Behavioral Operations

Behavioral Supply Chain Contracting

When designing supply chain contracts, the behavior of supply chain partners needs to be taken into account. Human decisions are not purely rational, i.e., profit maximizing, but are also influenced by risk or loss aversion and other factors. In experimental studies we investigate how supply chain contracts can be adapted in order to lead to better (more efficient) decisions by supply chain partners.

Social Interaction in Supply Chains

Social interaction is a natural part of a typical supply chain setting. In these interactions people do not care only for incentives and selfish payoffs, but do also take other aspects such as inequity aversion, procedural fairness, cooperative behavior, and group identity into account. Based on these aspects, we develop behavioral predictions which are tested in an experimental design. Applications of this research to the field can be found e.g., in contract design, relationship management, and corporate culture.

Incentive Schemes in Supply Chains

Conflicts of interest can arise within one company, e.g. between different functional areas. We study how the behavior of human decision makers in these settings is influenced by formal incentives, such as a reward for the attainment of a specific objective. As in contracting situations, there is evidence that human behavior under different incentive schemes is not fully rational, but can only be explained when taking into account individual preferences and social considerations.