Customer Reactions to Brokered Ultimatums: Integrating Negotiation and Justice Theory

44 Pages Posted: 30 Apr 2003

See all articles by Stephen E. Humphrey

Stephen E. Humphrey

Pennsylvania State University - Department of Management & Organization

Aleksander Ellis

Michigan State University - Department of Psychology

Donald E. Conlon

Michigan State University - Department of Management

Catherine H. Tinsley

Georgetown University - Department of Management

Abstract

The growth of discount travel intermediaries such as Priceline and Hotwire highlights the importance of studying customer reactions to brokered ultimatum bargaining contexts. We examine how procedural variations in a brokered ultimatum game (BUG) affect customer behaviors (offer made for the current purchase, repatronage behavior, and future bidding behavior) and attitudes (willingness to recommend the service to others). We find that while participants behave in economically prudent ways when determining their bid values, they rely on their perceptions of fairness when making decisions related to others and their own future use of the intermediary. Specifically, we find that transaction structure (ultimatum vs. negotiation), timeliness of response, and offer acceptance/rejection influence most of our customer outcomes, and that customer perceptions of justice (in particular, informational justice and distributive justice) mediate the relationships between the procedural variations and customer outcomes.

Keywords: ultimatums, justice, negotiation

Suggested Citation

Humphrey, Stephen E. and Ellis, Aleksander and Conlon, Donald Edward and Tinsley, Catherine H., Customer Reactions to Brokered Ultimatums: Integrating Negotiation and Justice Theory. Available at SSRN: https://ssrn.com/abstract=398200 or http://dx.doi.org/10.2139/ssrn.398200

Stephen E. Humphrey (Contact Author)

Pennsylvania State University - Department of Management & Organization ( email )

University Park, PA 16802-3306
United States

Aleksander Ellis

Michigan State University - Department of Psychology ( email )

Agriculture Hall
East Lansing, MI 48824-1122
United States

Donald Edward Conlon

Michigan State University - Department of Management ( email )

North Business Complex
East Lansing, MI 48824-1122
United States
517-432-3519 (Phone)

Catherine H. Tinsley

Georgetown University - Department of Management ( email )

Rafik B Hariri Building
McDonough School of Business
Washington, DC 20057
United States
202-687-2524 (Phone)

HOME PAGE: http://explore.georgetown.edu/people/tinsleyc/

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