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Chinese Journal of Management Science ›› 2019, Vol. 27 ›› Issue (11): 158-165.doi: 10.16381/j.cnki.issn1003-207x.2019.11.016

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Supply Chain Members' Preferences over Decision Sequence with Information Asymmetry

JIN Yan-nan1, TIAN Lin2   

  1. 1. College of Business, Shanghai University of Finance and Economics, Shanghai 200433, China;
    2. School of Management, Fudan University, Shanghai 200433, China
  • Received:2017-10-26 Revised:2018-06-11 Online:2019-11-20 Published:2019-11-28

Abstract: Supply chain members usually have asymmetric demand information. In this paper, the supply chain members' preferences over decision sequence with demand information asymmetry are studied in a signaling game. The supply chain consists of two members and each of them sets its profit margin to maximize its own profit. Three decision sequences are studied:the supply chain member with demand forecast information moves first in which case the second mover can infer the market demand information from the first mover's decision; the member with less information moves first; and both members move simultaneously. It is shown that the member with demand forecast information will prefer to be the first mover if the information accuracy is low, but not if the information accuracy is high. However, the member without demand forecast information will always prefer to be the first mover. Further, the whole supply chain prefers the member with demand forecast information to be the first mover when the forecast is not very accurate, but not when the forecast is very accurate. Some results are counterintuitive, depending on the tradeoff between signaling cost, first-mover advantage, and the second mover's strategic response. Our detailed analysis of the signaling game serves as a reference for researchers who are interested in the information asymmetry issues in supply chains. And our discussion about different decision sequences inspires researchers to consider operational problems with different supply chain power structures.

Key words: information asymmetry, signaling game, decision sequence, information accuracy

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