Experimental Design
The experiment uses a two-period supply chain game in which participants make decisions about sales quantity, order quantity, and, depending on the treatment, wholesale price, with the help of a calculator that displays all decision-relevant information, such as profit. The experiment is imple-mented in multiple sessions at the laboratory at Kiel University.
The experiment consists of six treatments that vary along three dimensions: the supply chain structure (vertically integrated vs. decentralized), the persistence of the demand shock, and, in decentralized supply chains, whether the manufacturer is played by a human or a computer.
The supply chain structure is either decentralized or vertically integrated. In decentralized treatments, participants are randomly assigned to one of two roles, retailer or manufacturer, and matched with another participant for the duration of the experiment; here, the manufacturer chooses the wholesale price, while the retailer chooses sales and order quantities. In vertically integrated treatments, a single participant makes all decisions for both stages of the supply chain, choosing sales and order quantities directly; no wholesale price exists in this setting.
The persistence of the demand shock takes a high or low value, determining how strongly a first-period demand shock carries over into the second period. Across all treatments, participants play 30 independent rounds, with the demand shock drawn randomly in each round.
In decentralized treatments, the manufacturer role is played either by a human participant or by a computer following a fixed rule; in the latter case, the human participant only takes the retailer role.
Of the 30 rounds, the first 10 are unpaid practice rounds, followed by 20 incentivized rounds. Pay-ments are based on cumulative profits earned in the incentivized rounds, converted to euros, plus a fixed participation fee. After the game, participants complete a questionnaire on their decision-making, a brief cognitive reflection test, and demographic questions.