Procurement in the Presence of Supply Disruptions Elena Katok Naveen Jindal School of Management, University of Texas at Dallas, Richardson, Texas 75080 USA. ekatok@utdallas.edu Lijia Tan Tianjin University, Tianjin, 300072 China Eindhoven University of Technology, Eindhoven, 5600MB Netherlands ljtan.wise@gmail.com We study the effect of bargaining, long-term relationships, and renegotiations on the performance of incomplete contracts in a supply chain setting with the possibility of supply disruption. Disruptions are a real threat to supply chains, especially as they become longer and more complex. Because disruptions are unpredictable, complete contracts that specify each contingency often cannot be written. We use a controlled laboratory experiments with human subjects incentivized based on performance. Our design manipulates the bargaining protocol, the relationship length, and the ability to renegotiate the contract after the disruption, as well as the ability to communicate through on-line chatting. Inefficiency, in our environment, comes from two sources: failing to reach an initial agreement (purchase inefficiency) and supplier’s failure to mitigate the disruption (disruption inefficiency). We find that long term relationships and the ability to communicate decrease both inefficiencies and the option to renegotiate decreases disruption inefficiency only, while allowing free bargaining actually increases both inefficiencies. Our findings can help managers in the process of designing and negotiating incomplete contracts in environments with supply disruptions. Keywords: Disruption; Renegotiation; Supply Chain; Experiment Draft Date: October 10, 2018 1. Introduction Supply disruptions are costly and unpredictable. The British Standards Institute (BSI) reported that in 2015 global supply chains incurred a total of $55.6 billion in disruption-related costs due to cargo theft and natural disasters. The empirical studies in operation management show that supply chain disruptions have a large effect on the operations of firms, for example due to earthquakes