Threshold Measurement Model for Perceived Service Quality

This study proposes a threshold measurement model based on the prospect theory and zone of tolerance for the SELVQUAL scale to measure the latent perceived service quality The concept of zone of tolerance is where customers are willing to accept a service discrepancy within a standard they recognize. The discussion focuses on three stages of consumers' mental state and how they relate to observable perceived service quality It then proposes a model that employs a threshold specification representing extent limit as a zone of tolerance. Because the value function in prospect theory describes human perception's dependence on the evaluation of differences, rather than absolute magnitudes, the proposed mode also integrates asymmetric and nonlinear properties. Empirical analysis was implemented using the data collected from several different service sectors, and the proposal model showed better performance as against other competitive models. The results provide an insight into the asymmetric and nonlinear latent structures of consumers'perceived service quality Clustering was conducted by applying estimated thresholds and factor scores to obtain three different kinds of consumer segments.