Does overconfident effect affect the performance of a duopoly market? A theoretical analysis

Zhang, Zhenchao; Li, Chunfa; Du, Peng; Xu, Lei

doi:10.1109/icsssm.2015.7170332

Cited by 4 publications

(1 citation statement)

References 14 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Wang et al [41] investigated the impact of the overconfidence behaviour of retailer on the SC and noticed that unless the level of overconfidence exceeds a threshold, the SC is not much affected compared to the basic model. Considering uncertain demand, Zhang et al [46] examined the influence of retailer's overconfidence preference on an SC consisting of a rational manufacturer, one rational retailer, and one overconfident retailer. Li et al [24] studied the effect of overconfidence in a competitive newsvendor setting.…”

Section: Overconfidence Behaviour In Supply Chainmentioning

confidence: 99%

Effect of fairness and overconfidence on pricing strategy of substitute bundles in a two-echelon supply chain

et al. 2023

View full text Add to dashboard Cite

Cognitive biases - fairness and overconfidence, affect the decision-making process. The manufacturer/retailer prefers to sell the products as bundles in a duopoly market because it fetches more benefits to supply chain (SC) partners. Till now, none considered the pricing of substitute bundles, produced and sold at the manufacturer’s level. Considering these, the effects of the above cognitive behaviours on the bundlingpricing strategy are investigated. We develop several SC models, depending on the partner’s cognitive biases, with two manufacturers, producing substitute bundles of two uncorrelated items and selling through a retailer. Using the Stackelberg game, prices and profits are evaluated. It is observed that overconfidence does not increase retailer’s and overconfident - manufacturer’s profits but is beneficial for another rational manufacturer. Against the retailer’s fairness concern, her profit is augmented, but both manufacturers’ profits are adversely affected. The combined effect of both cognitive biases is adjuvant for the retailer but maleficent for manufacturers. Managerial insights are presented.

show abstract

Section: Overconfidence Behaviour In Supply Chainmentioning

confidence: 99%