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Why Would a Company Calculate the Lifetime Value of a Customer

question 53

Essay

Why would a company calculate the lifetime value of a customer? Should the company fight to retain every customer?


Definitions:

Simultaneous Move Games

A scenario in game theory where all players make their decisions or moves at the same time, without knowledge of the others' choices.

Nash Equilibrium

A concept in game theory wherein each player's strategy is optimal given the strategies of other players, resulting in no incentive to deviate unilaterally from their strategy.

Best Response

In game theory, the strategy that yields the highest payoff for a player, given the strategies chosen by other players in the game.

Strategy

A planned set of actions designed to achieve long-term or overall aims and objectives.

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