How Do Delay Announcements Shape Customer Behavior? An Empirical Study

Management Science, Forthcoming

Kelley School of Business Research Paper No. 15-63

47 Pages Posted: 29 Aug 2015

See all articles by Qiuping Yu

Qiuping Yu

Scheller College of Business, Georgia Institute of Technology

Gad Allon

University of Pennsylvania - The Wharton School

Achal Bassamboo

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS)

Date Written: August 1, 2014

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

Suggested Citation

Yu, Qiuping and Allon, Gad and Bassamboo, Achal, How Do Delay Announcements Shape Customer Behavior? An Empirical Study (August 1, 2014). Management Science, Forthcoming, Kelley School of Business Research Paper No. 15-63, Available at SSRN: https://ssrn.com/abstract=2652393

Qiuping Yu (Contact Author)

Scheller College of Business, Georgia Institute of Technology ( email )

800 West Peachtree NW
Atlanta, GA 30308
United States

HOME PAGE: http://https://qiupingyu.com/

Gad Allon

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Achal Bassamboo

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS) ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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