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Market-Based Solutions to Vital Economic Issues
Research
Aug 19, 2013

Structural Estimation of Callers’ Delay Sensitivity in Call Centers

Abstract

We model callers’ decision making process in call centers as an optimal stopping problem. After each period of waiting, a caller decides whether to abandon or to continue to wait. The utility of a caller is modeled as a function of her waiting cost and reward for service. We use a random-coe model to capture the heterogeneity of the callers and estimate the cost and reward parameters of the callers using the data of individual calls made to an Israeli call center. We also conduct a series of counterfactual analyses that explore the e↵ects of changes in service discipline on resulting waiting times and abandonment rates. Our analysis reveals that modeling endogenous caller behavior can be important when major changes (such as a change in service discipline) are performed, and that using a model with an exogenously specified abandonment distribution may be misleading.

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