Research on supply chain revenue-sharing contract with a loss-averse retailer

Based on the prospect theory, this paper studies the revenue-sharing contract with stock-out cost of supply chain with a loss-averse retailer and a risk-neutral supplier. The order behaviors of a loss-averse retailer in the wholesale price contract and the revenue-sharing contract were studied respectively. It finds, with stock-out cost, the optimized order quantity of the loss-averse retailer may deviate from the optimized quantity of the centralized system. However, the revenue-sharing contract can improve the performance of supply chain.