Decision making and the price setting newsvendor: experimental evidence

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dc.citation.epage186en_US
dc.citation.issueNumber1en_US
dc.citation.spage157en_US
dc.citation.volumeNumber47en_US
dc.contributor.authorKocabıyıkoğlu, A.en_US
dc.contributor.authorGöğüş, C. I.en_US
dc.contributor.authorGönül, M. S.en_US
dc.date.accessioned2018-04-12T10:38:57Z
dc.date.available2018-04-12T10:38:57Z
dc.date.issued2016en_US
dc.departmentDepartment of Managementen_US
dc.description.abstractWe present an experimental study of the price-setting newsvendor problem, which extends the traditional framework by allowing the decision maker to determine both the selling price and the order quantity of a given item. We compare behavior under this model with two benchmark conditions where subjects have a single decision to make (price or quantity). We observe that subjects deviate from the theoretical benchmarks when they are tasked with a single decision. They also exhibit anchoring behavior, where their anchor is the expected demand when quantity is the decision variable and is the initial inventory level when price is the decision variable. When decision makers set quantity and price concurrently, we observe no significant difference between the normative (i.e., expected profit-maximizing) prices and the decision makers' price choices. Quantity decisions move further from the normative benchmarks (compared to when subjects have a single decision to make) when the ratio of cost to price is less than half. When this ratio is reversed, there is no significant difference between order levels in single- and multi-task settings. In the multidecision framework, we also observe a tendency to match orders and expected demand levels, which subjects can control using prices.en_US
dc.description.provenanceMade available in DSpace on 2018-04-12T10:38:57Z (GMT). No. of bitstreams: 1 bilkent-research-paper.pdf: 179475 bytes, checksum: ea0bedeb05ac9ccfb983c327e155f0c2 (MD5) Previous issue date: 2016en
dc.identifier.doi10.1111/deci.12158en_US
dc.identifier.issn0011-7315
dc.identifier.urihttp://hdl.handle.net/11693/36411
dc.language.isoEnglishen_US
dc.publisherBlackwell Publishing Ltden_US
dc.relation.isversionofhttp://dx.doi.org/10.1111/deci.12158en_US
dc.source.titleDecision Sciencesen_US
dc.subjectBehavioral operations managementen_US
dc.subjectPrice-setting newsvendor problemen_US
dc.titleDecision making and the price setting newsvendor: experimental evidenceen_US
dc.typeArticleen_US

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