SONG Yanan, LIU Lu, LI Tingting, YAN Xiangbin, ZHAO Enlong
Based on the exponential smoothing model and Logit choice model, this paper describes the multi-period purchase behavior of consumers, constructs the revenue model of two heterogeneous retailers under different money-back guarantees, and discusses the impact of money-back guarantees on experiential-learning consumers' purchase likelihood and retailers' revenues. We further investigate the changes brought about by the introduction of AI-assisted decision-making. We find that, due to the fluctuation of product quality and consumers' experiential-learning, consumers' beliefs about the average quality of products are lower than the real average quality. Different money-back guarantees will affect consumers to form different beliefs about product quality. When the focal retailer provides money-back guarantees while the competing retailer not, consumers' quality belief of the focal retailer is the closest to the real average quality. The retailers do not always benefit from offering money-back guarantees. When the unit return cost is low, it is the dominant strategy to offer money-back guarantees. As the return cost increases, the equilibrium of the two retailers' money-back guarantees gradually changes from providing money-back guarantees to not. Numerical analysis shows that the equilibrium reached by two retailers has a phenomenon of Prisoner's dilemma. Specifically, when the return cost is low, both retailers provide the money-back guarantees in equilibrium, but the equilibrium revenue of both retailers is lower than the revenue when no money-back guarantee is provided. This suggests that competition induces both retailers to choose to offer money-back guarantees, although it does not achieve the optimal retailer's payoff optimal. After introducing AI-assisted decision-making, retailers with large quality fluctuations obtain an increase in long-term profits. Offering money-back guarantees remains a dominant strategy when the return cost is low, but AI-assisted decision-making changes the threshold for strategy formulation.
