Research On Behavioral Choices And Cooperative Advertising With Sticky Price

As one of the critical factors influencing decision-making process,the evolution of product price conveys very important information.In static analysis of operation management,a large body of literature assumes price has a linear correlation with operation decisions like supply quantity;and the supply results in immediate effects on the price.However,in practice,it takes time for the price to react to the decisions.In other words,the price shows its stickiness during evolution.The consideration of sticky price makes decision problems more realistic but more complicated.In order to solve the decision-problems with sticky price in consideration,we implement our researches on behavioral choices and cooperative advertising.Firstly,we build up a differential game involving a supplier and a manufacturer,and discuss about the influences of behavioral choices,i.e.farsightedness or myopia,on the decisions and profits of supply chain members.Then,we build up another differential game consisting of a manufacturer and a retailer,and explore the influences of cooperative advertising on the decisions and profits of supply chain members.Based on quantitative model and numeric simulation,we have some interesting findings.Facing with behavioral choices that to be farsighted or to be myopia,supply chain members fall into a situation similar with “Prisoner's Dilemma”.With sticky price,it is possible for supply chain member to introduce cooperative advertising,but the supplier's over-sharing on advertising cost has passive influences on retailer's advertising effort.