Capacity Reservation and Wholesale Price Contracts under Forecast Sharing: A Behavioral Assessment

We study a supply chain setup in which buyer has private end customer demand information that she can share with the supplier. The is relevant to supplier's capacity decision. address question of whether supplier benefits from installing nonlinear reservation contracts rather than wholesale price contracts. contribute literature by providing first internally valid comparison both human decision makers. an experimental four treatments (both as well different margins). From perspective, we observe contract significantly outperforms contract; however, benefit using much higher under low margins high margins. Regarding performance, positive effect for exceeds negative margin setting, while two effects neutralize each other setting. identify behavioral factors explaining deviations theoretical predictions. In particular, naïve anchoring and trust strong drivers common types. Even though complexity results weaker performance predicted theory, our reveals suppliers still them; thus, important managerial implications choice type.