Asymmetric N-Person Newsvendor Game with Overconfidence

Overconfidence is a common behavior bias that affects the decision maker’s equilibrium strategy in competition. To explore the impact of overconfidence on the inventory game, this paper establishes an asymmetric newsvendor game model with N participators that considers overconfidence. The study found that when the newsvendor key ratios are identical the decision makers should ignore the impact of rival’s decisions. The pull-to-center effect can be observed in asymmetrical overconfident newsvendor games. Overconfident newsvendor may earn more when competing with the rational newsvendor, while the rational newsvendor may earn less. The overconfidence can offset the impact of competitive effect on order decisions. In addition, this paper explains the reason why the total order volume of the newsvendor game system is not lower than the total order volume of the centralized newsvendor system.