The expectation-based loss-averse newsvendor

Herweg, Fabian (2013): The expectation-based loss-averse newsvendor. In: Economics Letters, Vol. 120, No. 3: pp. 429-432

Abstract

We modify the classic single-period inventory management problem by assuming that the newsvendor is expectation-based loss averse according to Koszegi and Rabin (2006, 2007). We show that the expectation-based loss-averse newsvendor orders less than the profit-maximizing quantity. Moreover, the order placed by the expectation-based loss-averse newsvendor features plausible comparative statics of cost and price changes.

• Item Type: Journal article
• Faculties: Economics; Economics > Chairs > Junior Professor in Microeconomics (closed)
• Subjects: 300 Social sciences > 330 Economics
• Language: English