Knowledge that Transforms

How does coping with a resource loss of time, space, or money change a consumer? In the current work, we argue that resource losses that give rise to budget contractions require a coping strategy that not only influences choice in the moment but also changes underlying consumer preferences. We show that the preference restructuring that occurs when coping with a budget loss also leads to stabilization of preferences. Specifically, a consumer who allocates a budget to a set of items prior to a budget contraction and allocates that same budget post-contraction when the budget is fully restored will allocate the restored budget to fewer options in the set. Coping with the contraction helps consumers prioritize what matters to them, leading to refinement of preference. This within-consumer preference refinement effect exists for budgets of time, space, and money. We identify boundary conditions (i.e., significant budget contractions and self-determined contraction allocations are necessary for prioritization to occur) and rule out non-prioritization explanations (e.g., anchoring and under-adjusting). These findings suggest that marketers should focus on capturing consumers who are dealing with budget contractions as this is one of the moments where individuals revisit and rediscover what matters most to them.

Using a sample of individuals who hold target retirement funds (TRFs), we examine how people use arithmetic to estimate their retirement age. We find a robust “zero” bias where investors have a strong preference for TRFs that end with zero compared to TRFs that end with five. The evidence is consistent that the bias is an outcome of people using imprecise arithmetic, specifically rounding up and down in the computational estimation required to estimate their retirement year. The zero bias manifests itself in people born in years ending between eight and two. Those born in zero- through two-ending years select TRFs that imply they intend to retire at 70, whereas those born in eight- and nine-ending years choose TRFs that imply retiring at 60. The choices can significantly lower or increase wealth by altering the contribution amounts and exposing investors to risk incompatible with their age profile. The bias is particularly costly for those who are risk averse and select later TRFs but is also most beneficial to risk-averse consumers who choose early TRFs. We experimentally confirm that the contribution rates are related to the TRF choices and that the use of imprecise mathematical rounding is implicated in the bias.

Companies can create value by differentiating their products and services along quantitative attributes. Existing research suggests that consumers’ tendency to rely on relatively effortless and affect-based processes reduces their sensitivity to the scope of quantitative attributes and that this explains why increments along quantitative attributes often have diminishing marginal value. The current article sheds new light on how “system 1” processes moderate the effect of quantitative product attributes on subjective value. Seven studies provide evidence that system 1 processes can produce diminishing marginal value, but also increasing marginal value, or any combination of the two, depending on the composition of the choice set. This is because system 1 processes facilitate ordinal comparisons (e.g., 256 GB is more than 128 GB, which is more than 64 GB) while system 2 processes, which are relatively more effortful and calculation based, facilitate cardinal comparisons (e.g., the difference between 256 and 128 GB is twice as large as between 128 and 64 GB).

The consumer behavior literature extensively studied the impact of goal setting on behavior and performance. However, much less is known about the antecedents of goal-level setting—consumers’ decision of whether to work out twice or three times per week. Consumers can decide how many goal-consistent activities to undertake (“goal-consistent decision frame”; such as exercising two days per week) or to forego (“goal-inconsistent decision frame”; such as not exercising five days per week). While objectively the same decision, we argue that these different frames impact consumers’ ambition. Making a decision to forego goal-consistent activities triggers negative, self-evaluative emotions and to compensate for these unfavorable self-evaluations, consumers set more ambitious goal levels. Across a variety of contexts, consumers are more ambitious when their focal decision is inconsistent with goal achievement. For instance, they decide to work out more often when they decide how many work-out sessions they would skip (vs. attend). The impact of goal-inconsistent decision framing is mitigated when the activity is less instrumental toward goal achievement, and when negative self-evaluative emotions are alleviated through self-affirmation.

More information is available today than ever before, yet at times consumers choose to avoid it. Even with useful information (I should find out), people may prefer ignorance (But I don’t want to). Seven studies (N = 4,271) and five supplemental studies (N = 3,013) apply the concept of “cover” to information avoidance for consumer choices with real financial consequences. More consumers avoid information with cover—that is, when they can attribute their decision to another feature of a product or decision context rather than to information they want to avoid. Cover increases avoidance when consumers face intrapersonal conflict—when consumers want to avoid information that they believe they should receive (e.g., calorie information). As such, the effect of cover is reduced by decreasing want–should conflict, whether by reducing the should preference to receive information or the want preference to avoid it. Furthermore, cover increases avoidance by helping consumers justify a decision to themselves: avoidance increases only when people can attribute their decision to a relevant (vs. irrelevant) product feature and operates in public and private settings. Together, this research offers theoretical insights into consumers’ information avoidance and how cover itself operates, with practical implications for marketers.

Spending is influenced by many factors. One that has received little attention is the meaning that people give to the act of spending. Spending money might imply that someone is relatively wealthy—since they have money to spend—or relatively poor—since spending can deplete assets. We show that people differ in the extent to which they believe that spending implies wealth (SIW beliefs). We develop a scale to measure these beliefs and find that people who more strongly believe that SIW spend their own money relatively lavishly and are, on average, more financially vulnerable. We find correlational evidence for these relationships using objective financial-transaction data, including over 2 million transaction records from the bank accounts of over 2,000 users of a money management app, as well as self-reported financial well-being. We also find experimental evidence by manipulating SIW beliefs and observing causal effects on spending intentions. These results show how underlying beliefs about the link between spending and wealth play a role in consumption decisions, and point to beliefs about the meaning of spending as a fruitful direction for further research.

The consequences of overconsumption and the recent popularity of simple living point to consumer interest in reducing belongings. They also raise an interesting question—what is a useful approach to downsizing and decluttering? We investigate how dis/order (messy vs. tidy items) affects downsizing and find, across nine focal studies, that (a) consumers retain fewer items when choosing from a disordered set because (b) order facilitates the comparisons within category that underlie the tendency to retain items. The impact of dis/order is altered by consumers’ comparison tendencies, waste aversion, and decision strategy (selection vs. rejection), which serve as theoretically and pragmatically relevant moderators. Though consumers’ lay beliefs favor rejecting from order (i.e., choosing what to get rid of from tidy items), our findings point to the usefulness of selecting from disorder (i.e., choosing what to keep from messy items) as a downsizing strategy. Together, this research has implications for consumer downsizing activities, the burgeoning home organization and storage industries, as well as sustainability.

This research investigates reviewing experts on online review platforms. The main hypothesis is that greater expertise in generating reviews leads to greater restraint from extreme summary evaluations. The authors argue that greater experience generating reviews facilitates processing and elaboration and enhances the number of attributes implicitly considered in evaluations, which reduces the likelihood of assigning extreme summary ratings. This restraint-of-expertise hypothesis is tested across different review platforms (TripAdvisor, Qunar, and Yelp), shown for both assigned ratings and review text sentiment, and demonstrated both between (experts vs. novices) and within reviewers (expert vs. pre-expert). Two experiments replicate the main effect and provide support for the attribute-based explanation. Field studies demonstrate two major consequences of the restraint-of-expertise effect. (i) Reviewing experts (vs. novices), as a whole, have less impact on the aggregate valence metric, which is known to affect page-rank and consumer consideration. (ii) Experts systematically benefit and harm service providers with their ratings. For service providers that generally provide mediocre (excellent) experiences, reviewing experts assign significantly higher (lower) ratings than novices. This research provides important caveats to the existing marketing practice of service providers incentivizing reviewing experts and provides strategic implications for how platforms should adopt rating scales and aggregate ratings.

Drawing on cultural branding research, we examine how brands can craft national identity. We do so with reference to how brands enabled New Zealand’s displaced Pākehā (white) majority to carve out a sense of we-ness against the backdrop of globalization and resurgent indigenous identity claims. Using multiple sources of ethnographic data, we develop a process model of how brands create national identity through we-ness. We find that marketplace actors deployed brands to create and renew perceptions of we-ness through four-stages: reification, lumping, splitting, and horizon expansion. From this, we make three primary contributions to the consumer research literature: we develop a four-part process model of how brands become national identity resources, explore the characteristics of the brands that enable the emergence of and evolution of we-ness, and explore how our processes can address a sense of dispossession among displaced-majorities in similarly defined contexts.