B1755 - Tourism and the Web: Information, Uncertainty and the Digital Transformation

Learning outcomes

The main goal of this course is to build on and extend microeconomic theories to develop an understanding of how to manage uncertainty and asymmetric information in tourism through information and communication technologies. Specifically, with the ongoing digital transformation of tourism, and the growing impact of the Internet on marketplaces, students will acquire those economic tools useful for tourism firms in a digital economy, and techniques required to manage tourism business activity on the web, in a framework of uncertainty and asymmetric information. To that end, the course will focus on online booking and communication platforms and treat signaling, screening, reputation, and other web communication activities.

Course contents

1. Short review of microeconomic theory and tourism economics

• Neoclassical (or Walrasian) general equilibrium theory; Pareto efficiency and the two fundamental theorems of welfare economics; market failures, asymmetric information, and uncertainty
• The tourism markets: tourism goods; timing in tourism demand; information in tourists' choices (incomplete and imperfect information); market failures and asymmetric information; search, experience, and credence goods
  

2. Economic uncertainty and tourism. Insurance contracts in tourism

• Consumer decisions under uncertainty
• Expected utility theory and attitudes towards risk
• Insurance and risk-sharing contracts
• Insurance contracts in tourism: insurance against the economic risk of ruined holidays

3. Institutional mechanisms for managing uncertainty in tourism

• Future contracts in tourism: Free Sale and Allotment contracts
• Overbooking and cancelation policies: the no-show risk
• Commercial events as a risk-management tool

4. Asymmetric information and uncertainty in tourism. Incentive contracts. Signaling, reputation, and selection contract

• Incomplete, imperfect, and asymmetric information
• The moral hazard problem: incentive contracts in tourism and the travel agent commissions
• The adverse selection problem: signaling and selection mechanisms in tourism
• Implicit contracts and reputation mechanisms in tourism

5. Online tools and platforms for managing asymmetric information in tourism

• The online market for lemons and the booking platforms
• The review architectures and their non-neutral effects
• Quality signaling and economic performance

6. Economic theory of contracts

• The economic theory of contracts
• Contracts enforcement and enforcement mechanisms
• The Coase theorem
• The socially efficient outcome, first-best, and second-best contracts.
• The contracts in tourism markets

Readings/Bibliography

 

• G. Candela, P. Figini. The Economics of Tourism Destinations, Springer, 2012 (chapters 10 and 11).
• M. Castellani, M. Mussoni. An Economic Analysis of Tourism Contracts: Allotment and Free Sale, in Advances in Modern Tourism Research, Springer-Verlag, Berlin, 2007, p. 51-85.
• R. Cooter, R. Ulen. Law and Economics, 6th Edition, 2016, Berkeley Law Books (chapters 2 and 8).

Teaching methods

30 hours of in-class lectures and discussion of case studies.

Assessment methods

The written exam is composed of two open-answer questions on the topics taught during the course and lasts one hour. The questions aim to verify the knowledge and understanding of the theories taught during the course and their application to case studies.

The exam is conducted only in person (face-to-face). The option to take the exam online will be available only if the University guarantees this option.

Students must answer both questions with all the corresponding sub-points. The answer to each question is worth 30 points, and the final mark is computed as the simple average of the two marks obtained for each question. An example of an exam will be illustrated during the course.

Students must obtain a sufficient grade (18/30) for both questions to pass the exam. The maximum final mark obtainable by providing all the correct and complete answers is 30 cum laude and is expressed according to the following graduation:

• <18, fail;
• 18-23, sufficient;
• 24-27, good;
• 28-30, very good;
• 30 with laude, excellent.

A positive final mark can only be refused once. Refusal of the grade has to be communicated via email within the day of the subsequent office hours of the instructor.

Supporting material such as textbooks, personal notes, or electronic devices is prohibited during the exam. Registration for the exam is compulsory, and students have to register through AlmaEsami [https://almaesami.unibo.it/almaesami/welcome.htm] according to the general rules of the School of Economics and Management.

Teaching tools

Teaching material: slides and discussion of case studies.

The slides can be downloaded by clicking on "Teaching resources on Virtuale" or directly from the "Virtuale" website (https://virtuale.unibo.it).

Office hours

See the website of Maurizio Mussoni