Angry customers, e-word-of-mouth and incentives for quality provision
Heyes, A. and Kapur, Sandeep (2012) Angry customers, e-word-of-mouth and incentives for quality provision. Journal of Economic Behavior & Organization 84 (3), pp. 813-828. ISSN 0167-2681.
Emotions are a significant determinant of consumer behavior. A customer may get angry if he feels that he is being treated unfairly by his supplier and that anger may make him more likely to switch to an alternative provider. We model the strategic interaction between firms that choose quality levels and anger-prone customers who pick their supplier based on their expectations of suppliers’ quality. Strategic interaction can allow for multiple equilibria including some in which no firm invests in high quality. Allowing customers to voice their anger on peer-review fora can eliminate low-quality equilibria, and may even support a unique equilibrium in which all firms choose high quality.
|Keyword(s) / Subject(s):||Anger, Customer attrition, Quality, e-WOM, Social media, Blogs|
|School:||Birkbeck Schools and Departments > School of Business, Economics & Informatics > Economics, Mathematics and Statistics|
|Date Deposited:||18 Oct 2012 11:59|
|Last Modified:||17 Apr 2013 12:25|
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