The Multi-Reference Point Loss-Averse Newsvendor Problem With Reference Effect

Based on two quantity-oriented reference points,this paper explores the influence of reference effect and strategic consumer's purchase behavior on the loss-averse newsven-dor's decision,and the coordination of a supply chain involved of a risk neutral whole-saler and a loss averse retailer with two reference points(LARTRP)respectively.As a benchmark model,we first study the optimal inventory of LARTRP when facing myopic consumers,give the equation of retailer's optimal inventory,and analyze the influence of system parameters on it.Secondly,when consumers purchase strategically,we give and analyze the retailer's rational expectation equilibrium inventory and sales price,and ana-lyze the influence of system parameters on them.Finally,in the supply chain setting,we characterize the conditions under which a wholesale price contract or a revenue sharing contract can coordinate the supply chain.Especially,we find that the inventory decisions of LARTRP are always more conservative than those with single reference point.The correlation between reference effect and inventory decisions can be determined by the retailer's two levels of optimism.