TY - JOUR
T1 - Behavioral Decision Making in the (Q,R) Purchasing Model
T2 - An Experimental Study
AU - Shavit, Tal
AU - Cohen, Yuval
AU - Bogair, Ravid
AU - Benzion, Uri
PY - 2014/7
Y1 - 2014/7
N2 - This paper presents and analyzes the results of a decision-making experiment in inventory management under uncertainty. The experiment included 81 participants who played the role of a small car importer facing random demand as in the (Q,R) model. The results show strong evidence of learning and convergence, and the average reorder point (R) closely approaches the optimal level for maximizing profits. However, the participants' decisions are still biased by realizations of extreme values of demand and loss of potential sales. We argue that participants are affected by recency, loss aversion, and, possibly, their own risk aversion.
AB - This paper presents and analyzes the results of a decision-making experiment in inventory management under uncertainty. The experiment included 81 participants who played the role of a small car importer facing random demand as in the (Q,R) model. The results show strong evidence of learning and convergence, and the average reorder point (R) closely approaches the optimal level for maximizing profits. However, the participants' decisions are still biased by realizations of extreme values of demand and loss of potential sales. We argue that participants are affected by recency, loss aversion, and, possibly, their own risk aversion.
UR - http://www.scopus.com/inward/record.url?scp=84902163838&partnerID=8YFLogxK
U2 - 10.1002/mde.2628
DO - 10.1002/mde.2628
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AN - SCOPUS:84902163838
SN - 0143-6570
VL - 35
SP - 357
EP - 370
JO - Managerial and Decision Economics
JF - Managerial and Decision Economics
IS - 5
ER -