1729. A newsvendor model with multiple reference points: Target-setting for aspirational newsvendors
Invited abstract in session TC-33: Behavioural operations 2, stream Behavioural OR.
Tuesday, 12:30-14:00Room: Maurice Keyworth 1.31
Authors (first author is the speaker)
| 1. | Tian Bai
|
Abstract
Prospect theory suggests that the classification of outcomes as gains or losses depends on reference points, significantly influencing individual decision-making. Reference points can include both external targets and internal aspirations (self-goals). While growing evidence highlights the simultaneous impact of multiple reference points on decision-making, this phenomenon has received limited attention in operations management literature. This study investigates the influence of an external target as a reference point on the decisions and profitability of newsvendors who also possess a well-defined self-goal reference point. Two types of newsvendors are identified: balanced newsvendors, who harmonize personal needs with target achievement and are influenced by dual reference points, and focused newsvendors, who prioritize target realization and are guided solely by the target reference point. The findings reveal that the effects of target-setting on expected profits for both types of newsvendors depend on the specific value of their self-goal. Target-setting can yield advantages or disadvantages, contingent on the self-goal, with balanced newsvendors more likely to benefit. Additionally, scenarios where a newsvendor's self-goal is updated demonstrate potential for further performance improvement among balanced newsvendors.
Keywords
- Behavioural OR
Status: accepted
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