The Analysis of the Supply Chain Incentive Contract under Asymmetric Information

In this paper, we analyze the game between one supplier and one retailer. The supplier offer an incentive contract to inspire the retailer to sell the products through different effort level. We construct the discrete principal-agent model, which is reformulated as a stochastic bi-level programming problem. By analysis of the solution, we get how the asymmetrical information affects the supplier´s utility and retailer´s effort level.