Linking Delay Announcements, Abandonment, and Staffing: A Behavioral Perspective

35 Pages Posted: 13 May 2017

See all articles by Eric Webb

Eric Webb

University of Cincinnati, Lindner College of Business

Qiuping Yu

Scheller College of Business, Georgia Institute of Technology

Kurt Bretthauer

Indiana University - Kelley School of Business - Department of Operation & Decision Technologies

Date Written: May 13, 2017

Abstract

Using field data from a bank's call center, we study the behavioral determinants of customers' queue abandonment decisions in the presence of delay announcements. We relax traditional behavioral assumptions on how customers should make abandonment decisions and empirically explore how customers actually behave. Our flexible model can account for multiple delay announcements, reference-dependent behavior, sunk costs in time, and heterogeneity in customer patience. We show that customers exhibit loss aversion with respect to time losses in queue, becoming much more likely to abandon if forced to wait longer than the announced waiting time. We also find that customers may fall for the sunk cost effect, becoming less likely to abandon with more time sunk waiting in queue. Additionally, we find that longer announced wait times increase customer abandonment behavior and that customers are often strategic in their arrival decisions, with impatient customers avoiding the busy time of day. In a counterfactual study, we show that, by accounting for our behavioral insights, firms may significantly reduce their staffing levels without increasing customers' overall waiting time.

Keywords: loss aversion, sunk costs, delay announcement, staffng, behavioral operations

Suggested Citation

Webb, Eric and Yu, Qiuping and Bretthauer, Kurt, Linking Delay Announcements, Abandonment, and Staffing: A Behavioral Perspective (May 13, 2017). Kelley School of Business Research Paper No. 17-40. Available at SSRN: https://ssrn.com/abstract=2967901 or http://dx.doi.org/10.2139/ssrn.2967901

Eric Webb (Contact Author)

University of Cincinnati, Lindner College of Business ( email )

2925 Campus Green Drive
PO Box 210130
Cincinnati, OH 45221
United States
5135567131 (Phone)

Qiuping Yu

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

800 West Peachtree NW
Atlanta, GA 30308
United States

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

Kurt Bretthauer

Indiana University - Kelley School of Business - Department of Operation & Decision Technologies ( email )

Business 670
1309 E. Tenth Street
Bloomington, IN 47401
United States

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