Abstract:A key issue in decentralized systems is how to improve agents’service effort (service quality) . In this paper,we consider a decentralized service chain which consists of a brand owner,a contract service provider,and customers. We design a customer satisfaction incentive mechanism which is based on customers’answers to a binary satisfaction survey,and investigate how this incentive affects agents’service quality and the brand owner’s profit. We derive the best parameters for the customer satisfaction incentive contract and the conditions under which the service quality and brand owner’s profit are improved. We also analyze the impact of the customer satisfaction measure,survey feedback rate,the cost efficiency and risk aversion of the service provider on the brand owner’s profit. Because adding satisfaction incentives implies more expenses,the principal may not embrace this strategy due to the potential cost increases. To alleviate this concern,we studied a strategy in which the total commission rate is kept the same but a portion of it is reallocated to customer satisfaction measures. We prove that such a strategy also improves service quality and brand’s profit.