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Managers and Students as Newsvendors - How Out-of-Task Experience Matters

Author

Listed:
  • Gary E Bolton
  • Axel Ockenfels
  • Ulrich Thonemann

Abstract

We compare how freshmen business students, graduate business students and experienced procurement managers perform on a simple inventory ordering task. We find that, qualitatively, managers exhibit ordering behavior similar to students, including biased ordering towards average demand. Experience, however, affects subjects’ utilization of information. The managers’ work experience seems most valuable when there is only historical demand data to guide decision making, while students better utilize analytical information and task training. As a result, when information necessary to solve the problem to optimality is added to historical information, students catch up to the managers, and students with classroom experience in operations management outperform managers.

Suggested Citation

  • Gary E Bolton & Axel Ockenfels & Ulrich Thonemann, 2008. "Managers and Students as Newsvendors - How Out-of-Task Experience Matters," Working Paper Series in Economics 39, University of Cologne, Department of Economics.
  • Handle: RePEc:kls:series:0039
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    File URL: http://ockenfels.uni-koeln.de/fileadmin/wiso_fak/stawi-ockenfels/pdf/wp_series_download/wp0039.pdf
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    References listed on IDEAS

    as
    1. Uri Ben-Zion & Yuval Cohen & Ruth Peled & TAL SHAVIT, 2007. "Decision-Making and the Newsvendor Problem – An Experimental Study," Working Papers 0711, Ben-Gurion University of the Negev, Department of Economics.
    2. Gary E. Bolton & Elena Katok, 2008. "Learning by Doing in the Newsvendor Problem: A Laboratory Investigation of the Role of Experience and Feedback," Manufacturing & Service Operations Management, INFORMS, vol. 10(3), pages 519-538, September.
    3. David J. Cooper, 1999. "Gaming against Managers in Incentive Systems: Experimental Results with Chinese Students and Chinese Managers," American Economic Review, American Economic Association, vol. 89(4), pages 781-804, September.
    4. David Cooper & John Kagel & Qing Liang Gu & Wei Lo, 1999. "Gaming against managers in incentive systems: Experimental results with chinese students and chinese managers," Artefactual Field Experiments 00038, The Field Experiments Website.
    5. Ben Greiner, 2004. "The Online Recruitment System ORSEE 2.0 - A Guide for the Organization of Experiments in Economics," Working Paper Series in Economics 10, University of Cologne, Department of Economics.
    6. Ben Greiner, 2004. "The Online Recruitment System ORSEE - A Guide for the Organization of Experiments in Economics," Papers on Strategic Interaction 2003-10, Max Planck Institute of Economics, Strategic Interaction Group.
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    Citations

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    Cited by:

    1. Feng, Tianjun & Keller, L. Robin & Zheng, Xiaona, 2011. "Decision making in the newsvendor problem: A cross-national laboratory study," Omega, Elsevier, vol. 39(1), pages 41-50, January.
    2. Stewart Robinson & Stavrianna Dimitriou & Kathy Kotiadis, 2017. "Addressing the sample size problem in behavioural operational research: simulating the newsvendor problem," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(3), pages 253-268, March.
    3. Elena Katok & Diana Yan Wu, 2009. "Contracting in Supply Chains: A Laboratory Investigation," Management Science, INFORMS, vol. 55(12), pages 1953-1968, December.

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