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A Meta‐Analysis of Newsvendor Experiments: Revisiting the Pull‐to‐Center Asymmetry
Author(s) -
Zhang Yinghao,
Siemsen Enno
Publication year - 2019
Publication title -
production and operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.279
H-Index - 110
eISSN - 1937-5956
pISSN - 1059-1478
DOI - 10.1111/poms.12899
Subject(s) - newsvendor model , asymmetry , margin (machine learning) , observable , function (biology) , order (exchange) , sample (material) , econometrics , center (category theory) , economics , computer science , operations management , operations research , mathematics , physics , supply chain , business , thermodynamics , marketing , chemistry , quantum mechanics , crystallography , finance , machine learning , evolutionary biology , biology
The field of behavioral operations has produced a rich tradition of experiments in newsvendor decision‐making. Our study provides a meta‐analysis of 24 papers in this research area; we confirm that the pull‐to‐center (PtC) effect, where average order quantities in a sample lie in between average demand and optimal order quantities, is a very stable observable phenomenon across studies. However, we also show that the asymmetry in the PtC effect between high‐margin and low‐margin conditions varies significantly from study to study; factors that allow predicting the extent and direction of the PtC asymmetry include the likelihood of obtaining losses, the way underage costs are presented to subjects, and the existence of a decision support system. We validate these factors using a controlled experiment. In conclusion, the PtC asymmetry appears less as a fundamental attribute of human behavior, but rather as a function of the design aspects of the experiment.