 Cry‐wolf syndrome in recommendationBaixun Li, Meng Li and Chao Liang Production and Operations Management, 2023, vol. 32, issue 2, 347-358 Abstract: In this paper, we examine the effects of the cry‐wolf syndrome in a setting where a manufacturer hires a forecaster to make a recommendation on the capacity decision. In this context, we define cry wolf as a behavioral syndrome in which the manufacturer becomes less compliant with a forecaster's valuable recommendation after the forecaster's prior recommendation is known to be ex post nonoptimal. We find that, although the cry‐wolf syndrome unequivocally leads to lower performance for the manufacturer when the forecaster's forecast ability is exogenous, cry wolf can help boost the forecaster's investment in improving forecast ability when the ability can be endogenously determined by the forecaster and, thus, benefit the manufacturer. Moreover, cry wolf can improve the performance of the system—the manufacturer and forecaster together—when the commission that the manufacturer pays to the forecaster is not low. Our findings are helpful for understanding the conditions under which cry wolf can be detrimental or beneficial, and for indicating the need for caution with regard to actions curtailing the cry‐wolf syndrome among managers. Date: 2023 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:popmgt:v:32:y:2023:i:2:p:347-358 Ordering information: This journal article can be ordered from Access Statistics for this article Production and Operations Management is currently edited by Kalyan Singhal More articles in Production and Operations Management from Production and Operations Management Society |
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