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The commonness fallacy: Commonly chosen options have less choice appeal than people think
Emily Reit & Clayton Critcher
Journal of Personality and Social Psychology, forthcoming
Abstract:
In predicting what others are likely to choose (e.g., vanilla ice cream or tiramisu), people can display a commonness fallacy — overestimating how often common (but bland) options (e.g., vanilla ice cream) will be chosen over rarer (but exciting) options (e.g., tiramisu). Given common items are often chosen merely because they are frequently offered, not because they are preferred (tiramisu is rarely offered as a dessert), commonness is not necessarily diagnostic of future choice. Studies 1a and 1b document the commonness fallacy in forecasts of single and repeated choices. Study 2 replicates it in an incentive-compatible choice context. Studies 3 and 4 uncover when and why perceived commonness is relied upon. Perceived commonness is spontaneously used as a guide when forecasting others’ choices (as though people blur what has been chosen with what people will choose), but not when forecasting what others would be pleased to receive. Choice forecasters leaned upon perceived commonness over and above many other cues, including their own choices, the goods’ prices, and even how much others were thought to like each option. Upon conscious reflection, choice forecasters abandon commonness and gravitate toward more normatively defensible input. Studies 5 and 6 used correlational and experimental methods, respectively, to examine antecedents of the commonness fallacy. Study 7 illustrates a literally costly consequence: A 2-part marketplace simulation study found amateur sellers’ reliance on perceived commonness prompted them to systematically misprice goods.
Five decades of US, UK, German and Dutch music charts show that cultural processes are accelerating
Lukas Schneider & Claudius Gros
Royal Society Open Science, August 2019
Abstract:
Analysing the timeline of US, UK, German and Dutch music charts, we find that the evolution of album lifetimes and of the size of weekly rank changes provide evidence for an acceleration of cultural processes. For most of the past five decades, number one albums needed more than a month to climb to the top, nowadays an album is in contrast top ranked either from the start, or not at all. Over the last three decades, the number of top-listed albums increased as a consequence from roughly a dozen per year, to about 40. The distribution of album lifetimes evolved during the last decades from a log-normal distribution to a power law, a profound change. Presenting an information–theoretical approach to human activities, we suggest that the fading relevance of personal time horizons may be causing this phenomenon. Furthermore, we find that sales and airplay- based charts differ statistically and that the inclusion of streaming affects chart diversity adversely. We point out in addition that opinion dynamics may accelerate not only in cultural domains, as found here, but also in other settings, in particular in politics, where it could have far reaching consequences.
The Secrecy Effect: Secret Consumption Increases Women’s Product Evaluations and Choice
Maria Rodas & Deborah Roedder John
Journal of Consumer Research, forthcoming
Abstract:
Advertisers often depict their products being consumed in a social setting, but they also depict people secretly consuming their products. Will consumers like a product more if they are prompted to consume it in secret? We report eight studies, where women consumed and evaluated products such as cookies, chocolate, and apple chips. Women in secret consumption conditions were instructed to imagine eating the food in secret, instructed to hide the food from others while consuming it, or shown an advertisement encouraging eating the food in secret. These secret consumption prompts resulted in more positive product evaluations, and increased product choice, compared to evaluations in non-secret conditions. We identify preoccupation and attitude polarization as the primary drivers for these outcomes. When women consume a product in secret, they become preoccupied with the product, as thoughts about the product continually pop into mind. Increased thinking leads to attitude polarization, where evaluations for products they like become even more positive. Finally, we also identify moderators of these secrecy effects.
Company Worth Keeping: Personal Control and Preferences for Brand Leaders
Joshua Beck, Ryan Rahinel & Alexander Bleier
Journal of Consumer Research, forthcoming
Abstract:
Brand leaders possess tremendous agency, with the ability to shape a sweeping variety of outcomes. Does this fact confer psychological value to consumers? We posit that external conditions that undermine feelings of personal control cause consumers to affiliate more with brand leaders. This occurs because affiliating with such high-agency brands gives consumers a sense of personal agency and thereby restores feelings of control. An initial study using archival data from nearly 18,000 consumers reporting on over 1,200 brands documents real-world effects that are consistent with these propositions. Four follow-up experiments demonstrate the effect of low control on brand leader (vs. non-leader) purchase intentions using direct manipulations in controlled settings, capture the underlying process, and rule out alternative explanations. This research thus reveals that the psychology of personal control underlies a process that benefits brand leaders.
A Cinderella Story: How Past Identity Salience Boosts Demand for Repurposed Products
Bernadette Kamleitner, Carina Thürridl & Brett Martin
Journal of Marketing, forthcoming
Abstract:
Like Cinderella, many repurposed products involve a biographical transformation, from a tattered past identity (e.g., an old airbag) to a product with a valuable but different new identity (e.g., a backpack made from an airbag). In this article, the authors argue that marketers should help customers infer such product stories by highlighting the products’ tattered past identities. Three field experiments and four controlled experiments show that making a product’s past identity salient boosts demand across a variety of repurposed products. This is because past identity salience induces narrative thoughts about these products’ biographies, which in turn allows customers to feel special. Results also suggest that this strategy of past identity salience needs to be particularly well-crafted for products with easily discernible past identities. These findings highlight a promising new facet of storytelling (i.e., stories that customers self-infer in response to minimal marketer input); create new opportunities for promoting products with a prior life; and deliver detailed guidance for the largely unexplored, growing market for upcycled and recycled products.
Assessing the Efficacy of Consumer Boycotts of U.S. Target Firms: A Shareholder Wealth Analysis
Kasaundra Tomlin
Southern Economic Journal, forthcoming
Abstract:
This article analyzes the effectiveness of 125 U.S. boycotts from 1978 to 2017. On average, the results suggest that actual consumer boycott calls against U.S. target firms (treatment firms) had a negative and statistically significant effect on the shareholder wealth of U.S. target firms. The synthetic control method and the placebo tests confirmed that the negative cumulative abnormal returns (CAR) observed here are robust and not due to idiosyncratic shocks unrelated to the announced boycotts. Negative and statistically significant boycott effects were also found for boycott threats and categorical issues related to union issues, animal rights, living wages in less‐developed countries, racial/sexual discrimination, ideological issues, and political/religious boycotts. The results also show that firms with a higher level of competition and advertising activity experienced larger negative boycott effects; and firms with higher net income observed mitigated boycott effects.
Good Vibrations: Consumer Responses to Technology-Mediated Haptic Feedback
Rhonda Hadi & Ana Valenzuela
Journal of Consumer Research, forthcoming
Abstract:
Individuals often experience incidental device-delivered haptic feedback (e.g., vibrational alerts accompanying messages on mobile phones and wearables), yet almost no research has examined the psychological and behavioral implications of technology-mediated touch on consumers. Drawing from theories in social psychology and computer science, we explore how device-delivered haptic feedback may have the capability to augment consumer responses to certain consumer-directed communications. Across four studies, we find that haptic alerts accompanying messages can improve consumer performance on related tasks and demonstrate that this effect is driven by an increased sense of social presence in what can otherwise feel like an impersonal technological exchange. These findings provide applied value for mobile marketers and gadget designers, and carry important implications for consumer compliance in health and fitness domains.
Saving Your Self: How Identity Relevance Influences Product Usage
Daniel Sheehan & Sara Loughran Dommer
Journal of Consumer Research, forthcoming
Abstract:
Although research has consistently demonstrated that people prefer to purchase products and brands that represent their identity, relatively little research has examined how this identity-relevance influences product usage. Drawing from work on intertemporal choice, the present work proposes a conceptual framework for the influence of identity on product usage. The authors theorize and demonstrate an identity conservation effect, in that consumers are less likely to use nondurable identity products compared to nonidentity products because the tradeoff between possession value and in-use value is larger for identity products. Six studies demonstrate the identity conservation effect and provide support for the value tradeoff framework through both mediation and theoretically-supported moderation.
The Effect of Competition on Pricing and Product Positioning: Evidence from Wholesale Club Entry
Christoph Bauner & Emily Wang
International Journal of Industrial Organization, forthcoming
Abstract:
This paper empirically examines incumbents’ reactions to market entry along price and non-price dimensions in the example of wholesale warehouse entry into grocery retail markets. Leveraging a detailed retail panel spanning 2001–2011 and a novel dataset documenting opening and closing dates and locations of all Costco warehouse clubs, we classify incumbent retailers’ strategic responses (e.g., pricing, assortment) by the storability of product categories, controlling for persistent systematic differences across retailer–product combinations. We find that retailers are substantially affected by increased competition from wholesale club warehouse openings and in response increase the variability of their prices, consistent with adoption of the Hi–Lo pricing strategy. In addition, incumbent retailers’ strategic responses differ significantly across storability levels: They are more likely to increase prices and reduce assortments for highly storable products and decrease prices and increase assortments for less storable products. We extend our analysis by exploiting the spatial variations in our data and analyzing divergent market effects across geographical areas. We find significant geospatial differences in these strategic responses.
The Paradox of Openness: Exposure vs. Efficiency of APIs
Seth Benzell et al.
MIT Working Paper, August 2019
Abstract:
APIs are the building blocks of digital platforms, yet there is little quantitative evidence on their use. Do API adopting firms do better? Do such firms change their operating procedures? Using proprietary data from a major API tools provider, we explore the impact of API use on firm value and operations. We find evidence that API use increases market capitalization and lowers R&D expenditures. We then document an important downside. API adoption increases the risk of data breaches, a risk that rises when APIs are more open or place less emphasis on security. Firms reduce API data flows in the month before a hack announcement, consistent with a conscious attempt to limit breach scope. In the same period, however, the variance of API data flows increases, consistent with heterogeneity in firms' ability to detect and shut down unauthorized data access. Our findings highlight a fundamental paradox of openness: It increases upside value and downside risk at the same time. We document that firms respond to these trade-offs in logical ways and conclude that the benefits of opening APIs exceed the risks for firms situated to adopt a platform strategy.