Joseph T. Reiff, Hengchen Dai, J. Beshears, Katherine L. Milkman, S. Benartzi
To encourage farsighted behaviors, past research suggests marketers may be wise to invite consumers to pre-commit to adopt them “later”. However, across a large, multi-site field experiment of retirement savings decisions and three pre-registered laboratory studies (N=10,255), we find no consistent benefit from simultaneously offering consumers the opportunity to adopt farsighted behaviors now or later. Contrary to predictions of experts we surveyed, what we call “simultaneous pre-commitment” does not always increase farsighted behavior over simply offering consumers the option to adopt farsighted behaviors now and can even be harmful (e.g., reducing savings). We theorize that two opposing mechanisms account for this result. First, simultaneous pre-commitment leverages present bias and decreases the anticipated costs of adopting farsighted behaviors, thus increasing adoption. However, simultaneous pre-commitment also leads people to infer that taking action is not urgently recommended, which decreases adoption of farsighted behaviors (particularly immediate adoption). We also find that the design of pre-commitment moderates this effect: offering pre- commitment after someone declines to adopt a farsighted behavior now actually increases inferred urgency, boosting adoption.
{"title":"Save More Today or Tomorrow: The Role of Urgency and Present Bias in Nudging Pre-commitment","authors":"Joseph T. Reiff, Hengchen Dai, J. Beshears, Katherine L. Milkman, S. Benartzi","doi":"10.2139/ssrn.3625338","DOIUrl":"https://doi.org/10.2139/ssrn.3625338","url":null,"abstract":"To encourage farsighted behaviors, past research suggests marketers may be wise to invite consumers to pre-commit to adopt them “later”. However, across a large, multi-site field experiment of retirement savings decisions and three pre-registered laboratory studies (N=10,255), we find no consistent benefit from simultaneously offering consumers the opportunity to adopt farsighted behaviors now or later. Contrary to predictions of experts we surveyed, what we call “simultaneous pre-commitment” does not always increase farsighted behavior over simply offering consumers the option to adopt farsighted behaviors now and can even be harmful (e.g., reducing savings). We theorize that two opposing mechanisms account for this result. First, simultaneous pre-commitment leverages present bias and decreases the anticipated costs of adopting farsighted behaviors, thus increasing adoption. However, simultaneous pre-commitment also leads people to infer that taking action is not urgently recommended, which decreases adoption of farsighted behaviors (particularly immediate adoption). We also find that the design of pre-commitment moderates this effect: offering pre- commitment after someone declines to adopt a farsighted behavior now actually increases inferred urgency, boosting adoption.","PeriodicalId":18629,"journal":{"name":"MKTG: Economic Psychology & Economic Analysis of Consumer Behavior (Topic)","volume":"13 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-06-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82170191","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Consumers are often uncertain about their valuations for product quality when choosing among different products and will learn their valuations only after buying and using a product. Some consumers may thus experience over-purchase or under-purchase regret, depending on whether they have purchased a higher or lower quality level than what they would have chosen had they known their true valuations. When consumers anticipate their potential post-purchase regret, their purchase decisions may be affected. Our analysis shows that over-purchase regret lowers the firm’s profit, but under-purchase regret can benefit the firm if consumers’ over-purchase regret is not strong. When the firm optimally designs its product line, the quality difference between its offerings will be larger (smaller) if consumers’ anticipated regret increases (reduces) its profit. Surprisingly, although anticipated regret tends to reduce consumers’ utility, in equilibrium, the presence of anticipated regret can increase consumers’ expected surplus. We further examine when the firm should allow consumers to return their products by paying a restocking fee, and how the optimal restocking fee will change with consumers’ propensities for the two types of regret. We also experimentally show that consumers’ propensities of under-purchase and over-purchase regret are different and can be influenced by the firm’s messages.
{"title":"Product-Line Design in the Presence of Consumers’ Anticipated Regret","authors":"Tianxin Zou, Bo Zhou, Baojun Jiang","doi":"10.2139/ssrn.3427823","DOIUrl":"https://doi.org/10.2139/ssrn.3427823","url":null,"abstract":"Consumers are often uncertain about their valuations for product quality when choosing among different products and will learn their valuations only after buying and using a product. Some consumers may thus experience over-purchase or under-purchase regret, depending on whether they have purchased a higher or lower quality level than what they would have chosen had they known their true valuations. When consumers anticipate their potential post-purchase regret, their purchase decisions may be affected. Our analysis shows that over-purchase regret lowers the firm’s profit, but under-purchase regret can benefit the firm if consumers’ over-purchase regret is not strong. When the firm optimally designs its product line, the quality difference between its offerings will be larger (smaller) if consumers’ anticipated regret increases (reduces) its profit. Surprisingly, although anticipated regret tends to reduce consumers’ utility, in equilibrium, the presence of anticipated regret can increase consumers’ expected surplus. We further examine when the firm should allow consumers to return their products by paying a restocking fee, and how the optimal restocking fee will change with consumers’ propensities for the two types of regret. We also experimentally show that consumers’ propensities of under-purchase and over-purchase regret are different and can be influenced by the firm’s messages.","PeriodicalId":18629,"journal":{"name":"MKTG: Economic Psychology & Economic Analysis of Consumer Behavior (Topic)","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-08-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81589389","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The current research demonstrates that temporally separating a consumer’s initial decision to perform a guilt-inducing action from its actual enactment reduces the guilt felt while acting. This hypothesis follows from the development of a dynamic model that unpacks guilt into two distinct components. Initially, one experiences decision guilt accompanying the decision to act or the realization that one will act; subsequently, one experiences action guilt while engaging in the guilt-inducing behavior. Four experiments and two pilot studies reveal that introducing a temporal “decision-enactment gap” enables decision guilt to decay in this interim period, which lowers the overall guilt experienced upon acting. In line with the self-regulative function of guilt, decision-enactment gaps also increase indulgent consumption and decrease post-behavior atonement. This decoupling process can thus alleviate guilt that might otherwise detract from experiences, but may come at a cost to self-control efforts. The authors discuss the theoretical and practical implications of these findings.
{"title":"Guilt Dynamics: Consequences of Temporally Separating Decisions and Actions","authors":"Kristen E. Duke, On Amir","doi":"10.2139/ssrn.3032674","DOIUrl":"https://doi.org/10.2139/ssrn.3032674","url":null,"abstract":"The current research demonstrates that temporally separating a consumer’s initial decision to perform a guilt-inducing action from its actual enactment reduces the guilt felt while acting. This hypothesis follows from the development of a dynamic model that unpacks guilt into two distinct components. Initially, one experiences decision guilt accompanying the decision to act or the realization that one will act; subsequently, one experiences action guilt while engaging in the guilt-inducing behavior. Four experiments and two pilot studies reveal that introducing a temporal “decision-enactment gap” enables decision guilt to decay in this interim period, which lowers the overall guilt experienced upon acting. In line with the self-regulative function of guilt, decision-enactment gaps also increase indulgent consumption and decrease post-behavior atonement. This decoupling process can thus alleviate guilt that might otherwise detract from experiences, but may come at a cost to self-control efforts. The authors discuss the theoretical and practical implications of these findings.","PeriodicalId":18629,"journal":{"name":"MKTG: Economic Psychology & Economic Analysis of Consumer Behavior (Topic)","volume":"43 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2017-09-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81071787","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Consumers with limited discretionary money face important trade-offs when deciding how to spend it. In the current research, we suggest that feelings of financial constraint increase consumers’ concern about the lasting utility of their purchases, which in turn increases their preference for material goods over experiences. The results of seven studies confirm that the consideration of financial constraints shifts consumers’ preferences toward material goods (rather than experiences), and that this systematic shift is due to an increased concern about the longevity of the purchase. This preference shift persists even when the material goods are more frivolous than the experiences, indicating that the effect is not driven by an increased desire for sensible and justifiable purchases. However, the shift toward material purchases disappears when the material good is unusually short lived, further implicating concern about longevity as the key driver of the effect. Finally, the consideration of financial constraints increases preference for material purchases even when the potential memories that experiences can provide are made explicitly salient. Together, these results indicate that financially constrained consumers spend their discretionary money on material purchases as a means of securing long-term consumption utility.
{"title":"Seeking Lasting Enjoyment with Limited Money: Financial Constraints Increase Preference for Material Goods over Experiences","authors":"Stephanie M. Tully, Hal E. Hershfield, T. Meyvis","doi":"10.2139/ssrn.2311322","DOIUrl":"https://doi.org/10.2139/ssrn.2311322","url":null,"abstract":"Consumers with limited discretionary money face important trade-offs when deciding how to spend it. In the current research, we suggest that feelings of financial constraint increase consumers’ concern about the lasting utility of their purchases, which in turn increases their preference for material goods over experiences. The results of seven studies confirm that the consideration of financial constraints shifts consumers’ preferences toward material goods (rather than experiences), and that this systematic shift is due to an increased concern about the longevity of the purchase. This preference shift persists even when the material goods are more frivolous than the experiences, indicating that the effect is not driven by an increased desire for sensible and justifiable purchases. However, the shift toward material purchases disappears when the material good is unusually short lived, further implicating concern about longevity as the key driver of the effect. Finally, the consideration of financial constraints increases preference for material purchases even when the potential memories that experiences can provide are made explicitly salient. Together, these results indicate that financially constrained consumers spend their discretionary money on material purchases as a means of securing long-term consumption utility.","PeriodicalId":18629,"journal":{"name":"MKTG: Economic Psychology & Economic Analysis of Consumer Behavior (Topic)","volume":"15 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83368709","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Romantic desire often stimulates conspicuous consumption, but we find that people who chronically save are viewed as more attractive than people who chronically spend. We first demonstrate, in a face-to-face, incentive-compatible study, that people can accurately distinguish between savers and spenders by glancing at them (without communication). Then, in several experiments, we find that savers are viewed as possessing greater general self-control than spenders, and perceived self-control increases savers’ romantic appeal. Potential alternative sources of savers’ appeal (financial viability, reduced materialism) are ruled out. In addition, savers are expected to take better care of themselves, and this expectation favorably biases perceptions of savers’ physical attractiveness. However, because self-control favors prudence over fun, dispositional and situational factors that increase the need for stimulation reduce the allure of savers. Our work elucidates how a fundamental consumption behavior (one’s tendency to spend or save) is perceived and is influential in romantic relationship formation.
{"title":"A Penny Saved Is a Partner Earned: The Romantic Appeal of Savers","authors":"J. Olson, Scott I. Rick","doi":"10.2139/ssrn.2281344","DOIUrl":"https://doi.org/10.2139/ssrn.2281344","url":null,"abstract":"Romantic desire often stimulates conspicuous consumption, but we find that people who chronically save are viewed as more attractive than people who chronically spend. We first demonstrate, in a face-to-face, incentive-compatible study, that people can accurately distinguish between savers and spenders by glancing at them (without communication). Then, in several experiments, we find that savers are viewed as possessing greater general self-control than spenders, and perceived self-control increases savers’ romantic appeal. Potential alternative sources of savers’ appeal (financial viability, reduced materialism) are ruled out. In addition, savers are expected to take better care of themselves, and this expectation favorably biases perceptions of savers’ physical attractiveness. However, because self-control favors prudence over fun, dispositional and situational factors that increase the need for stimulation reduce the allure of savers. Our work elucidates how a fundamental consumption behavior (one’s tendency to spend or save) is perceived and is influential in romantic relationship formation.","PeriodicalId":18629,"journal":{"name":"MKTG: Economic Psychology & Economic Analysis of Consumer Behavior (Topic)","volume":"38 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2014-06-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75398297","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Consumers often face decisions that involve choosing among assortments comprised of multiple options. In this article, we examine how assortment size influences consumer choice among assortments and, in particular, how assortment attractiveness moderates this process. In particular, we propose that the preference for larger assortments is likely to decrease as the overall attractiveness of both assortments increases. This prediction is supported by the data from four experiments offer converging evidence in support of the theoretical predictions.
{"title":"Too Much of a Good Thing? Option Attractiveness and Assortment Choice","authors":"A. Chernev, Ryan Hamilton","doi":"10.2139/ssrn.893053","DOIUrl":"https://doi.org/10.2139/ssrn.893053","url":null,"abstract":"Consumers often face decisions that involve choosing among assortments comprised of multiple options. In this article, we examine how assortment size influences consumer choice among assortments and, in particular, how assortment attractiveness moderates this process. In particular, we propose that the preference for larger assortments is likely to decrease as the overall attractiveness of both assortments increases. This prediction is supported by the data from four experiments offer converging evidence in support of the theoretical predictions.","PeriodicalId":18629,"journal":{"name":"MKTG: Economic Psychology & Economic Analysis of Consumer Behavior (Topic)","volume":"37 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2006-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84723743","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates how friendship relationships act as pipes, prisms, and herding signals in a large online Peer-to-Peer (P2P) lending site. By analyzing decisions of lenders, we find that friends of the borrower, especially close offline friends, act as financial “pipes” by lending money to the borrower. On the other hand, the “prism” effect of friends’ endorsements via bidding on a loan negatively affects subsequent bids by third parties. However, when offline friends of a potential lender, especially close friends, place a bid, a “relational herding” effect occurs as potential lenders are likely to follow their offline friends with a bid.
{"title":"Friendships in Online Peer-to-Peer Lending: Pipes, Prisms, and Relational Herding","authors":"De Liu, Daniel J. Brass, Yong Lu, Dongyu Chen","doi":"10.2139/ssrn.2251155","DOIUrl":"https://doi.org/10.2139/ssrn.2251155","url":null,"abstract":"This paper investigates how friendship relationships act as pipes, prisms, and herding signals in a large online Peer-to-Peer (P2P) lending site. By analyzing decisions of lenders, we find that friends of the borrower, especially close offline friends, act as financial “pipes” by lending money to the borrower. On the other hand, the “prism” effect of friends’ endorsements via bidding on a loan negatively affects subsequent bids by third parties. However, when offline friends of a potential lender, especially close friends, place a bid, a “relational herding” effect occurs as potential lenders are likely to follow their offline friends with a bid.","PeriodicalId":18629,"journal":{"name":"MKTG: Economic Psychology & Economic Analysis of Consumer Behavior (Topic)","volume":"10 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82204107","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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