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Newsvendor Models with Alternative Risk Preferences Within Expected Utility Theory and Prospect Theory Frameworks

  • Charles X. Wang
  • Scott Webster
  • Sidong Zhang
Chapter
Part of the International Series in Operations Research & Management Science book series (ISOR, volume 176)

Abstract

Newsvendor models are widely used in the literature, and usually based upon the assumption of risk neutrality. Recently there is a growing body of literature that attempts to use alternative risk preferences rather than risk neutrality to describe the newsvendor decision-making behavior. In this chapter, we provide an overview of newsvendor models with alternative risk preferences within the expected utility theory and prospect theory frameworks and identify some directions for future research.

Keywords

Expected utility theory Prospect theory Risk aversion Loss aversion Newsvendor model Behavioral operations management 

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Copyright information

© Springer Science+Business Media New York 2012

Authors and Affiliations

  1. 1.School of ManagementState University of New YorkBuffaloUSA
  2. 2.Whitman School of ManagementSyracuse UniversitySyracuseUSA
  3. 3.Chinesisch-Deutsches HochschulkollegTongji UniversityShanghaiChina

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