Channel coordination under retailer's (sub)conscious preferences of loss aversion and fairness

Abstract

This study examines the impact of retailers' conscious and subconscious preferences on the coordination of a supplier-retailer channel. By evaluating various preference models, the research finds that a wholesale price contract is effective only when the retailer exhibits a conscious fairness preference without any conscious loss aversion preference. Additionally, the study indicates that retailers possessing both a conscious fairness preference and a subconscious loss aversion preference are more receptive to coordination efforts. This research provides valuable insights for managers, enabling them to promote collaboration and maximum channel utility without compromising retailers' interests.