Hawk-dove game based interactive design to manage customer expectation

Abstract

In the era of experience economy, how best to deliver memorable and exciting customer experiences has become a key issue for service providers, and customers can involve themselves in service experience delivery by actively deciding appropriate services rather than passively accepting existing ones. However, service providers frequently consider profit and cost first despite knowing that high-quality service can maximize satisfaction. A dilemma emerges particularly in the oligopoly market. Oligopoly service providers generally have no need to expend additional efforts and costs in attracting customers, and thus are considered a value-bounded context for customers in which providers only provide customers with existing services and restricted values. Accordingly, this study devises an interaction design mechanism to assist oligopoly service providers in effectively managing customer expectations within the dynamic interactions even in value-bounded contexts. The proposed mechanism models this interaction design problem as a series of Hawk-Dove games toward an evolutionary stable state. The simulation results suggest that oligopoly service providers should change their original mindset and design the interactions to manage customer expectations within the service experience delivery to not only achieve high satisfaction and profit but also engage customers to co-create the values.