How Do Delay Announcements Shape Customer Behavior? An Empirical Study

Qiuping Yu (), Gad Allon () and Achal Bassamboo ()
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Qiuping Yu: Kelley School of Business, Indiana University, Bloomington, Indiana 47405
Gad Allon: Kellogg School of Management, Northwestern University, Evanston, Illinois 60208
Achal Bassamboo: Kellogg School of Management, Northwestern University, Evanston, Illinois 60208

Management Science, 2017, vol. 63, issue 1, 1-20

Abstract: In this paper, we explore the impact of delay announcements using an empirical approach by analyzing the data from a medium-sized call center. We first explore the question of whether delay announcements impact customers’ behavior using a nonparametric approach. The answer to this question appears to be ambiguous. We thus turn to investigate the fundamental mechanism by which delay announcements impact customer behavior, by constructing a dynamic structural model. In contrast to the implicit assumption made in the literature that announcements do not directly impact customers’ waiting costs, our key insights show that delay announcements not only impact customers’ beliefs about the system but also directly impact customers’ waiting costs. In particular, customers’ per-unit waiting cost decreases with the offered waiting times associated with the announcements. The results of our counterfactual analysis show that it may not be necessary to provide announcements with very fine granularity.

Keywords: delay announcement; patience time; customer abandonment; structural estimation (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (18)

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