Overconfidence in Newsvendor Orders: An Experimental Study

• 成果类型: Article
• 署名作者: Ren, Yufei; Croson, Rachel
• 署名单位: Union College; University of Texas System; University of Texas Arlington
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2013.1715
• 发表日期: 2013
• 页码: 2502-2517
• 关键词: Overconfidence; Overprecision; newsvendor; experiment; Behavioral operations management

摘要

Previous studies have shown that individuals make suboptimal decisions in a variety of supply chain and inventory settings. We hypothesize that one cause is that individuals are overconfident (in particular, overprecise) in their estimation of order variation. Previous work has shown theoretically that underestimating the variance of demand causes orders to deviate from optimal in predictable ways. We provide two experiments supporting this theoretical link. In the first, we elicit the precision of each individual's beliefs and demonstrate that overprecision significantly correlates with order bias. We find that overprecision explains almost one-third of the observed ordering mistakes and that the effect of overprecision is robust to learning and other dynamic considerations. In the second, we introduce a new technique to exogenously reduce overprecision. We find that participants randomly assigned to this treatment demonstrate less overprecision and less biased orders than do those in a control group.