Group decision making in Newsvendor game: a pilot human experiment

Well established behavioral studies in Operations Management highlight that the Human's behaviour deviates from the optimal solution, even in simplified operating conditions such as those represented by the famous Newsvendor problem. Built on the results of controlled human experiments, this study proposes a decision-making model that accounts for the heuristics of anchoring and adjustment. Two experimental conditions, differing in the provision of demand information to couple of decision makers, are used to generate data. The model estimated shows that anchoring and adjustment behaviour differs in the two conditions: demand information knowledge enables smoothing partially the pull to center effect.