This paper studies the e ect of risk-aversion in the competitive
newsvendor game. Multiple newsvendors with risk-averse preferences face a
random demand and the demand is allocated proportionally to their inventory
levels. Each newsvendor aims to maximize his expected utility instead of his
expected pro t. Assuming a general form of risk-averse utility function, we
prove that there exists a pure Nash equilibrium in this game, and it is also
unique under certain conditions. We nd that the order quantity of each
newsvendor is decreasing in the degree of risk-aversion and increasing in the
initial wealth. Newsvendors with moderate preferences of risk-aversion make
more pro ts compared with the risk-neutral situation. We also discuss the joint
e ect of risk-aversion and competition. If the e ect of risk-aversion is strong
enough to dominate the e ect of competition, the total inventory level under
competition will be lower than that under centralized decision-making.