Study on Customer Relation Management Based on Multi-stage Signaling Game Modeling

In order to resolve the moral hazard and adverse selection problem between business and customer due to the information asymmetry, and to offer decision-support for dealing process between business and customer. Signaling game theory is applied in customer relation management. A mathematical model of bi-direction multi-stage signaling game between businesses and customers is established. Furthermore, methods of goal analysis and backwards induction are used to obtain the separating equilibriums of the model. The equilibrium signals selections of business and customer during the transaction are obtained. Research results showed that business and customer of different types will take different equilibrium signals, accordingly their true type can be judged from their action results.