Empirical Newsvendor Decision Biases under a Service Level Contract
In recent studies many researchers show that decision making in newsvendor settings does not follow profit maximizing predictions if human decision makers are involved: In various lab experiments, students and managers face the newsvendor problem, but their behavior consistently differs from normative profit maximizing textbook solutions. But how do decision makers behave facing newsvendor problems in real-world situations? Are they also biased in their decisions? Do they show similar deviations for expected profit maximizing behavior? In this chapter we address this issue. We analyze empirical data from newsvendor-like decisions in order to compare the observed deviations in the lab with real-world decisions.
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