Regulatory inquiries and Royal Commissions continue to identify poor practices by firms delivering essential and complex services, resulting in consumer detriment. Yet in many of these markets there is little information available to consumers to enable them to differentiate companies by the quality of their service, reflecting a key information asymmetry. Where consumers cannot pick ‘lemons’ from ‘peaches’, firms do not face competitive pressure to improve their service offering.
This report provides a summary of the findings from a collaborative research project between RMIT’s BehaviouralBusiness Lab and the Consumer Policy Research Centre. This research has produced unique empirical data about the value of service quality and how it affects consumer choice in the context of the Victorian retail energy market.
This project adopted a multi-stage, iterative and self-validating approach to first develop a prototype measure of service quality, and then to test whether service quality information affects consumer choice in an experimental setting and if so, how it affects choices.