The effect of retailers’ probabilistic loss aversion and loss aversion bounded rational behavior on the equilibrium of supply chain network is studied. Based on the variational inequality and complementary theory, the manufacturers’ optimal behaviors and supply-demand equilibrium in demand markets are modeled. Based on the cumulative prospect theory, the retailers’ concave prospect functions are established. Based on the variational inequality, the equilibrium of retail market is described. Comparative statics analysis show that, the retailers’ equilibrium quantities decrease as the degree of attention to the worst increase, the retailers’ equilibrium quantities increase as the degree of attention to the best increase, the retailers’ equilibrium quantities decrease as the degree of likelihood sensitivity to loss increase, and the retailers’ equilibrium quantities decrease as the degree of loss aversion increase.