The Effects of Customers’ Decision making with Different Risk Prefrences on Warranty Providers: Agent based Modeling

Abstract

The increased competition in markets, make manufacturers find a better way to attract customers. It is critical to make customers sure about the quality and reliability of products. One way to ensure customers is providing warranty policies to reduce not only the risk of production failures, but also to understand customers’ wants and requirements. This research seeks to recognize the effects of decision making of customers on short-term and long-term results of warranty providers with agent based modeling. Cusomers of this market have different risk prefrences and make decision in two ways: logically and socially. The reults confirm that the type of customers and their decisions influence the number of customers who will to extend their contract and the profitability of warranty providers. Concering to all states, the fisrt warranty provider in short term and the second warranty provider in long term are more capable of keeping customers and make profit.

Keywords

• warranty
• agent based modeling
• risk prefrences
• logical decision making
• social decision making