Managing consumer stockpiling with Bayesian persuasion

We consider the information design and inventory management problem in the context of consumer stockpiling under supply chain disruption risk. Employing a Bayesian persuasion framework, we characterize consumers’ rational stockpiling behavior and examine the strategic information disclosure of a profit-maximizing retailer versus a welfare-maximizing social planner. Our analysis reveals that when the disruption risk is low, retailers may deliberately induce mild stockpiling to shift holding costs onto consumers, increasing profit at the expense of customers’ utility. By contrast, when disruption risk is high, proper information design can curb excessive stockpiling, yielding a win-win outcome for both the retailer and customers. We further analyze the joint optimization of inventory and information design, deriving optimal strategies for both the retailer and the social planner. Compared to the retailer, the social planner orders more inventory and allocates holding costs more efficiently, which systematically improves consumer welfare. We also consider several extensions to better capture real-world complexities. Specifically, we incorporate boundedly rational customers to examine cascading behaviors, analyze settings where the retailer possesses imperfect private information, and explore cases with alternative assumptions on purchasing behavior and different decision sequences. These extensions demonstrate the robustness of our main results and highlight the practical relevance of our insights. Overall, our research deepens the understanding of the drivers of stockpiling behavior and provides actionable guidance for retailers and policymakers on managing information disclosure and inventory decisions during supply chain disruptions.