HEC Paris

About: HEC Paris is a education organization based out in Jouy-en-Josas, France. It is known for research contribution in the topics: Market liquidity & Entrepreneurship. The organization has 584 authors who have published 2756 publications receiving 104467 citations. The organization is also known as: Ecole des Hautes Etudes Commerciales & HEC School of Management Paris.

Managing Retention in Service Relationships

Abstract: Consider a firm that can actively manage and customize the service offered to customers in a repeat business context. What is the long-term value of such flexibility, and how should firms manage the service relationship over time? We propose a dynamic model of the firm-client relationship that relies on behavioral theories and empirical evidence to model the evolution of service quality expectations and their impact on customer retention and profitability. We find that firms can extract higher long-term value by managing service experiences and expectations over time. Varying service in the long run is not optimal, however. We characterize the optimal dynamic service policy and show that it converges to a steady-state service level. Loss aversion expands the range of constant optimal service policies, suggesting that behavioral asymmetries limit the value of responsive service. Sensitivity results characterize the effect of customer margin, loyalty, and memory on policies and profits.

Disinformation and Propaganda – Impact on the Functioning of the Rule of Law in the EU and its Member States

Abstract: This study, commissioned by the European Parliament’s Policy Department for Citizens’ Rights and Constitutional Affairs and requested by the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs, assesses the impact of disinformation and strategic political propaganda disseminated through online social media sites. It examines effects on the functioning of the rule of law, democracy and fundamental rights in the EU and its Member States. The study formulates recommendations on how to tackle this threat to human rights, democracy and the rule of law. It specifically addresses the role of social media platform providers in this regard.

Managing Retention in Service Relationships

Abstract: In a repeat business context, past experiences with a service provider affect customers' decisions to renew their contract. How should a strategic firm manage customized service over time to maximize the long-term value from each customer relationship? We propose a dynamic model that relies on behavioral theories and empirical evidence to capture the effect of past service experiences on service quality expectations, customer satisfaction, and retention. Although firms can benefit from managing service expectations at the beginning of a relationship, we find that varying service in the long run is not optimal. Behavioral regularities explain the structure of optimal service policies and limit the value of responsive service. Loss aversion expands the range of optimal constant policies; however, if satisfying experiences are more salient, then firms should constantly vary service levels. Loyal or high-margin customers need not warrant better service; those who anchor less on past service experiences do---provided that retention is improved by better past experiences. The effect of customer memory on service levels is determined by whether habituation or rather goodwill drives defection decisions. This paper was accepted by Christian Terwiesch, operations management.