A game theory-based analysis of merchants’ mobile payment adoption using hybrid SEM-neural network approach

Purpose – This study is driven by the evidence from the literature on the significance of mobile (m-)payment in economic growth and productivity and at the same time the relative dismal adoption of this service. Drawing upon the game theory framework, the present study set out to elucidate the merchants' m-payment adoption from the perspective of trust in the Malaysian context. Design/methodology/approach – An online survey consisting of 302 respondents was carried out to investigate the impact of trust and opportunism on merchants’ perceived trustworthiness using a two-staged SEM-neural network approach to determine the significance and relative importance of variables. This study also applies a game-theoretic approach to analyze the impact of trust on the relationship between merchants and m-payment service providers Findings – The results indicate a positive and statistically significant relationship between merchant trust, merchant opportunism and perceived trustworthiness; And a statistically significant negative relationship was found between m-payment provider opportunism and perceived trustworthiness. The findings from the prisoner’s dilemma two-player model indicate that the scenarios of mutual trust and mutual opportunism as paradigmatic of cooperation and defection produce the best and worse outcomes respectively. An intriguing result was the positive impact of merchant opportunism on perceived trustworthiness which indicates a very calculative orientation of merchants in m-payment contracting. Originality/value – To our knowledge, this is amongst the first attempts to propose a game theory approach to the interaction between merchants and m-payment providers under the framework of trust and opportunism. A game theory study in the context of mobile payment adoption can contribute to the theoretical literature by providing insights into the decision-making processes of merchants. By incorporating trust and opportunism into the game theory model, we can gain a better understanding of how they affect the decision-making process and overall adoption rates. The conclusions and implications provide useful insights for managers of both m-payment platforms and merchants in this relational exchange. The results of the present research can provide insights into the factors that influence merchant decisions and guide them towards suitable partnerships for successful adoption and can guide authorities for policy interventions and supporting adoption efforts