Anchor Selection and Group Dynamics in Newsvendor Decisions---A Note

Authors:
Srinagesh Gavirneni;Yusen Xia
Affiliations:
Johnson Graduate School of Management, Cornell University, Ithaca, New York 14853;Robinson College of Business, Georgia State University, Atlanta, Georgia 30303
Venue:
Decision Analysis
Year:
2009

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Anchor Selection and Group Dynamics in Newsvendor Decisions---A Note

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Decision Analysis
Anchor Selection and Group Dynamics in Newsvendor Decisions---A Note

Decision Analysis

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Abstract

We conducted a newsvendor experiment in which (i) the subjects were presented with multiple pieces of information that they could possibly use to anchor their decision and (ii) the subjects participated either as individuals or in groups of three. The primary objective was to determine whether the subjects tended to consistently anchor to the mean or change their anchor based on the experimental setting. The secondary objective was to study the impact of group dynamics on their decision-making approach. We observed that the subjects did not anchor to any one particular value, but rather chose an anchor that was closer to the optimal value. In addition, we observed that although there was no difference in their relative tendencies to anchor, the subjects in groups demonstrated a lower propensity for error than their individual counterparts.