Decision Theory and Risk Simulation Analysis for Optimizing Profit in Paylater Services
The projected increase in PayLater utilization reaches up to five million people by 2025. To optimize the yearly profit from their PayLater service, fintech companies must examine all possible risks before a unanimous decision is taken. Therefore, we proposed a unified decision framework derived from decision theory and the Monte Carlo simulation technique. Two schemes were coined: (1) a decision-making scheme, and (2) a risk simulation scheme. Throughout experiments, the framework was able to estimate several alternative decisions and their impacts, analyze the causes of failure and delays in the development of the PayLater service, and execute Monte Carlo simulations in up to 10,000 trials. Outputs of this study will benefit decision-makers in the fintech initiative before launching their PayLater products.
Authors:
Nicholas Dominic and Bens Pardamean
2022 International Conference on ENTERprise Information Systems, CENTERIS 2022