The Effects of Overconfidence in Supply Chain Systems

Xiao Wei Wang

doi:10.4028/www.scientific.net/AMM.543-547.4218

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HomeApplied Mechanics and MaterialsApplied Mechanics and Materials Vols. 543-547The Effects of Overconfidence in Supply Chain...

The Effects of Overconfidence in Supply Chain Systems

Abstract:

Based on the past research on overconfidence, we present a model of an overconfident retailer who has biased belief on variance of demand. We investigate the deviation on orders and profits between him and the rational one, and then prove that what the relationship between profits and overconfidence level is. Because the overconfident retailer's profits are always less than the rational one's, we discuss how supplier could take contractual mechanisms to achieve the maximize profits of supply chain, when confronted with an overconfident retailer.

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Periodical:

Applied Mechanics and Materials (Volumes 543-547)

Pages:

4218-4222

DOI:

https://doi.org/10.4028/www.scientific.net/AMM.543-547.4218

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Online since:

March 2014

Authors:

Xiao Wei Wang*

Keywords:

Buy-Back, Coordination, Overconfidence, Supply Chain

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* - Corresponding Author

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