Moral Hazard and Customer Loyalty Programs

• 成果类型: Article
• 署名作者: Basso, Leonardo J.; Clements, Matthew T.; Ross, Thomas W.
• 署名单位: Universidad de Chile; Saint Edward's University; University of British Columbia
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.1.1.101
• 发表日期: 2009
• 页码: 101-123
• 关键词: frequent-flyer programs; switching costs; flier programs; reward programs; airline choice; procurement; CORRUPTION; demand

摘要

Frequent flier plans (FFPs) may be the most famous of customer loyalty programs, and there are similar schemes in other industries. We present a theory that models FFPs as efforts to exploit the agency relations up between employers (who pay for tickets) and employees (who book travel). FFPs bribe employees to book flights at higher prices. While a single airline offering an FFP has an advantage, competing FFPs can result in lower profits for airlines even while ticket prices rise. Thus, in contrast to switching-cost treatments of FFPs, we may observe prices and profits moving in opposite directions. (JEL D82, L93, M31)