A game theory approach for value co-creation systems

Abstract

This paper introduces a game theory approach to study firms’ strategic behaviours in value co-creation systems. The game theory approach not only faces a joint value optimization problem between the firm and the customer, but also faces a value allocation problem to the firms. Value co-creation system emphases on firm-customer interaction and value trade-off between the firm and the customer. Simulation experiments are carried out on the hypothetical system to conduct the value trade-off between the firm and the customer, and study the firms’ strategic behaviours on the market place. The experimental results indicate the value trade-off between the firm and the customer, and the strategic tension between cooperation and competition. Although the competitive action is the dominant strategy for each firm, but the firms’ cooperative action guarantee to gain a maximum joint value. This paper contributes theoretical insights on value co-creation and firms’ strategic behaviours in value co-creation systems.