Newsvendor’s Response to Demand History
Mean anchor and chasing demand are two heuristics widely used in literature to explain newsvendor’s decision bias. The mean anchor heuristic is an aggregate representation, and static to some extent. In a dynamic setting we significantly control demand chasing behavior and conduct a laboratory experiment. We find that besides the two aforementioned heuristics subject’s response to demand history is heterogenous and cannot be neglected.
KeywordsIndividual Model Order Quantity Customer Demand Aggregate Model Optimal Order Quantity
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