Impulse balance and multiple-period feedback in the newsvendor game

• Autores: Axel Ockenfels, Reinhard Selten
• Localización: Production and Operations Management, ISSN-e 1937-5956, Vol. 24, Nº. 12, 2015, págs. 1901-1906
• Idioma: inglés
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• Resumen

  • Human subjects in the newsvendor game place suboptimal orders: orders are typically between the expected profit-maximizing quantity and mean demand (“pull-to-center bias”). In previous work, we have shown that impulse balance equilibrium (IBE), which is based on a simple ex post rationality principle along with an equilibrium condition, can predict ordering decisions in the laboratory. In this study, we extend IBE to standing orders and multiple-period feedback and show that it predicts—in line with previous findings—that constraining newsvendors to make a standing order for a sequence of periods moves the average of submitted orders toward the optimum