A Review of the Pull-to-Center Effect in the Newsvendor Problem

doi:10.3969/j.issn.1007-7375.2022.06.015

Abstract

Abstract: In 2000, Schweitzer and Cachon reported for the first time the pull-to-center (PTC) effect in the ordering decisions of the bounded newsvendor. Since then, the PTC effect has attracted more and more attention and been widely observed in a large body of experimental and theoretical studies. In this review, the existing literature about the cause of PTC effect from 2000 to 2021, including anchoring and insufficient adjustment heuristics, minimizing ex-post inventory error, recency effect, overconfidence, framing dependence, mental accounting and reference point aspects are summarized. Then, according to the characteristics of how individuals process cognitive information, these behavioral theories and biases leading to the PTC effect are classified into three phases, namely, information acquiring phase, information editing phase and information evaluation phase. The research shows that the current exploration of the PTC effect has mainly focused on the information editing stage. Finally, some potential topics for the future research are proposed.

Key words: behavioral operations, newsvendor problems, pull-to-center

CLC Number:

F253.4

LI Shourong, ZHANG Renqian. A Review of the Pull-to-Center Effect in the Newsvendor Problem[J]. Industrial Engineering Journal, 2022, 25(6): 126-135.

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