Individual difference in the newsvendor problem : The roles of risk perception and external sources of information in decision making under uncertainty

There is a systematic deviation from profit maximization in inventory management of short life cycle products, named the pull-to-center effect. This phenomenon describes either a too low or a too high pattern in inventory orders with the consequence to lead to overstocks or items shortage. The perception of risk of the inventory manager is an inherent part of the decision-making process, which is likely to affect it and could result in inappropriate inventory decisions. In addition, external information sources coming from social media related to a possible market acceptance of short life cycle products are also expected to influence ordering decision-making. This project investigates the role of risk perception where there is no information on past sales (newsvendor problem) and how individual differences in risk perception and the impact of external information availability on decision-making, could be possible explanations of suboptimal ordering decisions in inventory management.

Project funding

HEG - Genève (@HEG_GE) / Twitter