Cheating or delighting customers on product quality?
Fouad El Ouardighi – ESSEC Business School, France
In this paper, we claim that, though based on different tradeoffs, cheating and delighting policies are the two faces of the same coin. Cheating relies on inflated goodwill and provides a cheating rent as long as the cheating is not disclosed, while delighting benefits from enhanced goodwill and yields a delighting rent as soon as the delighting is awarded. The conditions that allow for rent equalization between the two policy options are identified. We also characterize the conditions under which either cheating or delighting customers on quality is beneficial.
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