Case studies and laboratory experiments have revealed that supply chain decisions made by humans do not conform to the expectations of supply chain management theory. In this study we conduct a simple lab experiment under newsvendor setting and compare the performance of Turkish and American decision-makers. We consider two different scenarios: namely buyback contract and revenue sharing contract. The subjects make consecutive ordering decisions against a fixed contract and random consumer demand. Our analysis shows that both groups of newsvendors place lower than optimal orders, however Turkish subjects place smaller orders under buyback contract than American subjects. The difference under revenue sharing contract is not significant. We also compare the subject performance in terms of risk-taking behavior and decision heuristics such as the mean anchor heuristic and demand chasing heuristic.

NOTE: The full paper version of this study will be posted this week. Please review that version.