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This article investigates the role of contextual cues in the evaluation of a service failure. Empirical data demonstrates that although discrimination is a factor in the evaluation of a service failure for black (vs. white) customers, contextual cues also play a role in the evaluation of the encounter. When a black customer experiences a service failure, the failure will be evaluated more severely when no other black customers are present. In addition, the context of the event differentially affects the negative emotions generated by the service failure and results in racially driven differences in the amount of remuneration perceived as necessary to successfully recover from the failure. The implication is that when serving customers, the race of both the customer and other customers can provide service providers with information relative to the appropriate service recovery effort to implement.

Consumers often rely heavily on price as a predictor of quality and typically overestimate the strength of this relation. Furthermore, the inferences of quality they make on the basis of price can influence their actual purchase decisions. Selective hypothesis testing appears to underlie the effects of information load and format on price–quality inferences. Results of 5 experiments converge on the conclusion that quality inferences are more heavily influenced by price when individuals have a high need for cognitive closure, when the amount of information presented is high (vs. low), and when the information presented is rank ordered in terms of quality rather than presented randomly. Furthermore, because consumers are willing to purchase more expensive brands when they perceive a high price–quality correlation, these variables can also influence their purchase decisions.

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