Is that Deal Worth my Time? The Interactive Effect of Relative and Referent Thinking on Willingness to Seek a Bargain

Saini, Ritesh; Rao, Raghunath Singh; Monga, Ashwani

doi:10.1509/jmkg.74.1.34

Cited by 48 publications

(23 citation statements)

References 53 publications

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“…Saini, Rao, and Monga (2010) offer a possible reconciliation of relative thinking evidence with our findings. They employ a hypothetical choice methodology and find that relative thinking appears to hold when hypothetical price changes are expected, but loss-aversion (“referent-thinking” in their model) holds instead when hypothetical price changes are unexpected.…”

supporting

confidence: 78%

“…In hypothetical choices, participants routinely report different marginal propensities to consume out of the same financial gain or loss depending on its source (Heath and Soll 1996). Violations of fungibility matter for the evaluation of public policies such as income tax withholding (Feldman 2010), tax-deferred retirement accounts (Thaler 1990), and fiscal stimulus (Sahm, Shapiro, and Slemrod 2010). Yet there is little empirical evidence measuring the importance of violations of fungibility outside the laboratory, and even less evidence on how best to incorporate violations of fungibility into models of consumer choice.…”

Section: Introductionmentioning

confidence: 99%

“…Both scenarios lead to the same budget constraint and hence to the same utility-maximizing behavior. However, both laboratory evidence (Fogel, Lovallo, and Caringal 2004; Saini, Rao, and Monga 2010) and an existing body of theory (discussed in more detail below) predict that households will exhibit more substitution towards the low-quality variety in the price-increase scenario than in the income-decrease scenario.…”

Section: Introductionmentioning

confidence: 99%

“…Because households cannot predict the path of future gasoline prices (Anderson, Kellogg, and Sallee 2011), it is reasonable to assume that referent thinking would dominate relative thinking in our context. Indeed, Saini, Rao, and Monga (2010) employ a gasoline-related vignette in their study, and show that higher-than-expected gasoline prices can induce consumers to state that they will drive further to seek out discounts. …”

mentioning

confidence: 99%

See 3 more Smart Citations

Fungibility and Consumer Choice: Evidence from Commodity Price Shocks*

Hastings¹,

Shapiro²

2013

The Quarterly Journal of Economics

211

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We formulate a test of the fungibility of money based on parallel shifts in the prices of different quality grades of a commodity. We embed the test in a discrete-choice model of product quality choice and estimate the model using panel microdata on gasoline purchases. We find that when gasoline prices rise consumers substitute to lower octane gasoline, to an extent that cannot be explained by income effects. Across a wide range of specifications, we consistently reject the null hypothesis that households treat “gas money” as fungible with other income. We compare the empirical fit of three psychological models of decision-making. A simple model of category budgeting fits the data well, with models of loss aversion and salience both capturing important features of the time series.

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supporting

confidence: 78%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

mentioning

confidence: 99%

See 2 more Smart Citations

Fungibility and Consumer Choice: Evidence from Commodity Price Shocks*

Hastings¹,

Shapiro²

2013

The Quarterly Journal of Economics

211

View full text Add to dashboard Cite

show abstract

“…Relatedly, researchers should consider moderators beyond income, such as payment method. Second, there is an opportunity to study the impact of in-store slack on different types of price promotions examined in recent research (i.e., Saini, Rao, and Monga 2010;Tsiros and Hardesty 2010). Third, a limitation of our data set is that it does not include a measure of nonprice marketing factors that can affect sales, such as amount of shelf space, displays, and features (i.e., Bemmaor and Mouchoux 1991; Chandon et al 2009;Inman, Winer, and Ferraro 2009).…”

Section: Limitations and Further Researchmentioning

confidence: 99%

Spending on the Fly: Mental Budgets, Promotions, and Spending Behavior

Stilley

Inman

Wakefield

2010

Journal of Marketing

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Recent research has suggested that consumers have in-store slack for grocery trips-that is, they leave room in their mental budgets to make unplanned purchases. Drawing on this work, this article examines how the impact of promotions depends on whether the shopper still has in-store slack remaining in his or her mental budget. Specifically, the authors evaluate how the effect of promotional savings for both planned and unplanned items on spending varies as a function of whether the item is purchased before or after the shopper's in-store slack is depleted. In addition, they examine how these relationships vary depending on income. To achieve these goals, the authors conducted a field study in which respondents used a handheld scanner to record the order of purchases. The results suggest that savings on planned items lead to stockpiling by higher-income shoppers when the savings occur before the in-store slack has been depleted but lead to increased purchase of unplanned items when they occur after in-store slack is depleted. The results also show that promotions on unplanned grocery items generate incremental spending at the basket level, which increases with income but only when the item is purchased after the in-store slack is exceeded. The authors discuss implications for shopper marketing strategies.

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Effects of mental accounting on purchase decision processes: A systematic review and research agenda

Skwara

2023

J of Consumer Behaviour

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This paper aims to systematically analyze and synthesize the existing research published on mental accounting and purchase decision processes by conducting a systematic literature review. Specifically, the paper aims to answer the question: “What are the effects of mental accounting on purchase decision processes?” Therefore, it identified 110 papers which contribute to achieving the research objective and which were selected using the same data collection, data analysis, and quality standards. After reviewing the identified publications, the paper finds that the existing literature can be structured along four main themes impacting purchase decision‐making processes: (1) source of funds, (2) intended use of funds, (3) pricing, and (4) payments. The paper shows that for each of the four themes there are multiple mental accounting effects with an impact on for example willingness to pay, the experienced pain of paying or the ultimate purchase decision. Further, the paper identifies potential directions for future research in mental accounting, including the influence of product categories on mental accounting, flexibility in budget setting and its impact on mental accounting behavior, long‐term effects of mental budgeting on financial wealth, integration–segregation behavior in the context of pricing, the role of consumer characteristics on mental accounting behavior, and the impact of increased financial transparency through technology on mental accounting.

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Is that Deal Worth my Time? The Interactive Effect of Relative and Referent Thinking on Willingness to Seek a Bargain

Cited by 48 publications

References 53 publications

Fungibility and Consumer Choice: Evidence from Commodity Price Shocks*

Fungibility and Consumer Choice: Evidence from Commodity Price Shocks*

Spending on the Fly: Mental Budgets, Promotions, and Spending Behavior

Effects of mental accounting on purchase decision processes: A systematic review and research agenda

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