关键词: 供应链协调, 损失规避, 参照依赖, 促销努力

Abstract: The estimated achievable profit, if it is reasonable, should locate between the maximum achievable profit and the minimum achievable profit for a given strategy. In prospect theory, the estimated profit can be chosen as a reference point of a decision-maker. In this circumstance, we refer to the decision-maker as reference-dependent. The reference point together with the degree of preference for loss aversion will influence its behavioral strategies, thereby affecting the design of contracts in the supply chain.
In the presence of promotional effort, the retailer's reference point depends not only on its inventory strategy but also on promotional strategy. This article constructs a supply chain consisting of a single supplier and a single retailer, where the retailer has loss-averse preferences with reference dependence and implements promotional effort. We use prospect theory to explore the retailer's ordering and promotion decisions, as well as the supply chain coordination issues via revenue-sharing and buyback contracts. In our utility model, the retailer's utility consists of two parts: consumption utility and loss-gain utility, where the loss-gain utility is characterized by the difference between the realized profit and the reference point. The reference point is related to the retailer's strategies and is a weighted average of the maximum achievable profit and the minimum one.
Firstly, we explore the decision-making problem of the retailer under the wholesale price contract, and analyze the impact of the loss aversion preference on the decisions. The optimal order quantity and sales effort level decrease in the weighted coefficient of the reference point, the degree of loss aversion, and the wholesale price. The optimal strategy may be greater or less than the classic newsvendor's counterpart. Specifically, if the wholesale price is low, the optimal order quantity and promotional effort level may be greater than those under centralized decision-making.
Secondly, we discuss the coordination issue of the supply chain via revenue-sharing and buyback contract. We demonstrate that a combination of revenue-sharing (buyback) contracts and promotion cost-sharing mechanisms can coordinate the supply chain in some circumstances. We characterize a sufficient condition to ensure the coordination achievement. In particular, the supply chain coordination can be realized if (1)the intensity of loss-gain utility is weak (i.e., the retailer pay little attention to loss-gain utility), (2)the intensity of loss-gain utility is very strong, and the reference point is not too extreme, (3)the intensity of loss-gain utility is moderate, and the reference point is either close to the worst result or the reference point is close to the best result.
Thirdly, we investigate the impact of the loss aversion preference on the coordination contracts. Given the proportion of promotion cost sharing, for revenue-sharing contract, the wholesale price and revenue-sharing coefficient decrease with the weighted coefficient of the reference point, the intensity of loss-gain utility, and the degree of loss aversion. For buyback contract, the buyback price increases with the weighted coefficient of the reference point, the intensity of loss-gain utility, and the degree of loss aversion.
Fourthly, we also discuss the fact that the equivalence of the two contracts under the retailer is loss averse. We show that the two contracts (revenue-sharing versus buyback) are still equivalent, and the equivalence between the parameters of two contracts is the same as that under the classic newsvendor framework. In another word, the loss aversion preference exerts no effect on the equivalence of the two contracts.
Some managerial insights are obtained as follows. First, if a retailer has a reference-dependent loss aversion preference, the revenue-sharing or buyback contracts cannot always achieve supply chain coordination. Second, when using the two contracts to coordinate the supply chain, it must consider the impact of the weighted coefficient of the reference point, the intensity of loss-gain utility, and the degree of loss aversion on the retailer's decisions. Specifically, for revenue-sharing contract, both the wholesale price and the revenue-sharing ratio need to be downwardly adjusted. Moreover, the revenue-sharing coefficient should be less than the cost-sharing ratio, and the wholesale price should be less than the product of the cost-sharing ratio and the unit production cost. For buyback contract, the buyback price should be upwardly adjusted, while the wholesale price should be downwardly adjusted, corresponding to the classic newsvendor case.

Key words: supply chain coordination, loss aversion, reference dependency, promotional effort