EVOLUTION OF TRUST IN A DUAL-CHANNEL SUPPLY CHAIN CONSIDERING RECIPROCAL ALTRUISTIC BEHAVIOR

Abstract

In order to alleviate the conflict between the channels in dual-channel supply chain, the altruism tendency and trust input are important for strengthening the cooperation between the channels. We view the dual-channel supply chain as a nonlinear system that consists of co-competition, learning decision and dynamic game between direct channels and retail channels. Then, we develop learning dynamics and evolutionary game model to analyze the channels’ altruism behavior and the factors that influence trust input. We find that the evolutionary direction of altruistic behavior is determined by the sensitiveness and the learning abilities of both members of supply chains. The trust input decision of both channels is highly related to the output ratio of high-level trust input, only if the input–output ratio is ideal for both game parties, the system may come to an evolutionary stable equilibrium of high trust input. If the trust input of the two sides is unilateral, then one side chooses high trust input, while the other side chooses low trust input. In this case, even the input–output ratio is high, it will not be evolutionary stable. The profit both sides earned from the low-trust cooperation is the basic for further trust input, the increased free ride income, trust input risk and the trust evaluation cost will affect the enthusiasm of trust input for the dual-channel supply chain members. To promote high trust input in dual-channel supply chain, a certain amount of compensation should be negotiated in the contract in order to improve the performance of the supply chain.