On the making of service recommendations: An action theory based on utility, reputation, and risk attitude

In the current service-oriented economy, professional workforce and service personnel have to make not only reasonable but also personalized recommendations in response to individual customer’s query. These actions affect not only the likelihood that the customer takes the recommendations in a short-term but also the service provider’s reputation in a long run because often more risky recommendations may provide more utility but failures have a negative impact to reputation. As different customers have different risk attitudes, they have different trade-off between the service providers’ reputation and the recommendations’ utilities. Therefore, the classical decision model considering only the utility is inadequate. We reconsider the problem of making recommendations from multiple perspectives, including also reputation and risk attitude. Based on this model, we propose an action theory to explain how service providers can act effectively at the strategic, tactical, and operations level, particularly through personalized recommendations.