Research on Supply Chain Coordination Mechanism with Multi-Loss-Averse Retailers

Under the prospect theory, this paper studies the markdown money contract with multi-loss-averse retailers and a risk-neutral supplier based on the supermodular games. It studies the order behaviors of loss-averse retailers in the wholesale price contract and the markdown money contract. It finds out that the order quality from the loss-averse retailers may deviate from the optimized quality of the system and that markdown money contract can coordinate the supply chain. At last, the effectiveness of markdown money contract is verified coordination by two numerical examples.