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The impact of human decision makers' individualities on the wholesale price contract's efficiency : simulating the newsvendor problem
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Dimitriou, Stavrianna, Robinson, Stewart and Kotiadis, Kathy (2009) The impact of human decision makers' individualities on the wholesale price contract's efficiency : simulating the newsvendor problem. In: Winter Simulation Conference 2009, Austin, TX, 13-16 Dec 2009 . Published in: Proceedings of the 2009 Winter Simulation Conference (WSC 2009), Vol.1-4 pp. 2353-2364. doi:10.1109/WSC.2009.5429209 ISSN 0891-7736.
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Official URL: http://dx.doi.org/10.1109/WSC.2009.5429209
Abstract
Suppliers and retailers in the newsvendor setting need to submit their pricing and inventory decisions respectively, well before actual customer demand is realized. In the literature they have both been typically considered as perfectly rational optimizers, exclusively interested in their own respective benefits. Under the above set of conditions the wholesale price-only contract has long been analytically proven as inefficient. We asked real human subjects to act as suppliers or retailers in simulation games performed in the laboratory. We found their decisions to significantly deviate from the perfectly rational decisions. By using Agent Based Simulation as the evaluation tool, we investigated the effect of their varying individual preferences on the contract's efficiency. In doing so we established sufficient evidence that the contract can emerge as efficient, in spite of the underlying strategies' under-performances. This counter-intuitive result fully supports the contract's long observed wide popularity.
Item Type: | Conference Item (Paper) | ||||
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Divisions: | Faculty of Social Sciences > Warwick Business School | ||||
Journal or Publication Title: | Proceedings of the 2009 Winter Simulation Conference (WSC 2009) | ||||
Publisher: | IEEE | ||||
ISSN: | 0891-7736 | ||||
Book Title: | Proceedings of the 2009 Winter Simulation Conference (WSC) | ||||
Official Date: | 2009 | ||||
Dates: |
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Volume: | Vol.1-4 | ||||
Page Range: | pp. 2353-2364 | ||||
DOI: | 10.1109/WSC.2009.5429209 | ||||
Status: | Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Restricted or Subscription Access | ||||
Conference Paper Type: | Paper | ||||
Title of Event: | Winter Simulation Conference 2009 | ||||
Type of Event: | Conference | ||||
Location of Event: | Austin, TX | ||||
Date(s) of Event: | 13-16 Dec 2009 |
Data sourced from Thomson Reuters' Web of Knowledge
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