Inequity aversion in dynamically complex supply chains

Abstract

Inequity aversion models developed by Fehr and Schmidt (1999) and Bolton and Ockenfels (2000) assume that, in addition to purely selfish subjects, there are subjects who dislike inequitable outcomes. Within the supply chain management literature, these models were used to study fairness concerns. A common limitation in this research area has been the use of rather simple settings, mainly dyadic channels with a single supplier and retailer. Thus, researching social preferences in different channel structures and the idea of multiple-player groups have been suggested as interesting future research areas. In this paper, we present dynamic analyses of the two inequity aversion models and their application in the Beer Distribution Game setting. Our simulation results challenge currently held assumptions about fairness perceptions among supply chain members. We provide some structural explanations for this and suggests future research areas.