Can Communication Help People’s Social Feedbacks to Facilitate the Provision of Public Water Services? Evidence from a Behavioral Experiment

Abstract:

One of the critical challenges for public water sectors is to ensure adequate water service provision in the face of potential underinvestment to infrastructure. In the past decades, however, unreliable water supply systems and their socio-economic impacts have been widely reported all around the world. The relatively unstudied questions in this regard are what options people have to address these potential shortcomings and how communication among them facilitates the provision of public water service. Economist Albert Hirschman suggested that customers of a service or product have mainly two possible social feedbacks facing declining quality and a poorly performing service provider: exit and voice. The exit feedback causes a loss of revenue to providers, which incentivizes them to improve their service to prevent further user loss or win back users. The voice feedback, on the other hand, inflicts direct management costs on poorly performing providers including loss of reputation, time spent to respond to such complaints, etc. Alongside these social feedbacks, there is now overwhelming evidence that simply allowing cheap talk or communication among people can lead to significant improvements in the level of cooperation achieved in social dilemma situations. However, the relative effectiveness of communication among people while giving them other social feedback options (e.g., exit and voice) in such user-agency interactions remains largely unstudied. Thus, inspired by Hirschman’s work on these citizen responses to organizational shortcomings, we developed and conducted an interactive online, human-subject behavioral experiment to evaluate how communication among participants affects the effectiveness of exit, voice, and their combination on improvements in public water service by a single provider. We examined four experimental treatments alongside our baseline in which no feedback options were given to participants. These treatments included communication only, communication with exit feedback, communication with voice feedback, and communication with both feedbacks. The experimental results generated empirical understandings about what combination of communication and different kind of policy fixes are relatively more advantageous in terms of public water service improvement.