Munich Personal RePEc Archive

Exit and voice: a game-theoretic analysis of customer complaint management

Liang, Pinghan (2013): Exit and voice: a game-theoretic analysis of customer complaint management. Forthcoming in: Pacific Economic Review , Vol. 13, No. 3 (July 2013)

[img]
Preview
PDF
MPRA_paper_45268.pdf

Download (316kB) | Preview

Abstract

We develop a multi-agent communication model with participation decisions to address the customer complaining behavior and the corresponding management policy. Privately informed customers choose among costly complain, keep silence, and exit, and a firm decides complaining barriers and whether to undertake a corrective action. It is shown that customers truthfully complain only under a moderate complaining barrier. The observed low complaint/dissatisfaction ratio and costly complaint arise as one equilibrium outcome. Customers' expectations, the precision of signals, and the temptation of outside options are identified as the determinants of complaint management policy. Firms are likely to set socially excessive complaining barriers.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.