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Do looks matter in supply chain contracting? An experimental study.
Lyudmyla Starostyuk1, Kay-Yut Chen2, Edmund L Prater2
1Metropolitan State University of Denver, Denver, CO USA.
Business Economics (Cleveland, Ohio)
|January 25, 2023
Summary
Facial appearance significantly influences pricing decisions in supply chain games. Both the retailer's and the participant's own facial traits impact wholesale price variations.
Area of Science:
- Behavioral Economics
- Supply Chain Management
- Psychology
Background:
- The "face effect" describes how facial appearance influences social and economic interactions.
- Pricing behavior in supply chains is complex and can be affected by various psychological factors.
Purpose of the Study:
- To investigate the impact of facial traits (attractiveness, trustworthiness, dominance) on pricing behavior within a supply chain game.
- To determine if seeing a retailer's face alters pricing decisions compared to not seeing it.
Main Methods:
- An experiment was conducted using a supply chain game framework.
- Participants made pricing decisions under conditions where they could or could not see the retailer's face.
- Subjective evaluations of facial traits (self-reported and by others) were collected.
Main Results:
- Decision-making distributions differed significantly between conditions with and without visual facial exposure.
- Complex relationships were observed between decision behaviors and specific facial traits.
- Both self-perceived and externally evaluated facial traits demonstrably affected pricing choices.
Conclusions:
- Facial appearance plays a significant role in shaping pricing behavior in supply chain interactions.
- Subjective judgments of facial traits introduce a "face effect" that influences economic decisions.
- Future research should explore the nuances of facial perception in economic contexts.
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