Abstract: Overconfidence, as a typical irrational behavior characteristic, will inevitably affect the decision-making of cross-shareholding supply chain. The purpose of this paper is to investigate the decision-making problem of cross-shareholding supply chain with overconfidence. Therefore, a Stackelberg game model of supply chain decision-making with cross-shareholding is constructed between manufacturer and retailer. Based on the overconfidence characteristics of supply chain members, four models are established：in which both manufacturer and retailer are completely rational, only manufacturer is overconfident, only retailer is overconfident, and both of them are overconfident. Finally, the influence of overconfidence and cross-shareholding ratio on the decision-making of supply chain members is discussed, and the conclusions are verified by numerical simulation. The results demonstrate: (1)When the market environment is good, the increase of overconfidence of either party of cross-shareholding will reduce its own profit and increase the profit of the other party; (2)When the market environment is poor, the manufacturer’s overconfidence will lead to the decrease of both sides’ profit, while the retailer’s overconfidence will increase their own profit but damage the manufacturer’s profit; (3) Manufacturers and retailers can adjust the impact of overconfidence on profits by changing the cross-shareholding ratio.

Key words: overconfidence; cross-shareholding; supply chain decision; Stackelberg game