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An Empirical Study of the Sentiment Capital Asset Pricing Model

Author

Listed:
  • Zuzana Brokesova

    (University of Economics in Bratislava)

  • Cary Deck

    (University of Alabama
    Economic Science Institute, Chapman University)

  • Jana Peliova

    (University of Economics in Bratislava)

Abstract

The newsvendor problem is a workhorse model in operation management research. We introduce a related game that operates in the price dimension rather than the inventory dimension: the price gouging game. Using controlled laboratory experiments, we compare news vending and price gouging behavior. We replicate the standard pull-to-center effect for news vending and find that the equivalent pattern occurs with price gouging. Further, we find that the pull-to-center is asymmetric both for newsvendors and price gougers. More broadly, the experimental results reveal that choices are similar across the theoretically isomorphic games, suggesting that observed behavior in newsvendor experiments is representative of a broader class of games and not driven by the operations context that is often used in newsvendor experiments. Finally, we do not find evidence that behavior in these games is systemically affected by sex, risk attitude, or cognitive reflection.

Suggested Citation

  • Zuzana Brokesova & Cary Deck & Jana Peliova, 2020. "An Empirical Study of the Sentiment Capital Asset Pricing Model," Working Papers 20-09, Chapman University, Economic Science Institute.
    • Handle: RePEc:chu:wpaper:20-09
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    File URL: https://digitalcommons.chapman.edu/esi_working_papers/303/
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    More about this item

    Keywords

    Behavioral Operations; Price Gouging; Newsvendor Game; Inventory; Pull-to-Center Effect;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D2 - Microeconomics - - Production and Organizations

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