The Benefits of Emergency Reserves: Greater Preference and Persistence for Goals that Have Slack with a Cost

Abstract

Marketers of programs that are designed to help consumers reach goals face dual challenges of making the program attractive enough to encourage consumer signup while still motivating consumers to reach desirable goals and thus stay satisfied with the program. The authors offer a possible solution to this challenge: the emergency reserve, or slack with a cost. They demonstrate how an explicitly defined emergency reserve not only is preferred over other options for goal-related programs but can also lead to increased persistence. Study 1 demonstrates that consumers prefer programs with emergency reserves to programs that do not have them, and Study 2 further clarifies that consumers' preference for an emergency reserve depends on the presence of a superordinate goal. Study 3 reveals that consumers prefer goals with emergency reserves because they perceive them to have both higher attainability and value than other goals. Study 4 demonstrates that reserves can lead to increased goal persistence in a realistic task that involves persistence over time. Finally, Studies 5 and 6 reveal that consumers persist more with reserve goals because they want to avoid using the “emergency” reserve.

Occasion Matching of Indulgences

“…Literature on focal thinking supports this explanation (D. et al 2000;Koehler 1994), and experimental tests of individuals searching for low probability ideal outcomes finds that they often delay too long and miss out on second best alternatives (Shu 2008;Truncellito 2016). Even during goal pursuit, individuals who have limited-use "emergency reserves" to help overcome temporary failures may delay their use in favor of saving them for future opportunities (Sharif and Shu 2017). Furthermore, mental generation of an ideal consumption occasion may include many different dimensions that must come together for a "perfect" experience (Mogilner et al 2013).…”

“…Research demonstrates that increasing the salience of opportunity costs can cause consumers to delay spending (Spiller 2011). Consumers worried about the permanent loss of a valued special item are likely to hold off on consuming it too soon, just as coaches sub-optimally save star players (Moskowitz and Wertheim 2011), individuals overinvest in maintaining sub-standard alternatives (Shin and Ariely 2004), and individuals resist using their emergency reserves in goal pursuit (Sharif and Shu 2017). Some items are saved just because they might be useful someday, such as cupboard castaways saved as "just in case" ingredients (Wansink et al 2000) or elderly who underspend their savings and die with more money than intended (Carroll and Samwick 1997;Palumbo 1999).…”

Goal-directed versus outcome-based financial incentives for weight loss among low-income patients with obesity: rationale and design of the Financial Incentives foR Weight Reduction (FIReWoRk) randomised controlled trial

“…The behavioural science construct of emergency reserves informs how the RA frames the goals; for example, the RA encourages the participant to ‘track what you eat every day, but you have two emergency “skip days” per week if you fall behind’. Goals with emergency reserves are perceived as more attainable and lead to increased goal persistence 64. The RA also communicates that the participant is to lose ≥2.5% of their baseline weight by 1 month and ≥5% by 2 months and provides their weight in pounds for each target.…”

Do versus Don’t: The Impact of Framing on Goal-Level Setting

“…For example, Sarah will perform best if she sets an ambitious goal level that is specific (e.g., attend expectancy and value of goal attainment influence the goal striving process (see Klein 1991 for a critical analysis of this relationship; Liberman & Forster 2008;Locke and Latham 2002). Recent work has mostly focused on the conditions under which the relationship between goal level and performance is stronger or weaker, such as when goal commitment is high versus low or when subgoals are absent versus present (Fishbach and Choi 2012;Fishbach and Dhar 2005;Gal and McShane 2012;Huang 2018;Huang, Jin, and Zhang 2017;Huang and Zhang 2011;Fishbach 2008, 2010;Locke and Latham 2006;Sharif and Shu 2017;Wallace and Etkin 2017;Zhang et al 2011).…”