Signaling through pricing by service providers with social preferences

• Autores: Baojun Jiang, Jian Ni, Kannan Srinivasan
• Localización: Marketing science, ISSN 0732-2399, Vol. 33, Nº 5, 2014, págs. 641-654
• Idioma: inglés
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• Resumen

  • In many service markets such as consulting, auto repair, financial planning, and healthcare, the service provider may have more information about the customer�s problem than the customer, and different customers may impose different costs on the service provider. In principle, the service provider should ethically care about the customer�s welfare, but it is possible that a provider may maximize only its own profit. Moreover, the customer may not know ex ante whether the provider is ethical or purely self-interested. We develop a game-theoretic model to investigate pricing strategies and the market outcome in service markets where the provider has two-dimensional private information about her own type (whether ethical or self-interested) and about the customer�s condition (whether serious or minor). We show that in a less ethical market, a self-interested provider will charge different prices based on the customer�s condition, whereas an ethical provider will charge the same price for both conditions. In contrast, in a more ethical market, both the self-interested and the ethical provider will charge the same uniform price to both types of customers. Interestingly, both market efficiency and the customer�s ex ante expected surplus might be lower in a more ethical market than in a less ethical one.