Effect of personality on newsvendor decisions

Official URL: http://dx.doi.org/10.46254/NA07.20220331

We present the results of a newsvendor experiment and out-of-experiment personality trait surveys. Our study is based on a simple scenario where the decision maker determines the stock quantity for a perishable product with stochastic consumer demand. We explore the predictive power of self-esteem and regret tendency on ordering behavior in newsvendor setting. We find that subjects with higher self-esteem scores place larger orders and earn more profit under low purchasing cost setting, whereas the difference is not salient under high purchasing cost setting. Moreover, decision-makers with higher regret tendency place orders with smaller variability and closer to the demand mean under high purchasing cost setting.