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

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  • Heyes, Anthony
  • Kapur, Sandeep

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.

Suggested Citation

  • Heyes, Anthony & Kapur, Sandeep, 2012. "Angry customers, e-word-of-mouth and incentives for quality provision," Journal of Economic Behavior & Organization, Elsevier, vol. 84(3), pages 813-828.
    • Handle: RePEc:eee:jeborg:v:84:y:2012:i:3:p:813-828
    DOI: 10.1016/j.jebo.2012.10.002
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    Cited by:

    1. Zazli Lily Wisker & Robert Neil McKie, 2021. "The effect of fake news on anger and negative word-of-mouth: moderating roles of religiosity and conservatism," Journal of Marketing Analytics, Palgrave Macmillan, vol. 9(2), pages 144-153, June.
    2. Phimai Nuansi & Piya Ngamcharoenmongkol, 2021. "Proactive Complaint Management: Effects of Customer Voice Initiation on Perceived Justices, Satisfaction, and Negative Word-of-Mouth," SAGE Open, , vol. 11(3), pages 21582440211, September.
    3. Bennett Chiles, 2021. "Shrouded Prices and Firm Reputation: Evidence from the U.S. Hotel Industry," Management Science, INFORMS, vol. 67(2), pages 964-983, February.
    4. Elisabetta Raguseo & Claudio Vitari, 2017. "The Effect of Brand on the Impact of e-WOM on Hotels’ Financial Performance," Post-Print halshs-01656399, HAL.

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    More about this item

    Keywords

    Anger; Customer attrition; Quality; e-WOM; Social media; Blogs;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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