Kicking the "Mean" Habit: Joint Prepositioning in Debiasing Pull-to-Center Effects

Jaime A. Castañeda, Paulo Gonçalves

Research output: Chapter in Book/Report/Conference proceedingChapter

1 Scopus citations

Abstract

Behavioral studies of the newsvendor model have revealed systematic underordering for low-cost products and overordering for high-cost products. This systematic deviation from optimal ordering is known as the pull-to-center effect. This chapter proposes a joint newsvendor framework or portfolio that bundles two products of different importance as a strategy to influence pull-to-center behavior. A high-cost, high-importance product is bundled with a low-cost, low-importance product, exposing decision-makers to an inconsistent cost-importance ordering task. In contrast, a low-cost, high-importance product is bundled with a high-cost, low-importance product, exposing decision-makers to a consistent cost-importance ordering task. In both cases, the high-importance product should be more salient relative to the low-importance product, thus inducing larger orders for the high-importance product compared to isolated orders associated with the same product. The framework is tested in a decision-making game portraying an inventory prepositioning task in preparation to emergency response. The prospects for debiasing in these contexts are addressed.

Translated title of the contributionAbandonando el hábito "malo": Preposicionamiento de las articulaciones en el desviado de los efectos de tracción hacia el centro
Original languageEnglish (US)
Title of host publicationThe Handbook of Behavioral Operations Management
Subtitle of host publicationSocial and Psychological Dynamics in Production and Service Settings
PublisherOxford University Press
Pages238-250
Number of pages12
ISBN (Electronic)9780190239336
ISBN (Print)9780199357215
DOIs
StatePublished - May 21 2015

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