Economics Insights @ CBS

The newsvendor model captures the trade-off faced by a decision maker that needs to place a firm bet prior to the occurrence of a random event. Previous research in operations management has mostly focused on deriving the decision that minimizes the expected mismatch costs. In contrast, we present two methods that estimate the unobservable cost parameters characterizing the mismatch cost function. We present a structural estimation framework that accounts for heterogeneity in the uncertainty faced by the newsvendor as well as in the cost parameters.

Competing organizations are often defined by their niche overlap or structural equivalence in resource dependence, but the very structure that defines competitors can also identify cooperators. There is a fine line between competition and cooperation, but current theories give insufficient guidance as to which will take place and also contribute to the belief that cooperation between competitors is illegitimate. We show that the legitimacy of these practices, as well the evaluation of their welfare implications, are context bound.

Prior research shows that perceivers can judge some traits better than others in first impressions of targets. However, questions remain about which traits perceivers naturally do infer. Here, we develop an account of the "agreeableness asymmetry": although perceivers show little ability to accurately gauge target agreeableness in first impressions, we find that agreeableness is generally the most commonly-inferred disposition among the Big Five dimensions of personality (agreeableness, extraversion, conscientiousness, openness, and emotional stability).

Historical and empirical data have linked artistic creativity to depression and other affective disorders. This study examined how vulnerability to experiencing negative affect, measured with biological products, and intense negative emotions influenced artistic creativity. The authors assessed participants' baseline levels of an adrenal steroid (dehydroepiandrosterone-sulfate, or DHEAS), previously linked to depression, as a measure of affective vulnerability.