Behavioural ordering, competition and profits: An experimental investigation Event as iCalendar

(Information Systems and Operations Management)

15 February 2019

1 - 2pm

Venue: The University of Auckland Business School, Level 3, Room 321, 12 Grafton Road, Auckland, 1010

We investigate the impact of behavioral ordering on profitability under competition. Specifically, we use controlled laboratory experiments to evaluate the differences in profits between a behavioral competitor where a human places orders, and a management science-driven competitor where orders are placed according to one of several plausible policies based on existing literature and managerial practice. Unlike the full-information game-theoretic models that assume rational decision-makers, these policies mimic practical situations by using less information and do not assume that their human competitors make fully rational decisions. Most prior literature focuses on non-competitive settings, where behaviorally-biased deviations from optimal order quantities result in small expected profit losses. The main result of our experiments is that human competitors receive a substantially lower profit than the equilibrium expected profit, while their competitors receive substantially higher profits, for a net difference several times larger than what was previously reported.

This paper is joint work with Bernardo Quiroga (Pontifical Catholic University of Chile) and Anton Ovchinnikov (Queens University, Canada) 

Brent Moritz is Associate Professor of Supply Chain Management at the Smeal College of Business – The Pennsylvania State University and is a faculty affiliate of the Laboratory for Economics, Management and Auctions (LEMA) at Penn State. He earned his PhD (Operations and Management Science) at the Carlson School of Management - University of Minnesota. He also holds a BS in Mechanical Engineering from Valparaiso University and an MBA from the Weatherhead School of Management at Case Western Reserve University. Prior to obtaining his PhD, he held positions in manufacturing operations and supply chain management at BorgWarner, Eaton and Parker Hannifin. This included international experience working in Mexico, England and Germany. 

Dr Moritz has research interests including supply chain management, behavioral operations, operations strategy and cognitive decision processes. His research is focused on inventory and forecasting decisions, which are core to many operations decisions. His research has been published in Management Science, Journal of Operations Management and Production and Operations Management. 

For further information view Bren't staff profile