On elicitation-method effect in game experiments: a competing newsvendor perspective

Yukun Zhao and Xiaobo Zhao

Journal of the Operational Research Society, 2018, vol. 69, issue 4, 541-555

Abstract: To test the behavioral validity of the strategy method in a setting of operations management, we experimentally investigate competing newsvendor behavior under incomplete information with both the strategy method and the direct-response method. We observe that the ‘‘pull-to-center’’ effect exists only with low margin; mean order quantity with high margin does not significantly deviate from equilibrium prediction. We build a behavioral model based on overestimation and mean anchoring to explain competing newsvendor behavior. Estimates of the behavioral model confirm the existence of the behavioral biases. Meanwhile, order levels are not significantly different between the strategy method and the direct-response method. Hence, we suggest that the strategy method should lead to similar decisions in newsvendor settings compared to the direct-response method and may be adopted in most operations management settings associated to the newsvendor problem to improve the efficiency of experimental studies.

Date: 2018
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1057/s41274-017-0246-z (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:tjorxx:v:69:y:2018:i:4:p:541-555

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/tjor20

DOI: 10.1057/s41274-017-0246-z

Access Statistics for this article

Journal of the Operational Research Society is currently edited by Tom Archibald

More articles in Journal of the Operational Research Society from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().