Customer Reactions to Brokered Ultimatums: Integrating Negotiation and Justice Theory
44 Pages Posted: 30 Apr 2003
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
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