Much ado about nothing? An EEG study of the beer game for neurophysiological insights on supply chain decision-making

Abstract

Volatile demand and information delays in multi-tier supply chains give rise to the well-known bullwhip effect, yet the cognitive mechanisms that drive the inventory decisions behind this phenomenon remain poorly explored. To address this gap, a beer-game experiment that couples game performance with neurophysiological evidence. Electroencephalogram (EEG) signals were collected while participants, who observed downstream orders, placed replenishment orders for 50 periods. A three-stage analytics process, incorporating topographical visualisation, dynamic time warping, and hierarchical clustering, was applied to the EEG time-series data to uncover latent neural patterns. Comparing inconsistency values across linkage methods, Ward's linkage performs best, with the lowest inconsistency (0.5785) and a cophenetic correlation coefficient of 0.7827. Furthermore, Silhouette analysis suggests an optimal solution of two clusters, with an average silhouette score of 0.65. Two cognitive profiles emerged: (1) hypoactive decision makers exhibiting lower cortical activation and (2) hyperactive decision makers with sustained high activation. Linking these profiles to operational outcomes shows that the hypoactive group generated 48.33% lower average cumulative cost and 66.59% lower standard deviation, indicating superior mitigation of the bullwhip effect. The results resonate with the Yerkes-Dodson law such that excessive activation may trigger over-thinking and stress, degrading performance in uncertain environments, whereas moderate activation supports calmer and more consistent choices. By revealing how neuro-cognitive states shape operational effectiveness, this study contributes a novel measurement framework and offers actionable insights for designing decision-support tools and training programs in disruptive supply-chain contexts.