I found Richard Thaler’s article on Customer Outrage thought provoking, particularly in light of the recent Netflix and Bank of America customer outrage setbacks. Please note particularly:
“For hints about how to avoid the consumer backlash, the bank’s executives might have consulted a paper I wrote in 1986 with the psychologist Daniel Kahneman and the economist Jack Knetsch. The central question was this: What actions by companies do people consider “unfair”?
Our method was to ask randomly selected people some simple questions by telephone. Here is an example:
“A hardware store has been selling snow shovels for $15. The morning after a large snowstorm, the store raises the price to $20. Please rate this action as: completely fair, acceptable, unfair, [or] very unfair.” Some 82 percent of the participants called it either unfair or very unfair.
Such judgments are puzzling to economists, business executives and M.B.A. students. I have posed the same snow-shovel question to students in my course on managerial decision-making — and only 24 percent have said that raising the price is unfair.”