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We propose a behavioral theory to predict actual ordering behavior in multi-location inventory systems. The theory rests on a well-known stylized fact of human behavior: People's preferences are reference-dependent. We incorporate reference-dependence into the newsvendor framework by assuming...

Supply chain contracting literature has traditionally focused on aligning incentives for economically rational players. Recent work has hypothesized that social preferences, as distinct from economic incentives, may influence behavior in supply chain transactions. Social preferences refer to...

Backward induction is a widely accepted principle for predicting behavior in sequential games. In the classic example of the "centipede game," however, players frequently violate this principle. An alternative is a "dynamic level-k" model, where players choose a rule from a rule hierarchy. The...

We consider a supply chain with a single supplier and two retailers. The retailers choose their orders strategically, and if their orders exceed the supplier's capacity, quantities are allocated proportionally to the orders. We experimentally study the capacity allocation game using subjects...