The use of screening contracts is a common approach to solve supply chain coordination problems under asymmetric information. One main assumption in this context is that managers without specific incentives would rather use their private information strategically than reveal it truthfully. This harms supply chain performance. This study investigates the impact of information sharing in a principal‐agent setting that is typical for many supply chain transactions. We conduct a laboratory experiment to test whether information sharing has an influence on supply chain coordination. We find that information sharing within the supply chain has two positive effects. First, information sharing reduces the inefficiencies resulting from information deficits if there is a certain amount of trust in the supply chain. Second, communication can limit out‐of‐equilibrium behavior with a small impact on the firm's own payoff, but a large impact on the supply chain partner. Furthermore, we find that both effects are amplified when communication takes place in an environment that allows the less informed supply chain party to punish or to reward the better informed party. Although our extended mechanisms substantially enhance the poor performance of the theoretically optimal coordination contract menu, we find no mechanism that implements supply chain performance superior to the theoretically predicted second‐best level.

AbstractWillingness to pay (WTP) is known to be lower for remanufactured products than for comparable new products. Normative work to date has assumed that a consumer's WTP for a remanufactured product is a fraction, called discount factor, of the consumer's WTP for a corresponding new product, and that this discount factor is constant across consumers. Recent empirical research demonstrates, however, that the discount factor is not constant across consumers. This discovery has led researchers to call for an exploration of more refined utility models that incorporate heterogeneous risk preferences through elements such as risk aversion, loss aversion, and ambiguity aversion. To address this call, this article assesses each of these risk preference elements by empirically deriving WTP distributions from two interlinked studies. To provide triangulation in both the empirical method and sample, the interlinked studies employ an online survey and a laboratory experiment that elicits WTP for framed lotteries that proxy the situation of buying remanufactured products. The empirical results and robustness verifications demonstrate that a parsimonious standard utility model incorporating only risk aversion explains the WTP data reasonably well.

Recent research indicates that consumers hold significant concerns about the quality of remanufactured products. To better understand this phenomenon, this manuscript combines surveys and experimental studies to identify the antecedents of perceived quality—in the form of perceived risk of functionality and cosmetic defects—and their significant impact on consumers' willingness to pay (wtp) for remanufactured electronics products. The study also controls for alternative explanations for wtp suggested in the literature, such as consumers' wtp for new products, environmental beliefs, disgust aversion toward used products, brand perceptions, risk aversion, and various demographic traits. Importantly, the study empirically estimates the magnitude and distribution of discount factors for remanufactured electronics products—the ratio between wtp for a remanufactured product and wtp for a corresponding new product—among consumers. Finally, the manuscript analytically compares a monopolist's decision to include remanufactured products in its portfolio under both the empirically derived discount factor distributions and the classical linear demand model, which assumes constant discount factors. Interestingly, the classical linear demand model remains reasonably robust for high‐level insights, such as the presence of cannibalization and market expansion effects. However, the analytical model that uses the empirically‐derived distributions of discount factors demonstrates significantly higher profitability than predicted by the classical linear model. This fundamental link between risk perceptions, wtp for remanufactured products, and profitability provides new insights on how to manage demand and product pricing in closed‐loop supply chains.