J. Neil Bearden, Ryan O. Murphy, Amnon Rapoport
We study a problem of selling a fixed number of goods over a finite and known horizon. After presenting a procedure for computing optimal decision policies and some numerical results of a simple heuristic policy for the problem, we describe results from three experiments involving financially motivated subjects. The experiments reveal that decision makers employ decision policies of the same form of the optimal policy. However, they show systematic biases to demand too much when they have many units to sell and too little when they have few to sell, resulting in significant revenue losses. © 2008 INFORMS.
Decision Sciences Area, INSEAD, Singapore, 138676, Singapore; Center for the Decision Sciences, Columbia University, New York, NY 10027, United States; Department of Management and Organizations, University of Arizona, Tucson, AZ 85721, United States
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