Evolutionary Stable Strategies for Supply Chains: Selfishness, Fairness, and Altruism

The management strategies of a firm are inevitable affected by individual behavior preferences. The effect of individual preference on the evolutionary dynamics for supply chains is studied by employing replicator dynamics. Each firm has three behavior preferences: selfishness, fairness, and altruism. Firstly, the case that the strategy set of manufacturers and retailers including two pure strategies is considered and the effect of preference parameter on the equilibrium outcome in the short-term interaction is discussed. Secondly, the equilibrium state in the short-term is always disturbed because the change of the environment, firm’s structure, and so forth. Using the replicator dynamics, the evolutionary stable strategies of manufacturers and retailers in the long-term interaction are analyzed. Finally, the extend case that the strategy set of manufacturers and retailers include three pure strategies is investigated. These results are found that the strategy profile in which both manufacturer and retailer choose fairness or altruism, or one player chooses fair or altruistic strategy and the other player chooses selfish strategy may be evolutionary stable, the stability of these equilibria depends on the the preference parameters.