Abstract
Financial overcompensation is considered an effective strategy for responding to service failures, but we currently have a limited understanding of why financial overcompensation effectively repairs consumer trust following e-commerce service failures. This research aims to capture the dynamic implicit processes through which financial overcompensation enhances consumer trust using event-related-potentials (ERPs). As expected, the behavioral results demonstrated that the participants tended to have higher trust ratings for e-commerce sellers who offered financial overcompensation than for sellers who offered equal compensation, suggesting that financial compensation size had an enhancing effect on trust-rebuilding decisions. The ERP results showed greater reward positivity (RewP) and stronger late-positive potential (LPP) responses in the overcompensation condition compared with the equal compensation condition. Together, these findings provide the novel insight that overcompensation is more effective in repairing damaged trust because of the implicit processes it activates in consumers, i.e., unexpected positive outcome processing and subsequently motivational emotional arousal. The findings advance a more nuanced understanding of the psychological processes underlying financial compensation for trust repair.
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The data that support the findings of this study are available from the corresponding author upon reasonable request.
Notes
According to a report on the consumer behavior of Chinese undergraduates issued by iiMedia Research (data. Iimedia. cn) in 2021, the commodity categories that undergraduates favor for online shop** include clothing, daily necessities, learning-related goods, and digital products. The average online consumption per visit of Chinese undergraduates is concentrated in the range of 100–200 yuan. To ensure that the products and prices were well matched, we searched for products priced between 100 and 200 yuan in each of the above categories on e-commerce platforms such as Taobao.com. We finally selected five representative products: hoodies, earphones, sports pants, shampoo sets, and books. These products cost approximately 140–200 yuan and they are suitable for both male and female undergraduates.
We investigated the current compensation policies for delayed delivery implemented by mainstream e-commerce platforms in China, including Taobao.com, JD.com, Pinduoduo.com, and Tmall.com. These have the largest e-commerce market share in China and the largest number of enrolled e-commerce sellers. Our investigation indicated that their compensation standard for sellers who fail to deliver goods within the promised time is 5% of the transaction amount of the order. For serious cases such as prolonged non-delivery or false delivery, the compensation standard is up to 30%. The 5% compensation standard is usually the general norm followed by all e-commerce sellers on the platform. In contrast, the 30% compensation standard applies to cases where a consumer complains about a seller’s severe delivery delay and the platform deems the complaint to be valid. To maintain consumer trust, e-commerce sellers commonly offer financial compensation before consumers complain to the platform. Our experimental scenario was consistent with this. Due to information asymmetry, e-commerce sellers usually have flexibility in determining the amount of compensation. They may compensate an amount equal to to the 5% compensation standard of the platform or make financial sacrifices and offer more than 5%. However, they usually do not compensate in excess of the 30% standard set by the platform for severe delivery delays, to avoid the perception that they are deceptive and/or have bad intentions.
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This work was supported by the [National Natural Science Foundation of China] under Grant [number 72271196]; [National Natural Science Foundation of China] under Grant [number 71671137].
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Wang, Q., Han, P., Hao, S. et al. Effect of financial overcompensation on consumer trust after e-commerce service failures: evidence from event-related potentials. Curr Psychol 43, 15621–15632 (2024). https://doi.org/10.1007/s12144-023-05500-5
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DOI: https://doi.org/10.1007/s12144-023-05500-5