How to Compete Against a Behavioral Newsvendor

Anton Ovchinnikov, Brent Moritz, Bernardo F. Quiroga

Research output: Contribution to journalArticlepeer-review

25 Scopus citations

Abstract

We investigate newsvendor ordering behavior under competition. We present a laboratory experiment that documents the behavioral ordering regularities in competitive newsvendor environments, and an analytical model extending the standard theory of newsvendor competition by including an optimal best-response policy for competing with a behaviorally biased newsvendor. We test the effectiveness of this policy using an out-of-sample experiment and find that it results in improved market share, service level and profitability.

Original languageEnglish (US)
Pages (from-to)1783-1793
Number of pages11
JournalProduction and Operations Management
Volume24
Issue number11
DOIs
StatePublished - Nov 1 2015

All Science Journal Classification (ASJC) codes

  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering
  • Management of Technology and Innovation

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