EconPapers    
Economics at your fingertips  
 

Cognitive reflection and economic order quantity inventory management: An experimental investigation

Jason Shachat, Jinrui Pan and Sijia Wei

MPRA Paper from University Library of Munich, Germany

Abstract: We use laboratory experiments to evaluate the effects of individuals' cognitive abilities on their behavior in a finite horizon Economic Order Quantity model. Participants' abilities to balance intuitive judgement with cognitive deliberations are measured by the Cognitive Reflection Test (CRT). Participants then complete a sequence of five “annual” inventory management tasks with monthly ordering decisions. Our results show that participants with higher CRT scores on average earn greater profit and choose more effective inventory management policies. However these gaps are transitory as participants with lower CRT scores exhibit faster learning. We also find a significant gender effect on CRT scores. This suggests hiring practices incorporating CRT type of instruments can lead to an unjustified bias.

Keywords: inventory management; economic order quantity; cognitive reflection; Markov learning (search for similar items in EconPapers)
JEL-codes: C91 D92 M11 (search for similar items in EconPapers)
Date: 2019-03-06
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-neu
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/92554/1/MPRA_paper_92554.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/93622/1/MPRA_paper_93622.pdf revised version (application/pdf)

Related works:
Journal Article: Cognitive reflection and economic order quantity inventory management: An experimental investigation (2020) Downloads
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:pra:mprapa:92554

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().

 
Page updated 2023-11-11
Handle: RePEc:pra:mprapa:92554