Designing Incentive Systems for Truthful Forecast Information Sharing Within a Firm

Published Online:https://doi.org/10.1287/mnsc.2017.2805

References

  • Abdellaoui M, Bleichrodt H, Paraschiv C (2007) Loss aversion under prospect theory: A parameter-free measurement. Management Sci. 53(10):1659–1674.LinkGoogle Scholar
  • Albers S (1996) Optimization models for salesforce compensation. Eur. J. Oper. Res. 89(1):1–17.CrossrefGoogle Scholar
  • Ashraf N, Bohnet I, Piankov N (2006) Decomposing trust and trustworthiness. Experiment. Econom. 9(3):193–208.CrossrefGoogle Scholar
  • Balasubramanian S, Bhardwaj P (2004) When not all conflict is bad: Manufacturing-marketing conflict and strategic incentive design. Management Sci. 50(4):489–502.LinkGoogle Scholar
  • Becker-Peth M, Katok E, Thonemann UW (2013) Designing buyback contracts for irrational but predictable newsvendors. Management Sci. 59(8):1800–1816.LinkGoogle Scholar
  • Beer R, Ahn H-S, Leider S (2017) Can trustworthiness in a supply chain be signaled? Management Sci. ePub ahead of print September 13, https://doi.org/10.1287/mnsc.2017.2817.LinkGoogle Scholar
  • Bendoly E, Croson R, Goncalves P, Schultz K (2010) Bodies of knowledge for research in behavioral operations. Production Oper. Management 19(4):434–452.CrossrefGoogle Scholar
  • Bostian AA, Holt CA, Smith AM (2008) Newsvendor “pull-to-center” effect: Adaptive learning in a laboratory experiment. Manufacturing Service Oper. Management 10(4):590–608.LinkGoogle Scholar
  • Cachon GP (2003) Supply chain coordination with contracts. Graves S, de Kok T, eds. Supply Chain Management, Handbooks in Operations Research and Management Science, Vol. 11 (Elsevier, Amsterdam), 229–339.CrossrefGoogle Scholar
  • Cachon GP, Larivière MA (2001) Contracting to assure supply: How to share demand forecasts in a supply chain. Management Sci. 47(5):629–646.LinkGoogle Scholar
  • Camerer CF, Loewenstein G (2004) Behavioral economics: Past, present, future. Camerer CF, Loewenstein G, Rabin M, eds. Advances in Behavioral Economics (Princeton University Press, Princeton, NJ), 3–51.CrossrefGoogle Scholar
  • Camerer C, Weber M (1992) Recent developments in modeling preferences: Uncertainty and ambiguity. J. Risk Uncertainty 5(4):325–370.CrossrefGoogle Scholar
  • Celikbas M, Shanthikumar JG, Swaminathan JM (1999) Coordinating production quantities and demand forecasts through penalty schemes. IIE Trans. 31(9):851–864.CrossrefGoogle Scholar
  • Charness G, Dufwenberg M (2006) Promises and partnership. Econometrica 74(6):1579–1601.CrossrefGoogle Scholar
  • Chen F (2003) Information sharing and supply chain coordination. Supply Chain Management, Handbooks in Operations Research and Management Science, Vol. 11 (Elsevier, Amsterdam),341–421.CrossrefGoogle Scholar
  • Chen F (2005) Salesforce incentives, market information and production/inventory planning. Management Sci. 51(1):60–75.LinkGoogle Scholar
  • Chen F, Lai G, Xiao W (2016) Provision of incentives for information acquisition: Forecast-based contracts vs. menus of linear contracts. Management Sci. 62(7):1899–1914.LinkGoogle Scholar
  • Cohen MA, Ho TH, Ren ZJ, Terwiesch C (2003) Measuring imputed cost in the semiconductor equipment supply chain. Management Sci. 49(12):1653–1670.LinkGoogle Scholar
  • Cooper DJ, Kagel JH (2016) Other regarding preferences: A selective survey of experimental results. Kagel JH, Roth AE, eds. Handbook of Experimental Economics, Vol. 2 (Princeton University Press, Princeton, NJ), 217–289.CrossrefGoogle Scholar
  • Crawford VP (2003) Lying for strategic advantage: Rational and boundedly rational misrepresentation of intentions. Amer. Econom. Rev. 93(1):133–149.CrossrefGoogle Scholar
  • Croson R, Schultz K, Siemsen E, Yeo ML (2013) Behavioral operations: The state of the field. J. Oper. Management 31(1–2):1–5.CrossrefGoogle Scholar
  • Cui R, Allon G, Bassamboo A, Van Mieghem JA (2015) Information sharing in supply chains: An empirical and theoretical valuation. Management Sci. 61(11):2803–2824.LinkGoogle Scholar
  • Cui TH, Raju JS, Zhang ZJ (2007) Fairness and channel coordination. Management Sci. 53(8):1303–1314.LinkGoogle Scholar
  • Dershem B (2007) Financial incentives improve the supply chain: Heineken’s journey. J. Bus. Forecast. 26(1):32–37.Google Scholar
  • Ebrahim-Khanjari N, Hopp W, Iravani SMR (2012) Trust and information sharing in supply chains. Production Oper. Management 21(3):444–464.CrossrefGoogle Scholar
  • Eichberger J, Kelsey D, Schipper BC (2008) Granny versus game theorist: Ambiguity in experimental games. Theory Decision 64(2–3):333–362.CrossrefGoogle Scholar
  • Eliashberg J, Steinberg R (1993) Marketing-production joint decision-making. Eliashberg J, Lilien GL, eds. Marketing, Handbooks in Operations Research and Management Science, Vol. 5 (Elsevier, Amsterdam), 827–880.CrossrefGoogle Scholar
  • Ellsberg D (1961) Risk, ambiguity, and the savage axioms. Quart. J. Econom. 75(4):643–669.CrossrefGoogle Scholar
  • Erat S, Gneezy U (2012) White lies. Management Sci. 58(4):723–733.LinkGoogle Scholar
  • Fehr E, Falk A (2002) Psychological foundations of incentives. Eur. Econom. Rev. 46(4–5):687–724.CrossrefGoogle Scholar
  • Fudenberg D, Tirole J (1991) Game Theory (MIT Press, Cambridge, MA).Google Scholar
  • Gaur V, Giloni A, Seshadri S (2005) Information sharing in a supply chain under ARMA demand. Management Sci. 51(6):961–969.LinkGoogle Scholar
  • Gibbons R (2005) Incentives between firms (and within). Management Sci. 51(1):2–17.LinkGoogle Scholar
  • Gino F, Pisano G (2008) Toward a theory of behavioral operations. Manufacturing Service Oper. Management 10(4):676–691.LinkGoogle Scholar
  • Gneezy U (2005) Deception: The role of consequences. Amer. Econom. Rev. 95(1):384–394.CrossrefGoogle Scholar
  • Gneezy U, Rockenbach B, Serra-Garcia M (2013) Measuring lying aversion. J. Econom. Behav. Organ. 93:293–300.CrossrefGoogle Scholar
  • Gonik J (1978) Tie salesmen’s bonuses to their forecasts. Harvard Bus. Rev. 56(3):116–123.Google Scholar
  • Gümüş M (2014) With or without forecast sharing: Competition and credibility under information asymmetry. Production Oper. Management 23(10):1732–1747.CrossrefGoogle Scholar
  • Heath C, Larrick RP, Wu G (1999) Goals as reference points. Cognitive Psychol. 38(1):79–109.CrossrefGoogle Scholar
  • Ho TH, Zhang J (2008) Designing pricing contracts for boundedly rational customers: Does the framing of the fixed fee matter? Management Sci. 54(4):686–700.LinkGoogle Scholar
  • Ho TH, Lim N, Cui TH (2010) Reference dependence in multilocation newsvendor models: A structural analysis. Management Sci. 56(11):1891–1910.LinkGoogle Scholar
  • Ho TH, Su X, Wu Y (2014) Distributional and peer-induced fairness in supply chain contract design. Production Oper. Management 23(2):161–175.CrossrefGoogle Scholar
  • Hurkens S, Kartik N (2009) Would I lie to you? On social preferences and lying aversion. Experiment. Econom. 12(2):180–192.CrossrefGoogle Scholar
  • Hyndman K, Kraiselburd S, Watson N (2013) Aligning capacity decisions in supply chains when demand forecasts are private information: Theory and experiment. Manufacturing Service Oper. Management 15(1):102–117.LinkGoogle Scholar
  • Inderfurth K, Sadrieh A, Voigt G (2013) The impact of information sharing on supply chain performance under asymmetric information. Production Oper. Management 22(2):410–425.CrossrefGoogle Scholar
  • Kahneman D, Tversky A (1979) Prospect theory: An analysis of decision under risk. Econometrica 47(2):263–291.CrossrefGoogle Scholar
  • Kahneman D, Knetsch JL, Thaler RH (1990) Experimental tests of the endowment effect and the Coase theorem. J. Political Econom. 98(6):1325–1348.CrossrefGoogle Scholar
  • Kartik N, Ottaviani M, Squintani F (2007) Credulity, lies, and costly talk. J. Econom. Theory 134(1):93–116.CrossrefGoogle Scholar
  • Katok E (2011) Using laboratory experiments to build better operations management models. Foundations Trends Tech., Inform Oper. Management 5(1):1–86.CrossrefGoogle Scholar
  • Katok E, Pavlov V (2013) Fairness in supply chain contracts: A laboratory study. J. Oper. Management 31(3):129–137.CrossrefGoogle Scholar
  • Katok E, Wu DY (2009) Contracting in supply chains: A laboratory investigation. Management Sci. 55(12):1953–1968.LinkGoogle Scholar
  • Katok E, Olsen T, Pavlov V (2014) Wholesale pricing under mild and privately known concerns for fairness. Production Oper. Management 23(2):285–302.CrossrefGoogle Scholar
  • Kelsey D, le Roux S (2015) An experimental study on the effect of ambiguity in a coordination game. Theory Decision 79(4):667–688.CrossrefGoogle Scholar
  • Kerr S (1975) On the folly of rewarding A, while hoping for B. Acad. Management J. 18(4):769–783.CrossrefGoogle Scholar
  • Kőszegi B, Rabin M (2006) A model of reference-dependent preferences. Quart. J. Econom. 121(4):1133–1165.CrossrefGoogle Scholar
  • Kremer M, Minner S, Van Wassenhove LN (2014) On the preference to avoid ex post inventory errors. Production Oper. Management 23(5):773–787.CrossrefGoogle Scholar
  • Lawrence M, O’Connor M (2005) Judgmental forecasting in the presence of loss functions. Internat. J. Forecast. 21(1):3–14.CrossrefGoogle Scholar
  • Lazear EP (2000) Performance pay and productivity. Amer. Econom. Rev. 90(5):1346–1361.CrossrefGoogle Scholar
  • Li L, Zhang H (2008) Confidentiality and information sharing in supply chain coordination. Management Sci. 54(8):1467–1481.LinkGoogle Scholar
  • Lindstrom MJ, Bates D (1990) Nonlinear mixed effects models for repeated measures data. Biometrics 46(3):673–687.CrossrefGoogle Scholar
  • Loch CH, Wu Y (2008) Social preferences and supply chain performance: An experimental study. Management Sci. 54(11):1835–1849.LinkGoogle Scholar
  • López-Pérez R, Spiegelman E (2013) Why do people tell the truth? Experimental evidence for pure lie aversion. Experiment. Econom. 16(3):233–247.CrossrefGoogle Scholar
  • Lundquist T, Ellingsen T, Gribbe E, Johannesson M (2009) The aversion to lying. J. Econom. Behav. Organ. 70(1):81–92.CrossrefGoogle Scholar
  • Mailath GJ, von Thadden EL (2013) Incentive compatibility and differentiability: New results and classic applications. J. Econom. Theory 148(5):1841–1861.CrossrefGoogle Scholar
  • Mantrala LK, Raman K (1990) Analysis of a sales force incentive plan for accurate sales forecasting and performance. Internat. J. Res. Marketing 7(2):189–202.CrossrefGoogle Scholar
  • McKenzie J (2011) Mean absolute percentage error and bias in economic forecasting. Econom. Lett. 113(3):259–262.CrossrefGoogle Scholar
  • Mishra BK, Raghunathan S, Yue X (2007) Information sharing in supply chains: Incentives for information distortion. IIE Trans. 39(9):863–877.CrossrefGoogle Scholar
  • Ockenfels A, Sliwka D, Werner P (2015) Bonus payments and reference point violations. Management Sci. 61(7):1496–1513.LinkGoogle Scholar
  • Oliva R, Watson N (2009) Managing functional biases in organizational forecasts: A case study of consensus forecasting in supply chain planning. Production Oper. Management 18(2):138–151.CrossrefGoogle Scholar
  • Özer Ö, Uncu O (2013) Competing on time: An integrated framework to optimize dynamic time-to-market and production decisions. Production Oper. Management 22(3):473–488.CrossrefGoogle Scholar
  • Özer Ö, Wei W (2006) Strategic commitments for an optimal capacity decision under asymmetric forecast information. Management Sci. 52(8):1238–1257.LinkGoogle Scholar
  • Özer Ö, Zheng Y (2017) Establishing trust and trustworthiness for supply chain information sharing. Ha AY, Tang CS, eds. Handbook of Information Exchange in Supply Chain Management, Springer Series in Supply Chain Management, Vol. 5 (Springer International Publishing, Cham, Switzerland), 287–312.CrossrefGoogle Scholar
  • Özer Ö, Subramanian U, Wang Y (2018) Information sharing, advice provision, or delegation: What leads to higher trust and trustworthiness? Management Sci. 64(1):474–493.LinkGoogle Scholar
  • Özer Ö, Zheng Y, Chen KY (2011) Trust in forecast information sharing. Management Sci. 57(6):1111–1137.LinkGoogle Scholar
  • Özer Ö, Zheng Y, Ren Y (2014) Trust, trustworthiness, and information sharing in supply chains bridging China and the United States. Management Sci. 60(10):2435–2460.LinkGoogle Scholar
  • Pinheiro J, Bates D (2000) Mixed-Effects Models in S and S-PLUS (Springer, New York).CrossrefGoogle Scholar
  • Pinheiro J, Bates D, DebRoy S, Sarkar D, R Core Team (2017) nlme: Linear and nonlinear mixed effects models. R package version 3.1-131. Accessed March 12, 2017, https://CRAN.R-project.org/package=nlme.Google Scholar
  • Prendergast C (1999) The provision of incentives in firms. J. Econom. Literature 37(1):7–63.CrossrefGoogle Scholar
  • Pulford BD, Colman AM (2007) Ambiguous games: Evidence for strategic ambiguity aversion. Quart. J. Experiment. Psychol. 60(8):1083–1100.CrossrefGoogle Scholar
  • Rabin M (1998) Psychology and economics. J. Econom. Literature 36(1):11–46.Google Scholar
  • Reese S (2001) The human aspects of collaborative forecasting. J. Bus. Forecasting Methods Systems 19(4):3–9.Google Scholar
  • Ren ZJ, Cohen MA, Ho TH, Terwiesch C (2010) Information sharing in a long-term supply chain relationship: The role of customer review strategy. Oper. Res. 58(1):81–93.LinkGoogle Scholar
  • Schweitzer ME, Cachon GP (2000) Decision bias in the newsvendor problem with a known demand distribution: Experimental evidence. Management Sci. 46(3):404–420.LinkGoogle Scholar
  • Shapiro BP (1977) Can marketing and manufacturing coexist? Harvard Bus. Rev. 55(5):104–114.Google Scholar
  • Shin H, Tunca TI (2010) Do firms invest in forecasting efficiently? The effect of competition on demand forecast investments and supply chain coordination. Oper. Res. 58(6):1592–1610.LinkGoogle Scholar
  • Sobel J (2009) Signaling games. Meyers RA, ed. Encyclopedia of Complexity and Systems Science (Springer, New York), 8125–8139.CrossrefGoogle Scholar
  • Terwiesch C, Ren ZJ, Ho T-H, Cohen MA (2005) An empirical analysis of forecast sharing in the semiconductor equipment supply chain. Management Sci. 51(2):208–220.LinkGoogle Scholar
  • Thaler RH (1985) Mental accounting and consumer choice. Marketing Sci. 4(3):199–214.LinkGoogle Scholar
  • Thaler RH (1999) Mental accounting matters. J. Behav. Decision Making 12(3):183–206.CrossrefGoogle Scholar
  • Turner R, Lasserre C, Beauchet P (2007) Innovation in field force bonuses: Enhancing motivation through a structured process-based approach. J. Medical Marketing 7(2):126–135.CrossrefGoogle Scholar
  • Vanberg C (2008) Why do people keep their promises? An experimental test of two explanations. Econometrica 76(6):1467–1480.CrossrefGoogle Scholar
  • Voigt G, Inderfurth K (2012) Supply chain coordination with information sharing in the presence of trust and trustworthiness. IIE Trans. 44(8):637–654.CrossrefGoogle Scholar
  • Zhang Y, Donohue K, Cui TH (2016) Contract preferences and performance for the loss-averse supplier: Buyback vs. revenue sharing. Management Sci. 62(6):1734–1754.LinkGoogle Scholar
INFORMS site uses cookies to store information on your computer. Some are essential to make our site work; Others help us improve the user experience. By using this site, you consent to the placement of these cookies. Please read our Privacy Statement to learn more.