Inequality aversion disrupts supply chain efficiency, impacting profits and coordination.
The study looked at different types of contracts used in supply chains and found that standard theories don't always work in practice. Through lab experiments, researchers discovered that people are influenced by a desire for fairness, limited thinking abilities, and not having all the information. Retailers are most affected by fairness concerns, while suppliers are influenced by not knowing how fair the retailers are. Both parties are also impacted by not being able to think through all possibilities.