Angry customers, e-word-of-mouth and incentives for quality provision

Heyes, Anthony 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 01672681

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Abstract

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.

Item Type: Article
Keywords: Anger; Customer attrition; Quality; e-WOM; Social media; Blogs
Schools and Departments: School of Business, Management and Economics > Economics
Subjects: H Social Sciences > HB Economic theory. Demography
Depositing User: Catrina Hey
Date Deposited: 11 Sep 2013 14:08
Last Modified: 11 Sep 2013 14:08
URI: http://sro.sussex.ac.uk/id/eprint/46136
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