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

journal contribution
posted on 2023-06-08, 15:40 authored by Anthony Heyes, Sandeep Kapur
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.

History

Publication status

  • Published

Journal

Journal of Economic Behavior & Organization

ISSN

01672681

Publisher

Elsevier

Issue

3

Volume

84

Page range

813-828

Department affiliated with

  • Economics Publications

Full text available

  • No

Peer reviewed?

  • Yes

Legacy Posted Date

2013-09-11

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