Team decision-making and individual learning in the newsvendor problem

Short abstract Past experimental studies of decision-making in the context of the Newsvendor problem unanimously find that the decision-makers tend to make suboptimal decisions and, unless special measures are taken to induce “in-task” learning, fail to improve quality of their decisions over time. However, most of these past studies dealt with individual decision-makers. In the present study we conduct a laboratory experiment to investigate the impact of the team structure on the team performance and the potential of teams as a learning medium. Consistently with some of the earlier studies we find that simply bringing people to work in teams need to improve the quality of decisions. However, we observe significantly differences performances of flat and hierarchical teams. With regard to learning, team decision-making proves effective in helping decision-makers “unlearn” their biased decision-making patterns but only when some other team member has a superior knowledge.