The expectation-based loss-averse newsvendor

We modify the classic single-period inventory management problem by assuming that the newsvendor is expectation-based loss averse according to  Kőszegi and Rabin, 2006, Kőszegi and Rabin, 2007. We show that the expectation-based loss-averse newsvendor orders less than the profit-maximizing quantity. Moreover, the order placed by the expectation-based loss-averse newsvendor features plausible comparative statics of cost and price changes.