Paper Type
Complete Research Paper
Description
Standards and technologies (e.g. in the area of web services) will strongly change IT-based communication. However, the decision of an agent (e.g. a firm) to adopt a standard is accompanied by the risk that other agents do not adopt the standard as well. The interdependencies among the agents´ standardization decisions du to positive network effects result in a coordination problem called "standardization problem". If each agent autonomously decides about the adoption of a standard based on incomplete information about the other agents (e.g. unknown cost structure), this problem is characterized by a decentralized decision structure and incomplete information. A well-known approach in this context is the Decentralized Standardization Model. Based on analysing methodical issus of this model, we propose a novel approach that explicitly and consistently takes into account the interdependencies among the adoption decisions by means of a system of inequalities. Game theoretical analyses reveal that this approach goes along with higher average net standardization benefits per agent as well as a lower fraction of incorrect individual agents´ decisions than the Decentralized Standardization Model.
ADDRESSING METHODICAL ASPECTS OF INTERDEPENDENT STANDARDIZATION DECISIONS
Standards and technologies (e.g. in the area of web services) will strongly change IT-based communication. However, the decision of an agent (e.g. a firm) to adopt a standard is accompanied by the risk that other agents do not adopt the standard as well. The interdependencies among the agents´ standardization decisions du to positive network effects result in a coordination problem called "standardization problem". If each agent autonomously decides about the adoption of a standard based on incomplete information about the other agents (e.g. unknown cost structure), this problem is characterized by a decentralized decision structure and incomplete information. A well-known approach in this context is the Decentralized Standardization Model. Based on analysing methodical issus of this model, we propose a novel approach that explicitly and consistently takes into account the interdependencies among the adoption decisions by means of a system of inequalities. Game theoretical analyses reveal that this approach goes along with higher average net standardization benefits per agent as well as a lower fraction of incorrect individual agents´ decisions than the Decentralized Standardization Model.