Impacts of supplier hubris in consignment supply chain including competitive suppliers

• 1、College of Management and Economics,Tianjin University,Tianjin,300072

Abstract：Problem definition: This paper studies the effects of two different types of overconfidence on each member of the supply chain. In the consignment model, we analyze the supply chain of two competing suppliers and one retailer, and discuss three scenarios. Scenario 1 is one supplier had "ability-based overconfidence" and the other had no cognitive bias. Scenario 2 is one supplier had "precision based overconfidence" and the other had no cognitive bias. And Scenario 3 is the two suppliers have two different kinds of overconfidence. We analyzed the influence of different overconfidence on the decision-making quantity, profit and the whole supply chain under three situations. Results: When a supplier has "ability-based overconfidence", that is to say, it overestimates its own ability, it will increase the price of products, increase the quantity of products available, result to increase the profit of competitors. While a supplier has "precision based overconfidence", under certain conditions, the behavior of the supplier underestimating the demand fluctuation will lead to the increase of the product price and the satisfaction rate of the product quantity to the expected market demand, which will increase the profit of both the supplier and the competitor. At this point, supplier overconfidence benefits both the supplier and the competitor. However, under other conditions, suppliers\' behavior of underestimating the demand fluctuation will lead to the reduction of product price and the reduction of product quantity\'s satisfaction rate to the market\'s expected demand, thus reducing their own profits and competitors\' profits. At this point, supplier overconfidence is not good for themselves and competitors.

Keywords： overconfidence Supplier competition Consignment model