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Self-Control for the Righteous: Toward a Theory of Luxury Pre-Commitment

Ran Kivetz; Itamar Simonson

Title:
Self-Control for the Righteous: Toward a Theory of Luxury Pre-Commitment
Author(s):
Kivetz, Ran
Simonson, Itamar
Date:
Type:
Working papers
Department:
Institute for Social and Economic Research and Policy
Permanent URL:
Series:
ISERP Working Papers
Part Number:
01-06
Publisher:
Institute for Social and Economic Research and Policy, Columbia University
Publisher Location:
New York
Abstract:
Prior research has examined consumers' use of self-control to avoid hedonic (myopic) temptations, such as overbuying and smoking. This paper proposes that consumers often exercise the opposite form of self-control, whereby they attempt to avoid default forms of spending on necessities and savings in favor of luxury, hedonic purchases. In particular, given the difficulty of choosing hedonic luxury items over necessities and cash in everyday (local) decisions, under certain conditions, consumers pre-commit to hedonic luxury consumption. Such precommitments to hedonic luxuries are more likely to occur when their psychological cost is less concrete. These propositions were tested in a series of studies involving real and hypothetical choices as well as process measures. The results indicate that a substantial segment of consumers choose hedonic luxury prizes over cash of equal or greater value; most of these consumers explain such choices as motivated by the need to pre-commit in order to guarantee a hedonic luxury experience and that the award does not end up in the pool of money used for necessities. In addition, consistent with our analysis, the likelihood of pre-committing to hedonic luxuries is enhanced when (a) the consequences of the decision will be realized farther in the future, (b) the odds of winning the reward are lower, and (c) consumers anticipate how they will use each possible award. We also show that hedonic luxury awards are more effective than cash as incentives for participation in a (real) lottery. The theoretical and practical implications of the results are discussed.
Subject(s):
Behavioral sciences
Item views:
419
Metadata:
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