Understanding customer reactions to brokered ultimatums: Applying negotiation and justice theory

There has been little research examining customer reactions to brokered ultimatum game (BUG) contexts (i.e., exchanges in which 1 party offers an ultimatum price for a resource through an intermediary, and the ultimatum offer is accepted or rejected by the other party). In this study, the authors incorporated rational decision-making theory and justice theory to examine how customers' bids, recommendations, and repatronage behavior are affected by characteristics of BUG contexts (changing from an ultimatum to negotiation transaction, response timeliness, and offer acceptance or rejection). Results indicated that customers attempt to be economically efficient with their bidding behavior. However, negotiation structures, long waits for a response, and rejected bids create injustice perceptions (particularly informational and distributive injustice), negatively influencing customers' recommendations to others and their repatronage. The authors then discuss the practical and theoretical implications of their results.