Modelling Human Behaviour in Newsvendor Game

Abstract

The production systems are made up of technologies, organizational styles, management models and, above all, individuals. The human contribution in operations management is particularly critical because it has a significant effect on the outcomes and it is difficult to predict. The literature review shows that, even in simplified operating conditions, such as those represented by the famous problem of newsvendor and in conditions of complete information, the behavior of human managers deviates considerably from the optimal. The literature review also shows that, although the concept of bounded rationality is now well established, the modeling of human behavior is still incomplete, often limited to the verification of a single type of bias without considering their simultaneous presence. This study, based on the results obtained from controlled human experiments on newsvendor game, proposes a decision-making model that takes into account more than just one bias and is based on the heuristics of anchoring and adjustment. The model shows a promising capacity to reveal the individual's behavior.