Publication Type

Conference Proceeding Article

Version

publishedVersion

Publication Date

8-2012

Abstract

The recent launch of Google Wallet has brought the issue of technology solutions in the mobile payment (m-payment) area to the forefront. In deciding whether and when to adopt m-payment technology, senior managers in banks are naturally concerned about uncertainties regarding future market conditions, technology standards, and consumer and merchant responses, especially their willingness to adopt. This study applies economic theory and modeling for decision-making under uncertainty to bank investments in mobile payment technology. We assess the projected benefits and costs of investment as a continuous-time stochastic process to determine optimal investment timing. We find that the value of waiting to adopt jumps when the related business environment experiences relevant shocks. Our analysis shows that when the volatility of the expected payoff, the time horizon for decision-making, and timeframe of the choice changes, the recommended investment timing will change too. We also consider how network effects influence managerial decision-making for this IT investment analysis context.

Keywords

Decision-making under uncertainty, economics, e-payments, investments, mobile payments, network effects, stochastic processes, value

Discipline

Computer Sciences | E-Commerce

Research Areas

Information Systems and Management

Publication

ICEC '12: 14th Annual International Conference on Electronic Commerce, Singapore, 7-8 August 2012: Proceedings

First Page

169

Last Page

170

ISBN

9781450311977

Identifier

10.1145/2346536.2346569

Publisher

ACM

City or Country

New York

Additional URL

http://dx.doi.org/10.1145/2346536.2346569

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