Exit, Tweets, and Loyalty

82 Pages Posted: 24 Dec 2016 Last revised: 25 Feb 2020

See all articles by Joshua S. Gans

Joshua S. Gans

University of Toronto - Rotman School of Management; NBER

Avi Goldfarb

University of Toronto - Rotman School of Management

Mara Lederman

University of Toronto - Rotman School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: January 3, 2020

Abstract

Hirschman’s Exit, Voice, and Loyalty highlights the role of “voice” when individuals confront an unexpected deterioration in quality. Yet, voice has received little attention. To motivate our empirical analysis, we develop a simple model of voice as the equilibrium of a relational contract between customers and firms. We use data on 4 million tweets to or about U.S. airlines to study the relationship between quality, voice, and market structure. Voice increases when quality deteriorates. This relationship is greater for airlines which operate a large share of flights in a market. Supplemental analyses support a relational contracting role for voice.

Keywords: exit voice and loyalty, complaints, airlines, Twitter, social media

JEL Classification: L1, D4, L86

Suggested Citation

Gans, Joshua S. and Goldfarb, Avi and Lederman, Mara, Exit, Tweets, and Loyalty (January 3, 2020). Rotman School of Management Working Paper No. 2889388, Available at SSRN: https://ssrn.com/abstract=2889388 or http://dx.doi.org/10.2139/ssrn.2889388

Joshua S. Gans

University of Toronto - Rotman School of Management ( email )

Canada

HOME PAGE: http://www.joshuagans.com

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Avi Goldfarb (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-946-8604 (Phone)
416-978-5433 (Fax)

Mara Lederman

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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