THE EFFECT OF SERVICE QUALITY AND EXPECTATIONS ON CUSTOMER COMPLAINTS^*

Abstract

Customer complaints measure consumers' dissatisfaction with the quality of a product or service. If product quality is unobservable ex ante , customer complaints may be driven by expectations as well as by the actually experienced quality level. I test whether the level of quality that could be expected prior to consumption affects the number of customer complaints after controlling for– ex post observable–actual quality, using data from the U.S. airline industry. I find that there are fewer complaints when actual quality is higher. Controlling for actual quality, a higher level of expected quality leads to more complaints.