Trust‐based decisions in commission–agency relationships

Xiao Fu, Guanghua Han and Jiaxin Wang

Managerial and Decision Economics, 2019, vol. 40, issue 5, 569-579

Abstract: In commission–agency case, an agent has an incentive to increase the recommended order quantity (ROQ) to maximize the expected profit. This study refers to a retailer's degree of dependence on the agent's ROQ as “trust.” We aim to formulate the agent and the retailer's decisions with trust‐based optimization models. To conduct the study, we first build the demand prediction and income model of the retailer and the agent with a trust‐updating model. Furthermore, we investigate the facts of the retailer's trust value by some experimental studies. Some managerial insights are thereby given and helpful to practice.

Date: 2019
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https://doi.org/10.1002/mde.3027

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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:40:y:2019:i:5:p:569-579

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