Under the prospect theory, the markdown money contract with stock-out cost of supply chain with a loss-averse
retailer and a risk-neutral supplier is discussed. The order behaviors of a loss-averse retailer in the wholesale price contract
and the markdown money contract are studied. Study results show that, with stock-out cost, the order quality from the lossaverse
retailer may deviate from the optimized quality of the system, and markdown money contract can coordinate the
supply chain. Finally, a case study shows the effectiveness of markdown money contract in supply chain coordination.