The loss-averse competitive newsvendor model with product substitution under multiple mental accounts

DOI

10.2991/iceesd-18.2018.228How to use a DOI?

Keywords

product substitution; multiple mental accounts; Nash equilibrium; loss aversion

Abstract

We consider a newsvendor game with two substitutable products which are sold by two retailers with loss-averse preferences under multiple mental accounts. The game theory is used to find the retailers’ optimal order quantity. Given the order quantity of one retailer, there exists a unique optimal order quantity of another retailer. And it shows that substitution, degree of loss aversion, shortage cost, degree of substitution and salvage value have an impact on optimal order quantity. Further, the Nash equilibrium is unique in the loss-averse newsvendor game. There exists a threshold of loss aversion coefficient which the effect of loss aversion dominates the effect of competition. Numerical experiments are conducted to illustrate our results.

Copyright

© 2018, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Haifei Shou
AU  - Bojun Gu
AU  - Di Zhang
PY  - 2018/05
DA  - 2018/05
TI  - The loss-averse competitive newsvendor model with product substitution under multiple mental accounts
BT  - Proceedings of the 2018 7th International Conference on Energy, Environment and Sustainable Development (ICEESD 2018)
PB  - Atlantis Press
SP  - 1235
EP  - 1239
SN  - 2352-5401
UR  - https://doi.org/10.2991/iceesd-18.2018.228
DO  - 10.2991/iceesd-18.2018.228
ID  - Shou2018/05
ER  -