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Market-Based Solutions to Vital Economic Issues


Market-Based Solutions to Vital Economic Issues
Oct 27, 2016

Impact of Delay Announcements in Call Centers: An Empirical Approach


We undertake an empirical study of the impact of delay announcements on callers’ abandonment behavior and the performance of a call center with two priority classes. A Cox regression analysis reveals that in this call center, callers’ abandonment behavior is affected by the announcement messages heard. To account for this, we formulate a structural estimation model of callers’ (endogenous) abandonment decisions. In this model, callers are forward-looking utility maximizers and make their abandonment decisions by solving an optimal stopping problem. Each caller receives a reward from service and incurs a linear cost of waiting. The reward and per-period waiting cost constitute the structural parameters that we estimate from the data of callers’ abandonment decisions as well as the announcement messages heard. The call center performance is modeled by a Markovian approximation. The main methodological contribution is the definition of an equilibrium in steady state as one where callers’ expectation of their waiting time, which affects their (rational) abandonment behavior, matches their actual waiting time in the call center, as well as the characterization of such an equilibrium as the solution of a set of nonlinear equations. A counterfactual analysis shows that callers react to longer delay announcements by abandoning earlier, that less patient callers as characterized by their reward and cost parameters react more to delay announcements, and that congestion in the call center at the time of the call affects caller reactions to delay announcements.

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