Research Article Three-Echelon Supply Chain Contractual Coordination with Loss-Averse Multiple Retailer Preference Jian Ming, 1,2 Azamat Rajapov , 1 and Saidjahon Hayrutdinov 1 1 School of Transportation and Logistics, Southwest Jiaotong University, Chengdu 610031, China 2 Southwest Jiaotong University National United Engineering Laboratory of Integrated and Intelligent Transportation, Chengdu 610031, China Correspondence should be addressed to Azamat Rajapov; azamatrajapov@mail.ru Received 22 June 2019; Revised 26 August 2019; Accepted 11 September 2019; Published 30 September 2019 Academic Editor: Przemyslaw Ignaciuk Copyright © 2019 Jian Ming et al. is is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. In this paper, we propose a supply chain contract model aimed to coordinate a three-echelon supply chain, which is based on the revenue-sharing allocation with loss-aversion preference. We consider a three-echelon supply chain consisting of a risk-neutral manufacturer, a risk-neutral distributor, and loss-averse multiple retailers. To address this model, we consider a shortage product produced and sold within a single period in the stochastic market. e model allows the system efficiency to be achieved as well as it will improve the profits of all supply chain members by tuning the contract parameters. We used the expected utility function to describe the loss-aversion member’s influence coefficient. e decisions of chain members under different conditions are studied by simulation analyses. e paper also analysed the relationship between different revenue-sharing coefficient combinations with multiple retailers in the supply chain system. Furthermore, the study has addressed the supply chain coordination decision bias in the centralized and decentralized systems. 1. Introduction Majorities of supply chain (SC) management literatures have mainly focused on SC coordination with two-stage leader- follower member’s game theory. e SC members decision- making behaviours’ efficiency analysed, identified, and compared with the centralized system control. e cen- tralized control assures the system efficiency. Both cen- tralized and decentralized conditions are difficult to be verified due to different objectives, which often make the hypothesis of a centralized control not realistic. Moreover, in practice, a decentralized SC consists of multiple decision makers pursuing different independent objectives. e decentralized SC approaches with contractual coordination have been studied in order to improve overall competi- tiveness in fast-growing marketplace. Research by Cachon and Lariviere [1] has proven that contractual sharing mechanism is advantageous in achieving coordination in two-stage SC. Giannoccaro and Pontrandolfo [2] have de- veloped and proposed a three-stage coordination approach by providing the incentives to make SC members’ decisions coherent among each other. SC models with the three stages involve the existence of several decision makers pursuing different objectives, possibly conflicting among each other [3]. e incentives let the risk and the revenue shared among all SC members. Additionally, traditional SC contractual models are based on risk neutrality, where members make independent decisions in order to maximize own profits. In practice, there is a lack of research study on the risk, revenue, cost, and gain-loss contractual sharing approaches with the three-stage SC. A gain-loss sharing contract specifies that the upstream member’s decision influences the downstream member’s gains or losses. Hence decision-making behav- iours are also identified as the main phenomenon of loss- aversion in the prospect theory, which states that managers are more sensitive to losses than to gains [4]. Loss-aversion is both intuitively appealing and well supported in finance, economics, marketing, and organizational behaviour [5, 6]. For example, there are economic field tests supporting loss- aversion in financial markets [7], life savings and Hindawi Mathematical Problems in Engineering Volume 2019, Article ID 4927302, 11 pages https://doi.org/10.1155/2019/4927302