The Heterogeneity of Behavior in Operations Processes : Empirical Evidence

Abstract: Behavioral science research has established that observed human behavior may deviate considerably from model suggestions. In addition to the realization that there is no such thing as standardized human behavior, there are also substantial differences in how people deviate from the model: Different individuals make dissimilar decisions in the same situation when using the same information. Recently, behavioral operations management has seen an increased focus on understanding the role of humans in the decisions and processes these models aim to capture. However, still little is known about the factors that determine the observed behavioral heterogeneity.Advancements in technology have made it possible to collect and analyze data at granular levels. The availability of such detailed data has increased the ability of the behavioral sciences to examine behavior with techniques from data science and empirical analysis. Therein lies the possibility of capturing the human role in processes and improving them according to the results.The overarching purpose of this dissertation is to enhance the understanding of what drives heterogeneity of behavior in operations processes. To fulfill this purpose, this dissertation presents four studies; each targeting drivers of the heterogeneity in different operations processes. The four studies focus on decision making, determining choices, and forecasting in different empirical settings.The first study analyzes the ordering behavior of purchasing agents when placing orders involving uncertain lead times with suppliers. Purchasers seem to rely on their prior encounters with suppliers and add safety times depending on the type and recency of their experiences with them. This behavior may lead to early ordering to avoid late deliveries. Our results inform behavioral operations by examining the mechanism behind experiential learning in an industrial setting. The second study explores e-commerce customers’ choices of fulfillment methods. It disentangles the importance of a customer’s perceived delivery convenience from factors such as order fulfillment speed and price of delivery.The third study investigates industrial purchasing again, this time analyzing how purchasers time their orders depending on previous experiences with specific suppliers and the experiences of peers. Our findings contribute to the literature on supply chain disruptions and the effect of rare events on an individual’s ordering decisions, and highlight how individuals learn from their own as well as from peers' experiences. The fourth study focuses on the effect of lifetime experiences on professionals who are tasked with forecasting inflation over an extended period. We provide evidence that systematic differences in forecasts of inflation across generations of economic forecasters are due to varied lifetime experiences. This outcome adds to the literature on experiential effects by emphasizing the importance of individual judgment versus available information in forecasting tasks.All studies use field data collected from several companies to explore drivers of behavioral heterogeneity in operations processes. Their findings permit a better understanding of what drives variations of behavior in different operations settings, which through further elaboration and research can help businesses set more targeted policies and management priorities.