nep-neu New Economics Papers
on Neuroeconomics
Issue of 2019‒10‒28
three papers chosen by
Daniel Houser
George Mason University

  1. WHEN SERVICE RECOVERY GOES WRONG ? THE HARMFUL EFFECT ON TRUST By Edwin Theron
  2. Cognitive and Non-Cognitive Abilities of Immigrants: New Perspectives on Migrant Quality from a Selective Immigration Country By Naghsh Nejad, Maryam; Schurer, Stefanie
  3. Incidental Emotions, Integral Emotions, and Decisions to Pay Taxes By Janina Enachescu; Žiga Puklavec; Christian Martin Bauer; Jerome Olsen; Erich Kirchler; James Alm

  1. By: Edwin Theron (Department of Business Management, Stellenbosch University)
    Abstract: Given the unique characteristics of the service act, service failure occurs frequently. Once a service failure occurs, it is important to rectify this mistake, because customer satisfaction is often negatively affected by these failures. Ultimately, a service failure might result in a customer defecting to an alternative competitive service provider. Therefore, service providers generally seize the opportunity to recover from service failures. However, not all service providers are capable of recovering appropriately, which results in a situation where the recovery is a failure as well. This twofold service failure is referred to as a ?double deviation? in the literature.This paper investigates the influence of a double deviation on a customer?s trust towards a service provider. The research question becomes particularly interesting when considering the fact that trust has proved to be one of the most important dimensions of a successful long-term customer relationship. The focus of the study was the airline industry, and respondents? trust was measured on two levels: firstly, after an initial service failure, and secondly, after a failed service recovery. The study made use of a 2x2 within subjects experiment using a non-interactive self-administered questionnaire.The data were analysed by means of one-way Anova tests, which found significant differences in trust, based on the two levels of service failure. The two types of trust, namely affective and cognitive trust, both eroded from the first service failure to the failed service recovery. The levels of cognitive trust decreased more than those of affective trust, which indicates that service recoveries should first and foremost concentrate on restoring cognitive trust. These findings support the existing literature that customers tend to suppress their emotions to safe guard their relationship with a service provider. This finding also reiterates the importance of maintaining long-term relationships with customers. On a practical level, service providers are strongly advised to invest in the training of frontline employees, as these employees are in the best position to deal with service failures.
    Keywords: Double deviation; cognitive trust; affective trust
    JEL: M31
    Date: 2019–10
    URL: http://d.repec.org/n?u=RePEc:sek:ibmpro:9411116&r=all
  2. By: Naghsh Nejad, Maryam (University of Technology, Sydney); Schurer, Stefanie (University of Sydney)
    Abstract: Economic theory suggests that selective immigration policies based on observable characteristics will affect unobservable migrant quality. Little empirical evidence exists on this hypothesis. We quantify traditionally unobservable components of migrant quality in Australia, a high-migrant share OECD country with a selective immigration policy. We proxy migrant quality with widely-accepted measures of personality and cognitive ability. Both first- and second-generation immigrants outperform natives on socially-beneficial personality traits. While first-generation migrants suffer language-ability penalties, their off-spring overcome these penalties and outperform natives in cognitive ability. Immigrants do not outperform natives in the labor market, a finding which may be explained by heterogeneous wage returns to non-cognitive ability.
    Keywords: economics of immigration, migrant quality, selection on unobservables, non-cognitive ability, cognitive ability
    JEL: F22 J61 J24 J31 J62 O15
    Date: 2019–10
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp12700&r=all
  3. By: Janina Enachescu (University of Vienna); Žiga Puklavec (University of Vienna); Christian Martin Bauer (University of Vienna); Jerome Olsen (University of Vienna); Erich Kirchler (University of Vienna); James Alm (Tulane University)
    Abstract: In this paper we present initial investigations of the role of emotions on tax compliance decisions. We first introduce selected emotion theories, and we also present different paths by which emotions can possibly affect tax decisions, namely indirectly via mood and emotions unrelated to the tax decision itself (or "incidental emotions") and directly via emotions that are elicited in the taxation context itself (or "integral emotions"). We then present and discuss an experimental study investigating the first path suggested above, the influence of positive versus negative mood on tax compliance. Further, we also present and analyze a study exploring emotions elicited by the taxation context. Finally, we suggest that a fruitful path for future research is the integration of emotions into the slippery slope framework of tax compliance.
    Keywords: Tax compliance, incidental emotions, integral emotions, behavioal economics, nudges, laboratory experiments.
    JEL: H26 C91
    Date: 2019–10
    URL: http://d.repec.org/n?u=RePEc:tul:wpaper:1909&r=all

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