Article ID: | iaor20101861 |
Volume: | 124 |
Issue: | 2 |
Start Page Number: | 448 |
End Page Number: | 452 |
Publication Date: | Apr 2010 |
Journal: | International Journal of Production Economics |
Authors: | Wang Charles X |
Keywords: | newsboy problem, Nash equilibrium |
This paper extends the standard newsvendor problem based upon risk neutrality to a game setting where multiple newsvendors with loss aversion preferences are competing for inventory from a risk-neutral supplier. We show that if the supplier allocates the total demand among the newsvendors proportional to their order quantities, then there exists a unique Nash equilibrium order quantity in this newsvendor game. We also find that while the