Other‐regarding Behavior

Bolton, Gary E.; Chen, Yefen

doi:10.1002/9781119138341.ch6

Cited by 5 publications

(3 citation statements)

References 85 publications

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“…Our interviews with participants in the experiment provided supporting qualitative evidence that though decision‐makers were aware of the negative implications of offering positive refunds when salvage value is zero, they nevertheless had to do so due to social norms and fairness (Bolton & Chen, 2019). For example, one participant noted (emphasis added):…”

Section: Exploring Behavioral Regularities and Building A Process Theorymentioning

confidence: 69%

“…In a typical round, a conditional decision‐making heuristic along the

r \to p \to Q

path is employed. Refund decisions are made based on the salvage value, social norms, and the dual entitlement principle (Bolton & Chen, 2019; Kahneman et al, 1986). In particular, decision‐makers establish entitlements based on social norms and the salvage value treatment they face in the first period, the influence of the first treatments carries over to the second period via the established entitlements and norms, and the adjustments to the refund amounts facing the second salvage value treatment are made based on the dual entitlement principle.…”

Section: Exploring Behavioral Regularities and Building A Process Theorymentioning

confidence: 99%

“…Q path is employed. Refund decisions are made based on the salvage value, social norms, and the dual entitlement principle (Bolton & Chen, 2019;Kahneman et al, 1986).…”

Section: Process Theory Summarymentioning

confidence: 99%

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Behavioral multi‐lever decision‐making: A study of consumer return policy, price, and inventory decisions

Oh,

Abdulla,

Oliva

2023

J of Ops Management

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Consumer return policies have been long recognized and studied by operations management scholars as an important managerial lever in a retail environment. Yet, the behavioral aspects of return policy decision‐making and interaction of return policy decisions with other common operational decisions have not been investigated to date. We present a behavioral analysis of return policy decision‐making in a retail environment with aggregate demand and individual product valuation uncertainties. Leveraging a generalized newsvendor context, we conduct a randomized behavioral experiment to understand how individuals make each of the three key retail decisions—refund amount, price, and order quantity—and the causal effect of salvage value on these decisions. We find that decision‐makers exhibit behavioral regularities in making decisions across the three levers and they react to changes in the operating conditions in a boundedly rational manner, suggesting the use of heuristics. Based on behavioral regularities that we observe in our data—that is, responses, time‐dependent effects, and decision dependencies—we develop a process theory based on behavioral decision‐making tenets that offers a new direction with testable hypotheses for future research. The process theory describes a conditional decision‐making heuristic that leads to a propagation of decision errors across different levers as well as lever‐specific decision biases.

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Section: Exploring Behavioral Regularities and Building A Process Theorymentioning

confidence: 69%

“…In a typical round, a conditional decision‐making heuristic along the