claim more carefully, we develop a rigorous economic model of the manufacturer's quality decision problem in the presence of piracy. We consider a monopolist who does not have any marginal costs but has a product development cost quadratic in the quality level produced. The monopolist faces a consumer market heterogeneous in its preference for quality and offers a quality level that maximizes its profit. We also allow for the possibility that the manufacturer may use versioning to counter piracy. We unexpectedly find that in certain situations, lower piracy enforcement increases the monopolist's incentive to invest in quality. We explain the reasons and welfare implications of our findings. This paper was accepted by Lorin Hitt, information systems.

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E ffective patch management is critical to ensure the security of information systems that modern organizations count on today. Facing numerous patch releases from vendors, an information technology (IT) manager must weigh the costs of frequent patching against the security risks that can arise from delays in patch application. To this end, we develop a rigorous quantitative framework to analyze and compare several patching policies that are of practical interest. Our analyses of pure policies-policies that rely on a single metric such as elapsed time or patch severity level-show that certain policies are never optimal and no single policy may fit all information systems uniformly well. Depending on the context parameters, particularly the setup and business disruption costs for patching, either a time-based approach or an approach based on the cumulative severity level may be effective. To develop a more complete guideline for policy selection, we decipher hybrid policies that combine multiple metrics. Finally, we conduct extensive numerical experiments to verify the robustness of our analytical results. Overall, our paper establishes a comprehensive framework for analyzing various patching policies and furnishes useful insights for IT managers.

Are Online Reviews of Physicians Reliable Indicators of Clinical Outcomes? A Focus on Chronic Disease Management