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Master of PhilosophyDealing with service failure, one question is constantly asked: why certain consumers are still dissatisfied even though compensations are made? The effectiveness of recovery strategy has been discussed in the context of service failure paradox and second deviation in the past literature. In this thesis, these two issues were brought together under the same framework -from the perspective of expectation. We propose that expectation mediates consumers' evaluation of recovery strategies, and leads to different levels of satisfaction and re-patronage intention. The expectation is further influenced by the type of resource spending consumers are reminded of and the failure type.Two studies were carried out to verify hypotheses. In study one, we used a 2 (resource spending: time vs. money) by 2 (high vs. low discount rate) by 2 (strong vs. weak apology) between subject factorial design to confirm the main effect and mediation effect of expectation on compensation strategies and overall satisfaction as well as re-patronage intention. Moreover, the framing effect of resource spending on time/money on expectation was also tested. In study two, we used a 2 (resource spending: time vs. money) by 2 (outcome vs. process failure) between subjects factorial design to validate the influence of resource spending type and failure types on expectation and satisfaction. DELARATION I declare that this is an original work based primarily on my own research, and I warrant that all citations of previous research, published or unpublished, have been duly acknowledged.