Distributional and Peer‐Induced Fairness in Supply Chain Contract Design

Ho, Teck-Hua; Su, Xuanming; Wu, Yaozhong

doi:10.1111/poms.12064

Cited by 221 publications

(81 citation statements)

References 30 publications

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“…In fact, experimental studies examining triadic settings have reported considerable evidence of horizontal fairness concerns induced between peers (e.g., Gantner, Güth, & Königstein, 2001; Güth, Königstein, Kov

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cs, & Zala‐Mez

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, 2001; Königstein, Kov

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cs, & Zala‐Mez

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, 2003; Ho & Su, ; Ho, Su, & Wu, ). Additionally, they reveal that peer‐induced fairness in horizontal dimensions appears more salient than distributional fairness in the vertical dimension in determining subjects' behaviors.…”

Section: Introductionmentioning

confidence: 99%

“…Additionally, they reveal that peer-induced fairness in horizontal dimensions appears more salient than distributional fairness in the vertical dimension in determining subjects' behaviors. Nevertheless, to the best of our knowledge, Ho et al (2014) is the only existing study incorporating horizontal fairness into the context of supply chain management. They investigate, both theoretically and experimentally, the role of fairness in a supply chain contract design, where one supplier sequentially offers two retailers a respective linear wholesale price contract, and each retailer must choose his own retail price if he accepts the suppliers wholesale price offer.…”

Section: Introductionmentioning

confidence: 99%

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Risk Mitigation Benefit from Backup Suppliers in the Presence of the Horizontal Fairness Concern

Zhao

Shen

2015

Decision Sciences

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The backup supply strategy is demonstrated as an effective approach to mitigating supply risk. We study a supply chain in which a leader manufacturer designs a contract to a potential backup supplier to mitigate the yield uncertainty of the primary supplier. In this context, the backup supplier may compare with the primary supplier and have horizontal fairness concerns. We model the contract design problem using a Stackelberg game and characterize the optimal decisions for the manufacturer and backup supplier, in both fairness and off‐fairness settings. The theoretical results show that the leader manufacturer must sacrifice his own payoff to balance the payoffs of both suppliers. As a result, using a self‐interested backup supplier is the dominating strategy, whereas using a fair‐minded backup supplier is only suggested when the reliability of the primary supplier is low and the fairness concern of the backup supplier is not strong. Additionally, the backup supplier only benefits from fairness concerns when the level is not exceeding a threshold value. With regard to high fairness levels beyond this threshold, fairness concern has negative effects on the monetary payoff and even might lead to loss of the business. By conducting laboratory experiments, we provide evidence of the horizontal fairness concern from the backup supplier. Further, we show that if the primary supplier also has horizontal fairness concerns, the leader manufacturer can conditionally benefit from a promoted yield reliability due to an extra effort from the primary supplier.

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\overset{a}{true}

cs, & Zala‐Mez

\overset{o}{true}

, 2001; Königstein, Kov

\overset{a}{true}

cs, & Zala‐Mez

\overset{o}{true}

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Risk Mitigation Benefit from Backup Suppliers in the Presence of the Horizontal Fairness Concern

Zhao

Shen

2015

Decision Sciences

View full text Add to dashboard Cite

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“…In contrast to the assumption of the supplier having complete information of retailer's preferences in earlier works, Katok et al (2014) experimentally show that a wholesale price contract can also coordinate under information asymmetry when the fairness concerns of supply chain partners are strong enough. Along with distributional fairness, Ho et al (2014) also consider peer-induced fairness in a single supplier-two fair retailer setting and found that peer-induced fairness is more salient than distributional fairness. Wu and Niederhoff (2014) analyzed the impact of fairness concerns on profit allocations and supply chain performance in the newsvendor setting with general randomdemand function.…”

Section: Fairnessmentioning

confidence: 99%

A Review of Behavioral Decision Making in the Newsvendor Problem

Sharma

Nandi

2018

OSCM: An Int. Journal

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Schweitzer and Cachon (2000) demonstrated that choices of decision-maker in the newsvendor problem setting systematically deviate from those that maximize their expected profit. Since then, a large body of empirical and theoretical studies has been published to describe the newsvendor decisionmaking behavior. To establish further, the purpose of this paper is twofold. First, it identifies the various behavioral theories and biases that explain the newsvendor behavior by employing a systematic literature review of peer-reviewed articles published in leading journals from 2000 to 2017. Second, it classifies and analyzes the identified literature from three dimensions of human behavior namely: individual decision making biases, social preferences, and cultural aspects. Our findings from the review show that research has primarily emphasized individual decision making biases while social and cultural aspects lack analysis and are worthy of investigation. Finally, we discuss some directions for future research, followed by the conclusion and limitations of this review.

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“…For instance, Ho et al [27] explored differences between distributional and peer-induced fairness in supply chain contract design. They showed that the retailer made a lower share of the total supply chain in the presence of peer-induced fairness, and the experiment suggested that peer-induced fairness was more salient.…”

Section: Literature Reviewmentioning

confidence: 99%

A Dynamic Programming Model for Operation Decision-Making in Bicycle Sharing Systems under a Sustainable Development Perspective

Shan

Liu

et al. 2017

Sustainability

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Abstract:Maintaining a balance between revenue and expenditure is the key to the sustainable development of a bicycle sharing system (BSS), and is a challenge for almost all systems worldwide. This article proposes a dynamic programming approach to obtain the optimal strategy to maximize the revenue of overall BSS. The Variable Granularity-Depth First Search (VG-DFS) algorithm is designed to speed up the solution. A numerical experiment is presented to verify the applicability of the model through a comparison with real data from the BSS in Hangzhou. Results indicated that the BSS could achieve break-even, or even obtain a substantial income by utilizing our model to make operational decisions, especially when the region it is located in has a relatively high GDP. Moreover, the best investment strategy proved is to involve stations in the initial construction period of the BSS as much as possible.

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Distributional and Peer‐Induced Fairness in Supply Chain Contract Design

Abstract: Members of a supply chain often make profit comparisons. A retailer exhibits peer-induced fairness concerns when his own profit is

Cited by 221 publications

References 30 publications

Risk Mitigation Benefit from Backup Suppliers in the Presence of the Horizontal Fairness Concern

Risk Mitigation Benefit from Backup Suppliers in the Presence of the Horizontal Fairness Concern

A Review of Behavioral Decision Making in the Newsvendor Problem

A Dynamic Programming Model for Operation Decision-Making in Bicycle Sharing Systems under a Sustainable Development Perspective

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