Session25handout - SupplyChainModeling...

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Supply Chain Modeling Session 25: Behavioral Effects  Atalay Atasu
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Behavioral concepts from Economics Let’s define the following: Risk Ambiguity Loss These are behavioral factors we typically consider for  individuals How do these factors affect your decisions?
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The Keyword is aversion Risk Aversion Loss Aversion Ambiguity Aversion Now, think about the newsvendor How does your ordering decision depend on these factors? Let’s test
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Experiment 1 Choose between the two lotteries $9 w.p. ½ and $1 w.p. ½ $5 w.p. 1 What is the outcome? What do you think we call this?
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Experiment 2 Choose between the two lotteries $9 w.p. ½ and $1 w.p. ½ $4 w.p. 1 What is the outcome?
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Experiment 3 Choose between the two lotteries $9 w.p. ½ and $7 w.p. ½ $6 w.p. 1 What is the outcome?
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Choose between the two lotteries
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This note was uploaded on 01/25/2011 for the course MGT 4803 taught by Professor Staff during the Spring '08 term at Georgia Institute of Technology.

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Session25handout - SupplyChainModeling...

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