From trade‐offs to trade: The effects of framing and social norms on waste supply chain coordination

The world generates substantial waste that could serve as feedstock, but often inefficiencies in waste exchange arise, caused by a lack of coordination among companies. When trading waste reuse, negotiators must manage the trade-offs between supply chain, personal, and environmental outcomes. Unlike studies focusing on monetary incentives (e.g., taxation, subsidies), we aim to identify how nudge techniques impact negotiation agreements in waste supply chains. We specifically study the effect of various (negative environmental and cost-adding economic) frames and (collectivelevel and individual-level) social norms on agreement rates. We analyze supply chain coordination in a set of stylized bargaining experiments characterized by moderately conflicting environmental and economic interests. We design different treatments in two studies, varying the environmental and economic frames in Study 1, and the presence of social norms (derived from Study 1’s decisions) in Study 2. We find that framing environmental externalities using a damage frame results in higher agreement rates compared to a help frame. However, a low individual-level norm indicating low acceptance of unfair offers tends to reduce agreement rates. We reveal that framing and social norms affect collaboration by triggering both proposers and receivers’ loss aversion in both economic and environmental dimensions. Additionally, we have discovered the effective boundary conditions for the effectiveness of the nudge effects, as well as the impact of decision-makers’ internal motivations (environmental concern, social value orientation) on the coordination decisions. Our findings can guide policy makers to improve inter-firm collaboration in the presence of negative environmental externalities by using frames to nudge supply chain partners.