Abstract not found

This research identifies a new source of failure to make accurate affective predictions or to make experientially optimal choices. When people make predictions or choices, they are often in the joint evaluation (JE) mode; when people actually experience an event, they are often in the single evaluation (SE) mode. The “utility function ” of an attribute can vary systematically between SE and JE. When people in JE make predictions or choices for events to be experienced in SE, they often resort to their JE preferences rather than their SE preferences and overpredict the difference that different values of an attribute (e.g., different salaries) will make to their happiness in SE. This overprediction is referred to as the distinction bias. The present research also specifies when the distinction bias occurs and when it does not. This research contributes to literatures on experienced utility, affective forecasting, and happiness. Suppose that a person is faced with two job offers. She finds one job interesting and the other tedious. However, the interesting job will pay her only $60,000 a year, and the tedious job will pay her $70,000 a year. The person wants to choose the job that will give her the greatest overall happiness. To make that choice, she tries to predict the difference in happiness between earning $60,000 a year

Prior research has examined consumers ’ use of self-control to avoid hedonic (myopic) temptations, such as overspending and smoking. In this research we investigate the opposite form of self-control, whereby consumers force themselves to indulge and avoid default forms of spending on utilitarian necessities and/or savings. In particular, consumers who have difficulty choosing items that are perceived as indulgences or luxuries (e.g., a cruise) over necessities (e.g., saving for college education) and cash in everyday decisions may use precommitments to indulgence, especially when the psychological cost of such commitments is less concrete. These propositions were tested in a series of studies involving real and hypothetical choices as well as process measures. The results indicate that a substantial segment of consumers choose hedonic luxury rewards over cash of equal or greater value; consumers typically explain such choices based on the need to precommit to indulgence, to make sure that the award does not end up in the pool of money used for necessities. In addition, consistent with our analysis, the likelihood of precommitting to indulgence is enhanced when (a) the consequences

Research on sequences of outcomes shows that people care about features of the experience, such as improvement or deterioration over time, and peak and end levels, that the discounted utility model (DU) assumes they do not care about. In contrast to the finding that some attributes are weighted more than DU predicts, Kahneman and coauthors have proposed that there is one feature of sequences that DU predicts people should care about but that people in fact ignore or underweight: duration. We extend this line of research by investigating the role of conversational norms (Grice, 1975), and scale norming (Kahneman and Miller, 1986). We examine the impact of these two factors in four parallel studies that manipulate these factors orthogonally. Our major finding is that response modes that reduce reliance on conversational norms or standard of comparison, also increase the attention that subjects pay to duration. Intertemporal choices -- decisions with consequences that extend over time -- are both common and important. Whether to save money or splurge, diet or indulge, devote oneself to learning a foreign language or indulge in a sit-com, are a few examples of the myriad intertemporal choices that most people confront on a daily basis. The outcome of these decisions have momentous consequences, not only for individuals but, as Adam Smith pointed out in The Wealth of Nations, for whole societies. Not surprisingly, then, the topic of intertemporal choice has attracted considerable attention from empirical researchers in diverse disciplines. Until recently, however, research on intertemporal choice has been curiously limited; it has dealt almost exclusively with single, discrete, outcomes (e.g., pellets delivered to a rat). As embodied in the dominant discounted utility model ...

The authors would like to thank the three anonymous reviewers for their helpful comments. INCOMMENSURATE RESOURCES: NOT JUST MORE OF THE SAME The pricing literature is replete with research focusing on how consumers respond to sales promotions when both the reference level and the change are expressed in dollar terms (i.e., discounts). The “psychophysics of pricing ” suggests changes in monetary magnitude are not based on their absolute level, but rather on their deviation from some reference level, or how the change is “framed. ” Accordingly, a $5 reduction appears more significant on a $15 purchase than a $125 purchase (Tversky and Kahneman 1981). Often times, however, a promotion is presented in non-monetary terms (e.g., a premium). When two resources are delivered simultaneously, but in different currencies (e.g., receive a free razor with the purchase of a can of shaving cream) the marginal value of the non-monetary, incremental benefit may be difficult to evaluate in relation to the focal product or its price. The value of the premium, therefore, may be less likely

Based on contrast effects studies from psychology, we predicted that movers arriving from more expensive cities would rent pricier apartments than those arriving from cheaper cities. We also predicted that as people stayed in their new city they would get used to the new prices and would readjust their housing expenditures countering the initial impact of previous prices. We found support for both predictions in a sample of 928 movers from the PSID. Alternative explanations based on unobserved wealth and taste, and on imperfect information are ruled out. ÔCommon Mistake #37: When moving from a high-cost area to a low-cost area, recalibrate your sights...... put the home prices of Boston and San Francisco out of your mind.Õ Eldred (2002, p. 89). The median rent for a two-bedroom apartment in Pittsburgh Pennsylvania is $654. Is that cheap or expensive? The answer seems to depend on what we compare those 654 dollars to. For a mover from San Francisco, Pittsburgh may very well feel like a bargain since the typical two-bedroom in San Francisco rents for $2,124. For a mover from Gadsden, Alabama, on the other hand, Pittsburgh may seem like a rip-off; a typical two-bedroom there rents for just $433.

In this paper we take stock of recent research on how people summarize and evaluate extended experiences. Summary assessments do not simply integrate all the components of the evaluated events, but tend to focus on only a few features (gestalt characteristics). Examples of these defining features include the rate at which the transient state components of the experience become more or less pleasant over its duration, and the intensity of the state at key instances, in particular the most intense (peak) and the final (end) moments. It is not yet sufficiently clear which specific gestalt characteristics dominate summary assessments of experiences, nor how this differs across types of experiences or measurement approaches. To address some of these issues, we describe new research in this area, discuss potential methodological difficulties, and suggest directions for future research.

y be factored into the decision more heavily than is price. The execu- tive may choose to ride dow-ntown by taxi and then implement this decision by standing on line and taking a taxi to the hotel. To bring these sorts of decision situations into the laboratory, researchers commonly focused on the goal of obtaining money, which they assume is shared across people. In the prototypical task, subjects are given choice options that differ in probability and amount. The use of gambles enabled researchers to explore decision making under risk. Often, a number of different choices are made in a single experimental session, and the pattern of choices across sets is analyzed. For ample, people might be asked whether they prefer a 45% chance to win $200 or a 50% chance to win $150. Later in the same ses sion, they might be asked whether they prefer a 90% chance to win $200 or a 100% chance to win $150. At issue in studies like these is the consistency of people's choices. The anal- yses would in

for many helpful discussions. Comments and suggestions by participants of the 2000 Marketing Science conference in Los Angeles are gratefully acknowledged. Product-Line Length as a Competitive Tool The increasing number of consumer goods and services offered in recent years suggests that product line extensions have become a favored strategy of product managers. A larger assortment, it is often argued, keeps customers loyal and allows firms to charge higher prices. There is disagreement, however, to what extent a longer product line translates into higher profits. We develop an econometric model derived from a game-theoretic perspective that explicitly models firms ’ use of product-line length as a competitive tool. On the demand side, we analytically establish the link between consumer choice and the length of the product line. Based on our derivations, we include a measure of line length in the utility function to investigate consumer preference for variety using a brand level discrete-choice model. The supply side is characterized by price and line length competition between oligopolistic firms.

e conditions under which comparative (vs. noncomparative or target brand only) advertising is likely to be effective (e.g., Belch, 1981; Drge & Darmon, 1987; Golden 1979; Goodwin & Etgar, 1980; Gorn & Weinberg, 1984; Rose, Miniard, Barone, Manning, & Till, 1993; also see Grewal, Kavanoor, Fern, Costley, & Barnes, 1997, for a review). However, little is known about the different types of comparisons and their effects in comparative advertising. There are three fundamental types of comparisons that marketers are currently using: (a) comparisons involving the same attribute dimension for both the advertised (target) and referent brands (e.g., "Vicks 44 relieves sore throat pain for 8 hours; Robitussin does so for only 4 hours;" also see Wilkie & Farris, 1975); (b) comparisons involving an attribute unique to the target and absent in the referent (e.g., "Cortizone Plus has 10 moisturizers; Cruel does not"); and (c) comparisons involving attributes unique to both brands (e.g., "PopTarts ha