How to Manage an Overconfident Newsvendor

Abstract

December 2008 Abstract Previous experimental work has shown that individuals make suboptimal decisions in newsvendor problems (e.g. Schweitzer and Cachon 2000). We present a theoretical (behavioral) model of overconfident newsvendors that is consistent with these observed results. We show that overconfident newsvendors place suboptimal orders (which can be… (More)

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