Decision making in the newsvendor problem: A cross-national laboratory study

A Review of Behavioral Decision Making in the Newsvendor Problem

“…However, we need to consider more comprehensive settings that include cultural variants and explain cross-cultural differences in inventory ordering decisions. Feng et al (2011) also suggested examining operational decisions to conduct crossnational studies using verbal protocol analysis.…”

“…We found only two empirical studies that look into the newsvendor decision making through cultural lens. One is Feng et al (2011) who examined the cross-cultural differences between Chinese and American subjects in a newsvendor setting. The authors repeated the experience and feedback experiment of Bolton and Katok (2008) with Chinese subjects and found that Chinese subjects were more prominent to the "pull-to-center" effect than the Americans, i.e.…”

“…Feng et al (2011), Cui et al (2013) demonstrated the cultural aspect as the influencing factor of behavior in these settings. The recent reviews on behavioral operations suggest how to incorporate more realistic behavioral attributes in a variety of operations management Sharma & Nandi: A Review of Behavioral Decision Making in the Newsvendor Problem Operations and Supply Chain Management 11(4) pp.…”

Optimal decisions for the loss-averse newsvendor problem under CVaR

“…Bostian et al (2008) replicated this "pull-to-center" effect in laboratory experiments and constructed an adaptive learning model that incorporates memory, reinforcement, and probabilistic choice to explain individual decisions. Feng et al (2011) conducted a laboratory experiment to examine cross-national differences in inventory ordering patterns between Chinese and American decision makers and found that the "pull-to-center" effect is more prominent for Chinese than Americans. Bolton et al (2012) compared how experienced procurement managers and students solve the newsvendor problem and found that both the managers and students broadly exhibit the same kind of pull-to-center bias.…”

Three-echelon supply chain coordination with a loss-averse retailer and revenue sharing contracts

“…In addition, the perception of gains or losses relates to a specific reference point. Many experimental studies and managerial decision-making practices under uncertainty (MacCrimmon and Wehrung, 1996;Fisher and Raman, 1996;Schweitzer and Cachon, 2000;Ho and Zhang, 2008;Feng et al, 2011) have asserted that enterprise managers' decision-making behaviors deviate from expected profit maximization due to loss aversion. In the scope of vertical supply chain collaboration, a supply chain leader, such as a large manufacturer, can diversify its assets across multiple firms, thereby likely becoming risk-neutral (Wiseman and Gomez-Mejia, 1998; Wang and Webster, 2007).…”