One of the main assumptions in research on designing supply contracts is that decision makers act in a way that maximizes their expected profit. A number of laboratory experiments demonstrated that this assumption does not hold – specifically, faced with uncertain demand, decision-makers place...

The ordering behavior of human decision makers under stochastic demand has been analyzed for various supply contracts. A consistent finding is that people place orders that both deviate from expected profit-maximizing quantities and exhibit high variability. We consider service level contracts,...