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Non-profit-maximizing behavior in supply chain management focuses on the human component in supply chain management. It develops behavioral models that consider individual and social preferences of supply chain members in order to improve our understanding of actual decision-making in supply chain management.
The author challenges the common assumption of a selfish homo economicus and introduces the human component in three experimental studies: In the first study, he examines the effect of individual risk preferences in the Newsvendor context. In the second study, a common group identity to overcome incentive conflicts in forecast sharing is studied. The third study explores underlying cognitive processes in contractual decision-making.
Potential readership includes scholars and graduate students who are interested in the field of behavioral operations management and practitioners looking for behavioral aspects of decision making in supply chain management.



Chapter 1. Introduction

In 2010, the British government established the Behavioral Insights Team with the objective of using insights from behavioral economics to improve key policy areas. After two years of work, their recommendations led to an estimated saving of £300 million over the next five years, and other governments in the Commonwealth are now setting up similar teams (Cabinet Office 2012). In science, Nobel Laureates George Akerlof and Daniel Kahneman have advanced behavioral research in the influential Roundtable Series in Behavioral Economics (Russell Sage Foundation 2012).
Torsten Gully

Chapter 2. Risk Preferences of Informed Newsvendors

People behave risk-averse in many situations where decisions are made under uncertainty (cf. Camerer 2000; Hillson and Murray-Webster 2005). However, in a commonly analyzed inventory model with demand uncertainty, the Newsvendor model (e.g., Khouja 1999; Nahmias 2008), most experimental research indicates that people are not risk-averse when making ordering decisions (e.g., Schweitzer and Cachon 2000).
Torsten Gully

Chapter 3. Group Preferences and Forecast Sharing in Supply Chains

Production planners make decisions about production volumes to meet future market demand. To make these decisions, they rely on demand forecasts, which require market knowledge. Therefore, forecasts are rarely created by production planners but by demand planners (cf. Chen 2005; Scheele et al. 2012). Accurate forecast information is crucial for the success of organizations (cf. Cachon and Lariviere 2001; Chen 2005; Terwiesch et al. 2005).
Torsten Gully

Chapter 4. Fairness Preferences and Priming in Contracting

Many economists model individual behavior through preferences in utility functions (Camerer and Loewenstein 2004; DellaVigna 2009). The standard (neoclassical) economic theory assumes that these preferences are narrowly self-interested (cf. Samuelson 1948). However, the behavioral economic literature shows that preferences should also include social preferences, which take the well-being of others into account (e.g., Charness and Rabin 2002; Cooper and Kagel 2009; Fehr and Fischbacher 2002; Fehr and Schmidt 2006).
Torsten Gully

Chapter 5. Conclusion

This thesis studied non-profit-maximizing behavior in supply chains, using standard models from supply chain management and incorporating relevant non-profit-maximizing preferences based on research from related fields. Normative predictions were derived and their validity examined in a laboratory setting.
Torsten Gully


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