Research On The Impact Of Overconfidence On The Cournot Competition Between An Original Manufacturer And A Third-Party Remanufacturer

For two decision-making modes of third-party remanufacturer-led and Nash equilibrium between an original equipment manufacturer(OEM)and a third-party remanufacturer(TPR),this paper compares game equilibrium solutions and profits of both parties in three cases: the TPR's perception of random remanufacturing yield with complete rationality,over-precision or both over-estimated and over-precision(over-estimate the mean value while over-precisely estimate the variance),and then analyzes the impact of the degree of overconfidence and the fluctuation rate of remanufacturing yield;Finally,under given overconfidence preference of the TPR,two decision modes are compared and the following main conclusions are obtained:(1)Under TPR-led mode,over-precision of the TPR will damage both parties' profits,while in the Nash equilibrium game mode,the increase of the TPR's over-precision degree will definitely damage the OEM's profits,but the TPR may benefit from himself over-precision when certain conditions are satisfied;under both decision-making modes,only when the dispersion coefficient square of the remanufacturing yield is above a medium level and the TPR's dual overconfidence degree is low,the OEM's profit decreases with the TPR's dual overconfidence degree,otherwise the profit of the OEM's increases with the TPR's dual overconfidence degree.In both decision-making modes,only when the dispersion coefficient square of remanufacturing yield is above the middle level and the degree of overconfidence is in the moderate range,the TPR himself can benefit from the increase of dual overconfidence degree.(2)Under two decision-making modes,regardless of overconfidence degree of the TPR and the fluctuation range of the remanufacturing yield,over-precision of the TPR is most harmful to the OEM;in the TPR-led mode,complete rationality is the TPR's best choice.Both over-precision and dual overconfidence of TPR are harmful to himself.In the Nash equilibrium game mode,when the remanufacturing yield fluctuation is small,in most cases TPR's over-precision has a positive impact on himself;when the dispersion coefficient square of the remanufacturing yield exceeds a threshold,only when the level of overconfidence is low can the TPR benefit from his over-precision.When the dispersion coefficient square of the remanufacturing yield is below the medium level,complete rationality will always be superior to dual overconfidence for the TPR;when the dispersion coefficient square of the remanufacturing yield is above the medium level,if the degree of overconfidence is high,the dual overconfidence will also damage the TPR's profit;if the degree of overconfidence is at a moderate level,double overconfidence will benefit the TPR;if the degree of overconfidence is low,which of the two behaviors(complete rationality and double overconfidence)is more beneficial to the TPR is uncertain.(3)When the overconfidence behavior of the TPR is given,under the two decision-making modes,both the TPR's used product input for remanufacturing and his expected profit decrease.On the contrary,both the OEM's raw material input for production and her expected profit increase.The total quantity of new products and remanufactured products under Nash equilibrium game mode is less than that in TPR-led mode,which leads to the increase of product price and the reduction of consumer surplus.In the two cases of complete rationality and over-precision of the TPR,the total channel profit of Nash equilibrium game is always higher than that in TPR-led mode;when the TPR is double overconfident,the total channel profit in Nash equilibrium game is still better than that in TPR-lead mode as a whole.However,when the TPR has a higher degree of overconfidence and the remanufacturing yield fluctuation is smaller,the total channel profit in TPR-led mode is higher instead.