Herweg, Fabian - In: Economics Letters 120 (2013) 3, pp. 429-432
We modify the classic single-period inventory management problem by assuming that the newsvendor is expectation-based loss averse according to Kőszegi and Rabin (2006, 2007). We show that the expectation-based loss-averse newsvendor orders less than the profit-maximizing quantity. Moreover,...