This Article Full Text (PDF) References Alert me when this article is cited Alert me if a correction is posted Services Email this article to a friend Similar articles in this journal Alert me to new issues of the journal Download to citation manager Citing Articles Citing Articles via HighWire Google Scholar Articles by Bearden, J. N. Articles by Rapoport, A.

Decision Biases in Revenue Management: Some Behavioral Evidence

Decision Sciences Area, INSEAD, Singapore, 138676
Center for the Decision Sciences, Columbia University, New York, New York 10027
Department of Management and Organizations, University of Arizona, Tucson, Arizona 85721
neil.bearden{at}insead.edu
rom2102{at}columbia.edu
amnon{at}u.arizona.edu

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.

Key Words: behavioral operations; revenue management; dynamic pricing; decision bias; heuristics
History: Received: June 2, 2006; accepted: July 23, 2007.

This article has been cited by other articles:

				N. Gans and R. Croson Introduction to the Special Issue on Behavioral Operations MSOM, September 1, 2008; 10(4): 563 - 565. [Abstract] [PDF]