In the newsvendor problem, a pull-to-center effect has been asserted, whereby subjects are said to order a quantity between the mean of the demand distribution and the expected profit-maximizing quantity. These claims have only been examined using group-level aggregate statistics. Looking at...

Problem denition: Studies have shown that the behavior of subjects in newsvendor experiments is not consistent with expected profit maximization - an assumption that is often made in operations management literature. Although prospect theory has been established as a popular model of behavioral...