Just Buying It
Consuming Regardless of Preference: Consumers Overestimate the Impact of Liking on Consumption
Heeyoung Yoon & Tom Meyvis
Journal of Consumer Research, forthcoming
Abstract:
Given that the central objective of consumption in many contexts is to derive enjoyment or utility, it is reasonable to assume that how much people consume a product will primarily be driven by how much they like it. Yet the current research finds that, although consumers indeed predict that they will consume a greater amount of options they like more, their actual consumption can be surprisingly insensitive to their preferences. Across six experiments, we find that consumers systematically overestimate the extent to which their consumption amount is determined by their preferences. We propose that how much people actually consume is determined by a variety of factors, including transient motivational states (e.g., hunger or boredom), consumption opportunities, and habits. Compared to these factors, however, people's liking of a product tends to be more salient, better known, and perceived as a more normatively appropriate driver of consumption-leading consumers to focus overly on their preferences when predicting their consumption. We further propose that this prediction error has important implications for consumer welfare, as it can lead to suboptimal inventory decisions (e.g., over-purchasing of favorite products) as well as ineffective self-control strategies (e.g., restricting oneself to mediocre options in order to reduce consumption).
People Reject Free Money and Cheap Deals Because They Infer Phantom Costs
Andrew Vonasch, Reyhane Mofradidoost & Kurt Gray
Personality and Social Psychology Bulletin, forthcoming
Abstract:
If money is good, then shouldn't more money always be better? Perhaps not. Traditional economic theories suggest that money is an ever-increasing incentivizer. If someone will accept a job for US$20/hr, they should be more likely to accept the same job for US$30/hr and especially for US$250/hr. However, 10 preregistered, high-powered studies (N = 4,205, in the United States and Iran) reveal how increasing incentives can backfire. Overly generous offers lead people to infer "phantom costs" that make them less likely to accept high job wages, cheap plane fares, and free money. We present a theory for understanding when and why people imagine these hidden drawbacks and show how phantom costs drive judgments, impact behavior, and intersect with individual differences. Phantom costs change how we should think about "economic rationality." Economic exchanges are not merely about money, but instead are social interactions between people trying to perceive (and deceive) each others' minds.
Keep It Simple? Consumer Perceptions of Brand Simplicity and Risk
Nicholas Light & Philip Fernbach
Journal of Marketing Research, forthcoming
Abstract:
Evoking simplicity in marketing communications has become popular among marketing practitioners, but little is known about its effects on consumers and firms. The current work focuses on consumers' perceptions of the simplicity or complexity of brands and a previously overlooked consequence of those perceptions. Results from six experiments and analysis of a proprietary customer satisfaction dataset from Consumer Reports (N = 147,600) show that when consumers think brands are simple, they judge them to be less likely to experience product or service failures. Although these lower risk judgments could be positive for brands, they can also lead consumers to punish simpler brands more in the event of failures. Results also suggest that consumers' simplicity/complexity perceptions reflect the dimensionality of their mental representations of brands, and the relationship between simplicity and lower risk is attenuated when additional brand dimensionality is framed in terms of redundancy. The findings cast doubt on the degree to which evoking simplicity is a uniformly positive marketing strategy and encourage practitioners to more thoughtfully consider simplicity's implications for consumer and firm welfare.
Identity from Symbolic Networks: The Rise of New Hollywood
Katharina Burgdorf & Henning Hillmann
Sociological Science, April 2024
Abstract:
To what extent may individual autonomy persist under the constraints of group identity? This dualism is particularly salient in new movements that value individual creativity above all, and yet have to muster community cohesion to establish a new style. Using the case of New Hollywood in the 1960s and 1970s, the authors show how this movement reconciled the demands of collective identity and collaboration in film production with their commitment to the individual filmmaker's artistic autonomy. Using information from the Internet Movie Database on 17,425 filmmakers who were active between 1930 and 1999, the authors show that a cohesive symbolic network, in which New Hollywood filmmakers shared references to a canon of revered films, served as a foundation for the collective identity of this new artistic movement. References include allusions to iconic scenes, settings, and shots of classic films. In contrast, collaborations in film projects yielded a fragmented network that did little to support the creative enterprise of New Hollywood. The evidence suggests that symbolic ties through shared citations allowed New Hollywood filmmakers to realize their vision of autonomous auteur filmmaking and to draw symbolic boundaries that separated them from the old Hollywood studio system.
Competent or Sad Blue? Lively or Aggressive Red? Why, How, and When Background Color Shapes the Meanings of Logo Hues
Franck Celhay & Jonathan Luffarelli
Journal of Consumer Research, forthcoming
Abstract:
Why, how, and when can logos with a blue positive space communicate competence versus sadness? Why, how, and when might logos with a red positive space evoke impressions of liveliness versus aggressiveness? As the current research establishes, a black background strengthens the negative meanings associated with the hue of a logo's positive space and weakens its positive meanings. Conversely, a white background strengthens its positive meanings and weakens its negative meanings. These automatic effects occur because the hue of the positive space interacts with the color of the negative space to determine whether logos communicate positive or negative brand impressions more vividly. These effects are broadly applicable to both well-known and unknown brands, yet they are attenuated for meaningful logos and filled-frame logos. With these novel findings, this article identifies specific factors that can alter the meanings of logo hues, provides a theoretical lens for understanding the interplay of the background color and the hue of the positive space, and offers guidelines for crafting effective logos. This article also reveals which brands can benefit most from conveying negative impressions through their logos: Logos with a black (white) background enhance evaluations of brands that possess negatively (positively) valenced personality traits.
The Financial Consequences of Online Review Aggregators: Evidence from Yelp Ratings and SBA Loans
Ruidi Huang
Management Science, forthcoming
Abstract:
This paper demonstrates the financial and real consequences of online review aggregators. Exploiting a regression discontinuity design that overcomes the endogenous relationship between Yelp reviews and Small Business Administration loan outcomes, I show that higher coarse Yelp ratings lead to improved loan terms and performance. Specifically, a one-half-star increase in Yelp ratings corresponds to a 25-basis-point decrease in loan spread and 6% lower collateral requirements. The effects are more pronounced when banks have less borrower information. Higher Yelp ratings also contribute to increased consumer demand and the likelihood of future business openings. These findings indicate that online review aggregators influence both consumer choices and banks' financing decisions.