Analyzing Learning Effects in the Newsvendor Model by Probabilistic Methods

20 Pages Posted: 11 Oct 2019

See all articles by Jonas Andersson

Jonas Andersson

Norwegian School of Economics (NHH) - Department of Business and Management Science

Kurt Jornsten

Norwegian School of Economics (NHH) - Department of Business and Management Science

Jostein Lillestol

Norwegian School of Economics (NHH) - Department of Business and Management Science

Jan Uboe

Norwegian School of Economics (NHH) - Department of Business and Management Science

Date Written: October 11, 2019

Abstract

In this paper, we use probabilistic methods to analyze learning effects in a behavioral experiment on the newsvendor model. We argue why we should believe that suggested orders follow a multinomial logit distribution, and use the single parameter in that model to extract information on learning effects. We revisit the data, analyzed previously by Bolton et al. (2012), and show that our model predicts the pull-to-center effect in these experimental data very well.

Keywords: behavioral OR, experimental economics, bounded rationality, probabilistic methods, pull-to-center effect

JEL Classification: C00, C70

Suggested Citation

Andersson, Jonas and Jornsten, Kurt and Lillestol, Jostein and Uboe, Jan, Analyzing Learning Effects in the Newsvendor Model by Probabilistic Methods (October 11, 2019). NHH Dept. of Business and Management Science Discussion Paper No. 2019/13, Available at SSRN: https://ssrn.com/abstract=3468178 or http://dx.doi.org/10.2139/ssrn.3468178

Jonas Andersson

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
Bergen, NO-5045
Norway

Kurt Jornsten

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
Bergen, NO-5045
Norway

Jostein Lillestol

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
Bergen, NO-5045
Norway

Jan Uboe (Contact Author)

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
Bergen, NO-5045
Norway

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