The manner in which economic outcomes are coded in a value function is critical because it has substantial influence on the evaluation of risky choices.In this paper,we formulate multiple mental accounts in a nonlinea...The manner in which economic outcomes are coded in a value function is critical because it has substantial influence on the evaluation of risky choices.In this paper,we formulate multiple mental accounts in a nonlinear value function and propose a newsvendor problem with mental accounting to predict and explain pull-to-center phenomenon.We show that the distinctive predictions of the proposed model come from the value function with mental accounting.We identify the individual and combined effects of loss aversion,risk aversion,and risk seeking on shaping newsvendor ordering behavior.Our work demonstrates that prospect theory can explain the decision bias and ordering behavior observed in newsvendor experiments.We also provide some additional insights to explain the studies in the literature.展开更多
Numerous empirical studies show that advertising effort can stimulate demand in both current and future periods, and there is an interaction between pricing, advertising and ordering decisions. How do these decisions ...Numerous empirical studies show that advertising effort can stimulate demand in both current and future periods, and there is an interaction between pricing, advertising and ordering decisions. How do these decisions interact with each other and what is the effect of advertising on pricing and ordering decisions？ To understand this interaction, we consider a newsvendor-type firm that sells a perishable product in a stable market and dynamically determines the joint ordering, pricing and advertising strategies. The problem is modeled as an infmite horizon newsvendor problem with an advertising carryover effect and price-sensitive demand. We characterize the optimal pricing, advertising and inventory strategies and their comparative statics, and consider how this policy differs from the traditional approach without the advertising effect. We show that the optimal effective advertising level is monotonically increasing with the effective advertising level in the previous period, and hence the optimal strategies （advertising, pricing, inventory level） globally converge to the steady states in the long run. We numerically show that the optimal policy can reap significant profit, which underscores the importance of the advertising-driven ordering and pricing strategies.展开更多
基金the National Natural Science Foundation of China under Grant Nos.71872012 and 71372018the Key Research Program of Beijing Social Science Foundation under Grant No.15JDJGA021+6 种基金the International Clean Energy Talents Program of China Scholarship Council underunder Grant Nos.Liujinfa[2017]5047 and Liujinfa[2018]5023the Special Fund of Beijing Municipal Commission of Education under Grant No.20162139016the Ministry of Education of Humanities and Social Science Project under Grant Nos.l9YJC630044 and 19YJC630035the National Natural Science Foundation of Zhejiang Province under Grant No.LY18G010016Zhoushan Science and Technology Project under Grant No.2017C41018the Foundation of Zhejiang Educational Committee under Grant No.Y201840337the Startup Foundation of Zhejiang Ocean University under Grant Nos.11085090318 and 11085090418.
文摘The manner in which economic outcomes are coded in a value function is critical because it has substantial influence on the evaluation of risky choices.In this paper,we formulate multiple mental accounts in a nonlinear value function and propose a newsvendor problem with mental accounting to predict and explain pull-to-center phenomenon.We show that the distinctive predictions of the proposed model come from the value function with mental accounting.We identify the individual and combined effects of loss aversion,risk aversion,and risk seeking on shaping newsvendor ordering behavior.Our work demonstrates that prospect theory can explain the decision bias and ordering behavior observed in newsvendor experiments.We also provide some additional insights to explain the studies in the literature.
文摘Numerous empirical studies show that advertising effort can stimulate demand in both current and future periods, and there is an interaction between pricing, advertising and ordering decisions. How do these decisions interact with each other and what is the effect of advertising on pricing and ordering decisions？ To understand this interaction, we consider a newsvendor-type firm that sells a perishable product in a stable market and dynamically determines the joint ordering, pricing and advertising strategies. The problem is modeled as an infmite horizon newsvendor problem with an advertising carryover effect and price-sensitive demand. We characterize the optimal pricing, advertising and inventory strategies and their comparative statics, and consider how this policy differs from the traditional approach without the advertising effect. We show that the optimal effective advertising level is monotonically increasing with the effective advertising level in the previous period, and hence the optimal strategies （advertising, pricing, inventory level） globally converge to the steady states in the long run. We numerically show that the optimal policy can reap significant profit, which underscores the importance of the advertising-driven ordering and pricing strategies.
