Prospect Theory Explains Newsvendor Behavior: The Role of Reference Points

• 成果类型: Article
• 署名作者: Long, Xiaoyang; Nasiry, Javad
• 署名单位: Hong Kong University of Science & Technology
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2014.2050
• 发表日期: 2015
• 页码: 3009-3012
• 关键词: Prospect theory; reference points; Newsvendor Problem

摘要

Current understanding in operations management is that prospect theory, as a theory of decision making under uncertainty, cannot systematically explain the ordering behavior observed in experiments on the newsvendor problem. We suggest this is because the newsvendor's reference point is assumed to be the status quo, i.e., zero payoff. We propose an alternative based on newsvendor's salient payoffs and show that prospect theory can, in fact, account for experimental results.