| Article ID: | iaor2016457 |
| Volume: | 24 |
| Issue: | 11 |
| Start Page Number: | 1783 |
| End Page Number: | 1793 |
| Publication Date: | Nov 2015 |
| Journal: | Production and Operations Management |
| Authors: | Ovchinnikov Anton, Moritz Brent, Quiroga Bernardo F |
| Keywords: | behaviour, inventory: order policies, experiment |
We investigate newsvendor ordering behavior under competition. We present a laboratory experiment that documents the behavioral ordering regularities in competitive newsvendor environments, and an analytical model extending the standard theory of newsvendor competition by including an optimal best‐response policy for competing with a behaviorally biased newsvendor. We test the effectiveness of this policy using an out‐of‐sample experiment and find that it results in improved market share, service level and profitability.