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Trust‐based decisions in commission–agency relationships

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  • Xiao Fu
  • Guanghua Han
  • Jiaxin Wang

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.

Suggested Citation

  • Xiao Fu & Guanghua Han & Jiaxin Wang, 2019. "Trust‐based decisions in commission–agency relationships," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 40(5), pages 569-579, July.
    • Handle: RePEc:wly:mgtdec:v:40:y:2019:i:5:p:569-579
    DOI: 10.1002/mde.3027
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    Cited by:

    1. Fu, Xiao & Tan, Hao & Tsenina, Ekaterina & Liu, Shuchun & Han, Guanghua, 2022. "Information sharing based on two-way perceptions of trust and supply chain decisions: A simulation based approach," Chaos, Solitons & Fractals, Elsevier, vol. 157(C).

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