An evolutionary game analysis of vehicle recall supervision considering the impact of public opinion

Abstract

Government supervision on vehicle recall has become a social focus in recent years with the rapid development of the automobile industry and the growing impact of public opinion in the recall process. Motivated by this, we apply the evolutionary game approach to study the interaction between the automakers and the governments in their vehicle recall and supervision behaviors under the impact of public opinion. The equilibrium outcomes when public opinion exists or not are analyzed. We find that the governments may choose weak or strong supervision under no supervision of public opinion, but the automakers always choose hiding vehicle defects in stable states; and the players’ optimal strategies may exhibit periodic fluctuations over time. Under public opinion supervision, the automakers may choose voluntary recall regardless of whether the governments choose strong or weak supervision. With a high public opinion supervision and low penalty for hiding defects, the governments may choose strong supervision even with sufficiently high supervision cost. Furthermore, although the players’ behaviors may also exhibit periodic fluctuations given a certain level of public opinion, the system will converge to the desired stable states under which voluntary recall is optimal for the automakers as public opinion increases. Our study highlights the role of public opinion in the players’ product recall and supervision behaviors.

Keywords:

• Vehicle recall
• government supervision
• public opinion
• evolutionary game theory

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 https://www.nhtsa.gov/sites/nhtsa.dot.gov/files/documents/2019_recall_annual_count_final-031620-v1-tag.pdf

2 https://www.dpac.org.cn/xwdt/gzdt/202003/t20200331_90348.html

3 https://asia.nikkei.com/Business/Automobiles/LG-Chem-agrees-to-cover-most-of-Hyundai-s-900m-EV-recall

4 https://www.motortrend.com/news/nhtsa-fines-gm-35-million-over-ignition-switch-issue/

5 https://www.nhtsa.gov/sites/nhtsa.dot.gov/files/documents/14218-mvsdefectsandrecalls_041619-v2-tag.pdf

6 https://www.vox.com/2014/10/3/18073458/gm-car-recall

7 https://www.detroitnews.com/story/business/autos/general-motors/2015/06/05/gm-nhtsa-report/28540239/

8 https://www.sohu.com/a/330422740_441104

9 https://www.guancha.cn/qiche/2021_03_17_584365_s.shtml

10 https://www.edmunds.com/car-safety/why-are-so-many-cars-being-recalled.html

11 The tripartite model may apply when the scope of the game players of “the public” is unambiguous, for example, when there are some major media that play a decisive role in influencing public opinion and other media’s impacts are limited.

12 For example, Volkswagen confirmed that DSG defects existed in vehicles sold in 2009, but Volkswagen still produced and sold defective vehicles in 2012 (http://www.gov.cn/gzdt/2013-03/20/content_2358321.htm); besides, SAIC-GM identified the suspension defects in 2015, but it also produced and sold defective cars until 2018 (https://www.dpac.org.cn/qczh/gnzhqc/201809/t20180928_79395.html).

13 For example, it may be affected by the number of defective products sold in the market. Such a relationship has supported by Eilert et al. (2017), who empirically examined factors influencing the time to recall when the governments conduct investigations about vehicle defect. They find that the recall size (i.e., the number of vehicles investigated for the defect) can increase the time to recall. This implies that if the sales volume of the defective vehicles is larger, the automakers are more likely to delay the recall and hence the proportion of the sale volume to the total production volume is larger when the recall occurs.

Additional information

Funding

The research was supported by the National Natural Science Foundation of China (Grants Nos. 71972081, 72171091, 71971219, 71804063); MOE (Ministry of Education in China) Project of Humanities and Social Sciences (Grants No. 21YJA630074), Philosophy and Social Science Planning Project of Guangdong Province (Grants Nos. GD20CGL29, GD21CGL25), and Characteristic Innovation Project (Social Science) of Guangdong Colleges and Universities (Grants Nos. 2020WTSCX013, 2020WTSCX064).