Anchor Selection and Group Dynamics in Newsvendor Decisions--A Note

We conducted a newsvendor experiment in which (i) the subjects were presented with multiple pieces of information that they could possibly use to anchor their decision and (ii) the subjects participated either as individuals or in groups of three. The primary objective was to determine whether the s...

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Bibliographic Details
Published inDecision analysis Vol. 6; no. 2; pp. 87 - 97
Main Authors Gavirneni, Srinagesh, Xia, Yusen
Format Journal Article
LanguageEnglish
Published Linthicum INFORMS 01.06.2009
Institute for Operations Research and the Management Sciences
Subjects
anchoring
Behavior
Costs
Decision analysis
Decision making
Decision making models
Design of experiments
Experiments
group decisions
Group dynamics
Hypotheses
Inventory
Inventory control
Inventory management
newsvendor models
Order quantity
Studies
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Summary:We conducted a newsvendor experiment in which (i) the subjects were presented with multiple pieces of information that they could possibly use to anchor their decision and (ii) the subjects participated either as individuals or in groups of three. The primary objective was to determine whether the subjects tended to consistently anchor to the mean or change their anchor based on the experimental setting. The secondary objective was to study the impact of group dynamics on their decision-making approach. We observed that the subjects did not anchor to any one particular value, but rather chose an anchor that was closer to the optimal value. In addition, we observed that although there was no difference in their relative tendencies to anchor, the subjects in groups demonstrated a lower propensity for error than their individual counterparts.
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ISSN:1545-8490
1545-8504
DOI:10.1287/deca.1090.0136