IDEAS home Printed from https://ideas.repec.org/a/spr/elcore/v23y2023i2d10.1007_s10660-021-09493-w.html
   My bibliography  Save this article

Nominal effect vs actual effect: overconfidence in a consignment omnichannel

Author

Listed:
  • Zhisong Chen

    (Nanjing Normal University
    New York University)

  • Chaonan Tang

    (Nanjing Normal University)

  • Jianhui Peng

    (Shanghai Normal University)

Abstract

The overconfident behavior brings about serious decision biases to the consignment omnichannel, which will invariably lead to false prosperity and poor actual performance eventually. This paper tries to explore the nominal and actual effects and corresponding countermeasures of overconfident behavior issues in a consignment omnichannel through game-theoretical modelling and numerical and sensitivity analyses. The research results show that: (1) from the perspective of nominal effect, the full-overconfidence scenario performs best among all three scenarios. (2) from the perspective of actual effect, the non-overconfidence scenario performs best among all three scenarios. (3) reducing the degree of overconfidence will improve the actual operational performance of the consignment omnichannel.

Suggested Citation

  • Zhisong Chen & Chaonan Tang & Jianhui Peng, 2023. "Nominal effect vs actual effect: overconfidence in a consignment omnichannel," Electronic Commerce Research, Springer, vol. 23(2), pages 843-876, June.
    • Handle: RePEc:spr:elcore:v:23:y:2023:i:2:d:10.1007_s10660-021-09493-w
    DOI: 10.1007/s10660-021-09493-w
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10660-021-09493-w
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10660-021-09493-w?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ulrike Malmendier & Geoffrey Tate, 2005. "CEO Overconfidence and Corporate Investment," Journal of Finance, American Finance Association, vol. 60(6), pages 2661-2700, December.
    2. Ken Binmore & Ariel Rubinstein & Asher Wolinsky, 1986. "The Nash Bargaining Solution in Economic Modelling," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 176-188, Summer.
    3. Yun Fong Lim & Yunzeng Wang & Yue Wu, 2015. "Consignment Contracts with Revenue Sharing for a Capacitated Retailer and Multiple Manufacturers," Manufacturing & Service Operations Management, INFORMS, vol. 17(4), pages 527-537, October.
    4. Meng Li & Nicholas C. Petruzzi & Jun Zhang, 2017. "Overconfident Competing Newsvendors," Management Science, INFORMS, vol. 63(8), pages 2637-2646, August.
    5. Elodie Huré & Karine Picot-Coupey & Claire-Lise Ackermann, 2017. "Understanding omni-channel shopping value: A mixed-method study," Post-Print halshs-01595944, HAL.
    6. Nicholas C. Petruzzi & Maqbool Dada, 1999. "Pricing and the Newsvendor Problem: A Review with Extensions," Operations Research, INFORMS, vol. 47(2), pages 183-194, April.
    7. Li, Sijie & Zhu, Zhanbei & Huang, Lihua, 2009. "Supply chain coordination and decision making under consignment contract with revenue sharing," International Journal of Production Economics, Elsevier, vol. 120(1), pages 88-99, July.
    8. Ji, Jingna & Zhang, Zhiyong & Yang, Lei, 2017. "Comparisons of initial carbon allowance allocation rules in an O2O retail supply chain with the cap-and-trade regulation," International Journal of Production Economics, Elsevier, vol. 187(C), pages 68-84.
    9. Yan, Ruiliang & Pei, Zhi & Ghose, Sanjoy, 2019. "Reward points, profit sharing, and valuable coordination mechanism in the O2O era," International Journal of Production Economics, Elsevier, vol. 215(C), pages 34-47.
    10. Xuanming Su, 2008. "Bounded Rationality in Newsvendor Models," Manufacturing & Service Operations Management, INFORMS, vol. 10(4), pages 566-589, May.
    11. Hu, Benyong & Meng, Chao & Xu, Dong & Son, Young-Jun, 2018. "Supply chain coordination under vendor managed inventory-consignment stocking contracts with wholesale price constraint and fairness," International Journal of Production Economics, Elsevier, vol. 202(C), pages 21-31.
    12. Meng Li, 2019. "Overconfident Distribution Channels," Production and Operations Management, Production and Operations Management Society, vol. 28(6), pages 1347-1365, June.
    13. Yunzeng Wang, 2006. "Joint Pricing-Production Decisions in Supply Chains of Complementary Products with Uncertain Demand," Operations Research, INFORMS, vol. 54(6), pages 1110-1127, December.
    14. Martin A. Lariviere, 2006. "A Note on Probability Distributions with Increasing Generalized Failure Rates," Operations Research, INFORMS, vol. 54(3), pages 602-604, June.
    15. Sterman, John D., 1989. "Misperceptions of feedback in dynamic decision making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 43(3), pages 301-335, June.
    16. Dan Lovallo & Colin Camerer, 1999. "Overconfidence and Excess Entry: An Experimental Approach," American Economic Review, American Economic Association, vol. 89(1), pages 306-318, March.
    17. Huré, Elodie & Picot-Coupey, Karine & Ackermann, Claire-Lise, 2017. "Understanding omni-channel shopping value: A mixed-method study," Journal of Retailing and Consumer Services, Elsevier, vol. 39(C), pages 314-330.
    18. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475.
    19. Xu Chen & Xiaojun Wang & Xinkuang Jiang, 2016. "The impact of power structure on the retail service supply chain with an O2O mixed channel," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 67(2), pages 294-301, February.
    20. J B Heaton, 2002. "Managerial Optimism and Corporate Finance," Financial Management, Financial Management Association, vol. 31(2), Summer.
    21. Verhoef, Peter C. & Kannan, P.K. & Inman, J. Jeffrey, 2015. "From Multi-Channel Retailing to Omni-Channel Retailing," Journal of Retailing, Elsevier, vol. 91(2), pages 174-181.
    22. Paul, Joydeep & Agatz, Niels & Spliet, Remy & Koster, René De, 2019. "Shared Capacity Routing Problem − An omni-channel retail study," European Journal of Operational Research, Elsevier, vol. 273(2), pages 731-739.
    23. Blom, Angelica & Lange, Fredrik & Hess, Ronald L., 2017. "Omnichannel-based promotions’ effects on purchase behavior and brand image," Journal of Retailing and Consumer Services, Elsevier, vol. 39(C), pages 286-295.
    24. Fei Gao & Xuanming Su, 2018. "Omnichannel Service Operations with Online and Offline Self-Order Technologies," Management Science, INFORMS, vol. 64(8), pages 3595-3608, August.
    25. Ru, Jun & Wang, Yunzeng, 2010. "Consignment contracting: Who should control inventory in the supply chain?," European Journal of Operational Research, Elsevier, vol. 201(3), pages 760-769, March.
    26. Yufei Ren & David Croson & Rachel Croson, 2017. "The overconfident newsvendor," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(5), pages 496-506, May.
    27. John D. Sterman, 1989. "Modeling Managerial Behavior: Misperceptions of Feedback in a Dynamic Decision Making Experiment," Management Science, INFORMS, vol. 35(3), pages 321-339, March.
    28. Martin A. Lariviere & Evan L. Porteus, 2001. "Selling to the Newsvendor: An Analysis of Price-Only Contracts," Manufacturing & Service Operations Management, INFORMS, vol. 3(4), pages 293-305, May.
    29. Yufei Ren & Rachel Croson, 2013. "Overconfidence in Newsvendor Orders: An Experimental Study," Management Science, INFORMS, vol. 59(11), pages 2502-2517, November.
    30. Maurice E. Schweitzer & Gérard P. Cachon, 2000. "Decision Bias in the Newsvendor Problem with a Known Demand Distribution: Experimental Evidence," Management Science, INFORMS, vol. 46(3), pages 404-420, March.
    31. Ailawadi, Kusum L. & Farris, Paul W., 2017. "Managing Multi- and Omni-Channel Distribution: Metrics and Research Directions," Journal of Retailing, Elsevier, vol. 93(1), pages 120-135.
    32. Beck, Norbert & Rygl, David, 2015. "Categorization of multiple channel retailing in Multi-, Cross-, and Omni†Channel Retailing for retailers and retailing," Journal of Retailing and Consumer Services, Elsevier, vol. 27(C), pages 170-178.
    33. Yunzeng Wang & Li Jiang & Zuo-Jun Shen, 2004. "Channel Performance Under Consignment Contract with Revenue Sharing," Management Science, INFORMS, vol. 50(1), pages 34-47, January.
    34. Elodie Huré & Karine Picot-Coupey & Claire-Lise Ackermann, 2017. "Understanding omni-channel shopping value: A mixed-method study," Post-Print hal-02002141, HAL.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pei-Ju Wu, 2023. "O2O switching determinants and successful drivers in omnichannel retailing services," Service Business, Springer;Pan-Pacific Business Association, vol. 17(3), pages 771-788, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhisong Chen & Shong-Iee Ivan Su, 2021. "Consignment supply chain cooperation for complementary products under online to offline business mode," Flexible Services and Manufacturing Journal, Springer, vol. 33(1), pages 136-182, March.
    2. Cai, Ya-Jun & Lo, Chris K.Y., 2020. "Omni-channel management in the new retailing era: A systematic review and future research agenda," International Journal of Production Economics, Elsevier, vol. 229(C).
    3. Zhisong Chen & Li Fang & Shong-Iee Ivan Su, 2021. "The value of offline channel subsidy in bricks and clicks: an O2O supply chain coordination perspective," Electronic Commerce Research, Springer, vol. 21(2), pages 599-643, June.
    4. Zhisong Chen & Jianhui Peng, 2022. "Should the assembly system with direct omnichannel introduce integrated management service? A game-theoretical modelling study," Electronic Commerce Research, Springer, vol. 22(4), pages 1307-1350, December.
    5. Liu, Jie & Yang, Yang & Yu, Yugang, 2021. "Ordering and interest rate strategies in platform finance with an overconfident and commerce retailer," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 153(C).
    6. Xiang Fang & Jun Ru & Yunzeng Wang, 2021. "The Effect of List Price on Channel Performance with Consignment," Production and Operations Management, Production and Operations Management Society, vol. 30(1), pages 235-252, January.
    7. Tyrväinen, Olli & Karjaluoto, Heikki & Saarijärvi, Hannu, 2020. "Personalization and hedonic motivation in creating customer experiences and loyalty in omnichannel retail," Journal of Retailing and Consumer Services, Elsevier, vol. 57(C).
    8. Paula Rodríguez–Torrico & Sonia San–Martín & Rebeca San José Cabezudo, 2020. "Consumer behavior using multiple channels: a review," DOCFRADIS Working Papers 2002, Catedra Fundación Ramón Areces de Distribución Comercial, revised Jul 2020.
    9. Chang, Ya Ping & Li, Jingwen, 2022. "Seamless experience in the context of omnichannel shopping： scale development and empirical validation," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    10. Mitxel Cotarelo & Teresa Fayos & Haydeé Calderón & Alejandro Mollá, 2021. "Omni-Channel Intensity and Shopping Value as Key Drivers of Customer Satisfaction and Loyalty," Sustainability, MDPI, vol. 13(11), pages 1-17, May.
    11. Meng Li & Nicholas C. Petruzzi & Jun Zhang, 2017. "Overconfident Competing Newsvendors," Management Science, INFORMS, vol. 63(8), pages 2637-2646, August.
    12. Adida, Elodie & Ratisoontorn, Nantaporn, 2011. "Consignment contracts with retail competition," European Journal of Operational Research, Elsevier, vol. 215(1), pages 136-148, November.
    13. Neslin, Scott A., 2022. "The omnichannel continuum: Integrating online and offline channels along the customer journey," Journal of Retailing, Elsevier, vol. 98(1), pages 111-132.
    14. Gasparin, Isadora & Panina, Ekaterina & Becker, Larissa & Yrjölä, Mika & Jaakkola, Elina & Pizzutti, Cristiane, 2022. "Challenging the "integration imperative": A customer perspective on omnichannel journeys," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    15. Gao, Mengjia & Huang, Lin, 2021. "Quality of channel integration and customer loyalty in omnichannel retailing: The mediating role of customer engagement and relationship program receptiveness," Journal of Retailing and Consumer Services, Elsevier, vol. 63(C).
    16. Flavián, Carlos & Gurrea, Raquel & Orús, Carlos, 2020. "Combining channels to make smart purchases: The role of webrooming and showrooming," Journal of Retailing and Consumer Services, Elsevier, vol. 52(C).
    17. Yufei Ren & David Croson & Rachel Croson, 2017. "The overconfident newsvendor," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(5), pages 496-506, May.
    18. Jain, Tarun & Hazra, Jishnu & Cheng, T.C.E., 2018. "Sourcing under overconfident buyer and suppliers," International Journal of Production Economics, Elsevier, vol. 206(C), pages 93-109.
    19. Avinadav, Tal & Chernonog, Tatyana & Perlman, Yael, 2015. "Consignment contract for mobile apps between a single retailer and competitive developers with different risk attitudes," European Journal of Operational Research, Elsevier, vol. 246(3), pages 949-957.
    20. Julián Chaparro-Peláez & Emiliano Acquila-Natale & Ángel Hernández-García & Santiago Iglesias-Pradas, 2020. "The Digital Transformation of the Retail Electricity Market in Spain," Energies, MDPI, vol. 13(8), pages 1-18, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:elcore:v:23:y:2023:i:2:d:10.1007_s10660-021-09493-w. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.