Findings

Consumer confidence

Kevin Lewis

August 11, 2012

Energized by Television: Familiar Fictional Worlds Restore Self-Control

Jaye Derrick
Social Psychological and Personality Science, forthcoming

Abstract:
Enacting effortful self-control depletes a finite resource, leaving less self-control available for subsequent effortful tasks. Positive social interaction can restore self-control, but hurtful or effortful social interaction depletes self-control. Given this conflict, people might seek an alternative to social interaction to restore self-control. The current research examines social surrogate restoration - the possibility that people seek a social surrogate when depleted, and that seeking social surrogacy restores self-control. One experiment (Study 1) and one daily diary (Study 2) demonstrate that people seek familiar fictional worlds (e.g., a favorite television program) after exerting effortful self-control. Moreover, immersion in this familiar fictional world restores self-control. Supplementary analyses suggest that it is the social nature of this familiar fictional world that contributes to restoration.

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Nonprobative photographs (or words) inflate truthiness

Eryn Newman et al.
Psychonomic Bulletin & Review, forthcoming

Abstract:
When people evaluate claims, they often rely on what comedian Stephen Colbert calls "truthiness," or subjective feelings of truth. In four experiments, we examined the impact of nonprobative information on truthiness. In Experiments 1A and 1B, people saw familiar and unfamiliar celebrity names and, for each, quickly responded "true" or "false" to the (between-subjects) claim "This famous person is alive" or "This famous person is dead." Within subjects, some of the names appeared with a photo of the celebrity engaged in his or her profession, whereas other names appeared alone. For unfamiliar celebrity names, photos increased the likelihood that the subjects would judge the claim to be true. Moreover, the same photos inflated the subjective truth of both the "alive" and "dead" claims, suggesting that photos did not produce an "alive bias" but rather a "truth bias." Experiment 2 showed that photos and verbal information similarly inflated truthiness, suggesting that the effect is not peculiar to photographs per se. Experiment 3 demonstrated that nonprobative photos can also enhance the truthiness of general knowledge claims (e.g., Giraffes are the only mammals that cannot jump). These effects add to a growing literature on how nonprobative information can inflate subjective feelings of truth.

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Projection Bias in the Car and Housing Markets

Meghan Busse et al.
NBER Working Paper, July 2012

Abstract:
Projection bias is the tendency to overpredict the degree to which one's future tastes will resemble one's current tastes. We test for evidence of projection bias in two of the largest and most important consumer markets - the car and housing markets. Using data for more than forty million vehicle transactions and four million housing purchases, we explore the impact of the weather on purchasing decisions. We find that the choice to purchase a convertible, a 4-wheel drive, or a vehicle that is black in color is highly dependent on the weather at the time of purchase in a way that is inconsistent with classical utility theory. Similarly, we find that the hedonic value that a swimming pool and that central air add to a house is higher when the house goes under contract in the summertime compared to the wintertime.

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The Effect of Red Background Color on Willingness-to-Pay: The Moderating Role of Selling Mechanism

Rajesh Bagchi & Amar Cheema
Journal of Consumer Research, forthcoming

Abstract:
The authors investigate the effect of red backgrounds on willingness-to-pay in auctions and negotiations. Data from eBay auctions and the lab show that a red (vs. blue) background elicits higher bid jumps. By contrast, red (vs. blue) backgrounds decrease price offers in negotiations. An investigation of the underlying process reveals that red color induces aggression through arousal. In addition, the selling mechanism - auction or negotiation - alters the effect of color by focusing individuals on primarily competing against other bidders (in auctions) or against the seller (in negotiations). Specifically, aggression is higher with red (vs. blue or gray) color and, therefore, increases bid jumps in auctions but decreases offers in negotiations.

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Social-evaluative influences moderate the relationship between price and perceived quality

Kenneth Herbst, Mark Leary & Collin McColskey-Leary
Social Influence, forthcoming

Abstract:
People often perceive products that cost more as having higher quality. Two experiments tested the hypothesis that the effect of price on perceived quality is attenuated when people believe that their judgments of product quality will be shared with other people. Shoppers rated wines that they thought sold for a low or high price, believing that they might have to explain their ratings or that their ratings were private. The prospect of making public ratings eliminated the tendency to rate higher-price wines more positively, but this effect occurred only when participants were told that their judgments would be public before tasting the wines. The findings show that social-evaluative concerns moderate the effects of price on perceived quality.

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Work Values, Early Career Difficulties, and the U.S. Economic Recession

Monica Kirkpatrick Johnson, Rayna Amber Sage & Jeylan Mortimer
Social Psychology Quarterly, forthcoming

Abstract:
We examine how work difficulties in the early career and the generally deteriorating work conditions associated with the recent U.S. economic recession shape individuals' work values. Drawing on panel data from the Youth Development Study, we test whether individuals change their work values in response to concerns about satisfying material needs or the features of jobs that they are able to attain. Results indicate that extrinsic values are weakened in the face of unemployment, as well as reduced job security, income, and advancement. These patterns support a reinforcement and accentuation model in which workers adjust their values to emphasize what they actually obtain from the job. Intrinsic values are weakened by working in a job unrelated to one's career plans; they are reinforced by the experience of greater intrinsic rewards and advancement opportunities.

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Slow Down! Insensitivity to Rate of Consumption Leads to Avoidable Satiation

Jeff Galak, Justin Kruger & George Loewenstein
Journal of Consumer Research, forthcoming

Abstract:
Consumers often choose how quickly to consume things they enjoy. The research presented here demonstrates that they tend to consume too rapidly, growing tired of initially well-liked stimuli such as a favorite snack (experiments 1 and 4) or an enjoyable video game (experiments 2 and 3) more quickly than they would if they slowed consumption. The results also demonstrate that such overly rapid consumption results from a failure to appreciate that longer breaks between consumption episodes slow satiation. The results present a paradox: Participants who choose their own rate of consumption experience less pleasure than those who have a slower rate of consumption chosen for them.

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Pricing Misperceptions: Explaining Pricing Structure in the Cell Phone Service Market

Oren Bar-Gill & Rebecca Stone
Journal of Empirical Legal Studies, September 2012, Pages 430-456

Abstract:
The cell phone service market is an economically significant market that has substantially increased consumer welfare. In this article, we focus on the pricing of cell phone service. The common pricing structure is a three-part tariff comprising: (1) a monthly charge; (2) a fixed number of minutes that the monthly charge pays for; and (3) a per-minute price for minutes beyond the plan limit. Using a unique data set of consumer-level monthly billing and usage information for 3,730 consumers at a single wireless provider, we evaluate the explanatory power of three accounts of the three-part tariff: a rational choice account; a behavioral account proposed by Grubb (2009) that supposes that consumers are overconfident in their estimates of their future usage; and a second behavioral account that posits that some consumers overestimate their average future usage while others underestimate it. We quantify the mistakes that consumers make in plan choice and, extrapolating from our data, estimate that these mistakes cost U.S. consumers over $13 billion annually. Our analysis suggests that regulation mandating the disclosure of product use information can be socially desirable in the cell phone service market.

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Locomoting Toward Well-Being or Getting Entangled in a Material World: Regulatory Modes and Affective Well-Being

Mauro Giacomantonio, Lucia Mannetti & Antonio Pierro
Journal of Economic Psychology, forthcoming

Abstract:
Two studies were conducted to examine the impact of two basic self-regulatory orientations - locomotion and assessment (Higgins, Kruglanski, & Pierro, 2003) - on materialistic values. We hypothesized that, because assessment is associated with great concern over self-evaluation - particularly as it applies to social comparison and extrinsic motivation - it should promote materialistic concerns which in turn should decrease affective well-being. In contrast, owing to high levels of task involvement and intrinsic motivation, locomotion is expected to be negatively associated with materialism and well-being. In Study 1, we found that individuals in an assessment mode as opposed to a locomotion mode were more likely to rate materialistic choices as more normative. In Study 2, we found that materialism and negative motives for earning money mediate the relationship between regulatory orientations and well-being. Implications and avenues for future research are discussed.

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Building trust to increase purchase intentions: The signaling impact of low pricing policies

Tiffany Barnett White & Hong Yuan
Journal of Consumer Psychology, July 2012, Pages 384-394

Abstract:
We examine the differential signaling impact of two low pricing policies, Price Matching Guarantees and Everyday Low Prices, on consumers' trusting beliefs and purchase intentions. We demonstrate that both PMG and EDLP pricing policies signal stores' ability to offer lower prices. However, whether these sellers were perceived as benevolent, and - consequently - consumers' purchase intentions, varied critically depending upon price uncertainty. Perceived benevolence and purchase intentions were significantly higher [lower] for sellers offering PMG than EDLP when price dispersion was high [low]. Our findings offer insights into whether and under what conditions firms should adopt these low pricing policies.

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Buying Life Experiences for the "Right" Reasons: A Validation of the Motivations for Experiential Buying Scale

Jia Wei Zhang, Ryan Howell & Peter Caprariello
Journal of Happiness Studies, forthcoming

Abstract:
Although numerous studies have demonstrated the hedonic benefits of spending money on life experiences instead of material possessions, there has been no attempt to determine how different motivations for experiential consumption relate to psychological need satisfaction and well-being. Across five studies (N = 931), guided by self-determination theory, we developed a reliable and valid measure of motivation for experiential consumption - the Motivation for Experiential Buying Scale - to test these relations. Those who spend money on life experience for autonomous reasons (e.g., "because they are an integral part of my life") report more autonomy, competence, relatedness, flourishing, and vitality; however, those who spend money on life experiences for controlled (e.g., "for the recognition I'll get from others") or amotivated reasons (e.g., "I don't really know") reported less autonomy, competence, and relatedness. These results demonstrated that the benefits of experiential consumption depend on why one buys life experiences.

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Explaining the Endowment Effect through Ownership: The Role of Identity, Gender, and Self-Threat

Sara Loughran Dommer & Vanitha Swaminathan
Journal of Consumer Research, forthcoming

Abstract:
The price people are willing to pay for a good is often less than the price they are willing to accept to give up the same good, a phenomenon called the endowment effect. Loss aversion has typically accounted for the endowment effect, but an alternative explanation suggests that ownership creates an association between the item and the self, and this possession-self link increases the value of the good. To test the ownership account, this research examines three moderators that theory suggests should affect the possession-self link and consequently the endowment effect: self-threat, identity associations of a good, and gender. After a social self-threat, the endowment effect is strengthened for in-group goods among both men and women but is eliminated for out-group goods among men (but not women). These results are consistent with a possession-self link explanation and therefore suggest that ownership offers a better explanation for the endowment effect.

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Possession is not always the law: With age, preschoolers increasingly use verbal information to identify who owns what

Peter Blake, Patricia Ganea & Paul Harris
Journal of Experimental Child Psychology, forthcoming

Abstract:
Children can identify owners either by seeing a person in possession of an object (a visual cue) and inferring that they are the owner or by hearing testimony about a claim of ownership (a verbal cue). A total of 391 children between 2.5 and 6 years of age were tested in three experiments assessing how children identify owners when these two cues are in conflict. Children were presented with stories using two dolls and a toy. One doll possessed the toy, and children were told that the toy was either the possessor's or the nonpossessor's. Two forms of ownership statement were used: a third-person statement, "That is Billy's ball", and a first-person statement by one of the dolls, "That is my ball". The results show that by 4 years of age, children prioritize the verbal statements as a more reliable cue to ownership than physical possession. Younger children did not prioritize possession over the verbal cue to ownership but rather gave mixed responses. These results are discussed in terms of children's social experience outside of the home and their acceptance of testimony in other domains.

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The Nonobvious Basis of Ownership: Preschool Children Trace the History and Value of Owned Objects

Susan Gelman, Erika Manczak & Nicholaus Noles
Child Development, forthcoming

Abstract:
For adults, ownership is nonobvious: (a) determining ownership depends more on an object's history than on perceptual cues, and (b) ownership confers special value on an object ("endowment effect"). This study examined these concepts in preschoolers (2.0-4.4) and adults (n = 112). Participants saw toy sets in which 1 toy was designated as the participant's and 1 as the researcher's. Toys were then scrambled and participants were asked to identify their toy and the researcher's toy. By 3 years of age, participants used object history to determine ownership and identified even undesirable toys as their own. Furthermore, participants at all ages showed an endowment effect (greater liking of items designated as their own). Thus, even 2-year-olds appreciate the nonobvious basis of ownership.

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Shining in the Center: Central Gaze Cascade Effect on Product Choice

Selin Atalay, Onur Bodur & Dina Rasolofoarison
Journal of Consumer Research, forthcoming

Abstract:
Consumers' tendency to choose the option in the center of an array and the process underlying this effect is explored. Findings from two eye-tracking studies suggest that brands in the horizontal center receive more visual attention. They are more likely to be chosen. Investigation of the attention process revealed an initial central fixation bias, a tendency to look first at the central option, and a central gaze cascade effect, progressively increasing attention focused on the central option right prior to decision. Only the central gaze cascade effect was related to choice. An offline study with tangible products demonstrated that the centrally located item within a product category is chosen more often, even when it is not placed in the center of the visual field. Despite widespread use, memory-based attention measures were not correlated with eye-tracking measures. They did not capture visual attention and were not related to choice.

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Consumerism and well-being in early adolescence

Helen Sweeting, Kate Hunt & Abita Bhaskar
Journal of Youth Studies, Summer 2012, Pages 802-820

Abstract:
It has been suggested that consumerism is negatively related to well-being in children and adolescents, as well as adults. Few studies have explored whether certain aspects of consumerism have stronger associations with well-being than others, or between-group differences in associations. This article uses data from a sample of early adolescents to examine: levels of consumerism; relationships between different aspects of consumerism and well-being; and differences according to gender, school year group and family affluence. Data were obtained in 2010 via secondary school pupil surveys (N=2934). Consumerism measures comprised number of 'standard' and 'premium' possessions and four dimensions of consumer involvement; well-being measures comprised self-esteem, psychological distress and anger. There was evidence of high penetration of consumerist values. There were positive associations between number of possessions and anger, and between 'dissatisfaction' and poorer well-being, regardless of how measured. 'Brand awareness' was associated with positive male well-being, but negative female well-being. Many relationships between consumerism and well-being were stronger than those between family affluence and well-being. These results suggest only certain aspects of consumerism are associated with poorer adolescent well-being. Although, for some sub-groups, other aspects might be associated with better well-being, there was no evidence that modern consumer goods promote happiness.

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Giving Stated Preference Respondents "Time to Think": Results From Four Countries

Joseph Cook et al.
Environmental and Resource Economics, April 2012, Pages 473-496

Abstract:
Previous studies have found that contingent valuation (CV) respondents who are given overnight to reflect on a CV scenario have 30-40% lower average willingness-to-pay (WTP) than respondents who are interviewed in a single session. This "time to think" (TTT) effect could explain much of the gap between real and hypothetical WTP observed in experimental studies. Yet giving time to think is still rare in binary or multinomial discrete choice studies. We review the literature on increasing survey respondents' opportunities to reflect on their answers and synthesize results from parallel TTT studies on private vaccine demand in four countries. Across all four countries, we find robust and consistent evidence from both raw data and multivariate models for a TTT effect: giving respondents overnight to think reduced the probability that a respondent said he or she would buy the hypothetical vaccines. Average WTP fell approximately 40%. Respondents with time to think were also more certain of their answers, and a majority said they used the opportunity to consult with their spouse or family. We conclude with a discussion of why researchers might be hesitant to adopt the TTT methodology.


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