An Experimental Study On Learning Effect And Fairness Concern In A Triadic Supply Chain

Standard theory supports that human beings are self-interested; however, manyexperimental reports challenged this hypothesis, and provided convincing evidencesthat people make decisions not only according to their own payoff but also consideringothers, i.e., they concern fairness. Another human behavior is learning effect which iscommonly observed in various experimental studies, that is, people learn from the pastexperiences and improves decision making over time. It is an important issue toconsider both human behaviors in the study. At the current stage of the behavioraloperation research, the study of learning effect with the concern of fairness is still rare.We study a triadic supply chain consisting of one single manufacturer, a co-supplier and a backup supplier. The backup supplier would decide whether to acceptthe contract offered by manufacturer. We had two experimental sessions by settinginformation sharing in session2which more or less lead to social learning.Information of every subject in all previous rounds regarding the amount each contracthad been offered and the rejection percentages of those strategies were shared insession2. Our experimental results showed that learning effect led to a decreasingrejection percentage and a decreasing decision time over time. We incorporated thefairness concern into reinforcement learning model, and conducted the maximumlikelihood estimation, which provided the evidence of horizontal fairness concern ofthe backup supplier in session1but not in session2. Moreover, information sharing insession2led to a lower variance of subjects’ decisions, and a higher reduction rate ofrejection percentage, but an unexpectedly slower decision time reduction rate.