Game theoretic modelling of service agent warranty fraud

D. N. P. Murthy () and N. Jack ()
Additional contact information
D. N. P. Murthy: The University of Queensland

Journal of the Operational Research Society, 2017, vol. 68, issue 11, 1399-1408

Abstract: Abstract When a warranty provider outsources warranty servicing to an external service agent this agent may act in a fraudulent manner. In this paper we consider a special case of service agent fraud—with the service agent overbilling the warranty provider for some of the warranty claims. A detailed inspection of a claim may be made to identify whether or not the service agent has committed fraud, but this inspection involves an additional cost to the warranty provider. This cost may be recovered by imposing a penalty on the service agent whenever a fraud is committed and it is detected. This penalty is specified in the maintenance service contract. A game theoretic approach is used to find the optimal overbilling strategy for the service agent and the optimal inspection strategy for the warranty provider. The optimal solution is the mixed strategy Nash equilibrium of a static game between the two parties.

Keywords: warranty provider; warranty servicing; service agent; warranty fraud; game theory; Nash equilibrium (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1057/s41274-016-0125-z Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:jorsoc:v:68:y:2017:i:11:d:10.1057_s41274-016-0125-z

Ordering information: This journal article can be ordered from
http://www.springer. ... search/journal/41274

DOI: 10.1057/s41274-016-0125-z

Access Statistics for this article

Journal of the Operational Research Society is currently edited by Tom Archibald and Jonathan Crook

More articles in Journal of the Operational Research Society from Palgrave Macmillan, The OR Society
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().