Advanced Search
MyIDEAS: Login to save this article or follow this journal

Risky discounts: Do people prefer them on a per-item or per-purchase basis and why?

Contents:

Author Info

  • Kamleitner, Bernadette
  • Mandel, David R.
  • Dhami, Mandeep K.
Registered author(s):

    Abstract

    Risky discounts differ from other discount formats in that the actual discount level is determined by chance (e.g., “scratch & save” cards). Four studies investigated whether consumers prefer to receive risky discounts on a per-purchase or per-item basis. Although these options do not differ with regard to expected value, they entail multiple differences (e.g., savings distribution, amount of individual gains, excitement, and effort involved) that may lead to differential consumer perceptions and experiences. Controlling for expected value of savings, participants preferred per-item over per-purchase discounts. As hypothesized, the main reasons for this preference were a partly incorrect perception of the properties of the savings distribution, the adoption of a narrow mindset focusing on the best outcome in a series of discount gambles, and the greater excitement provided by multiple discount gambles.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.sciencedirect.com/science/article/pii/S0167487011001176
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Economic Psychology.

    Volume (Year): 32 (2011)
    Issue (Month): 6 ()
    Pages: 951-961

    as in new window
    Handle: RePEc:eee:joepsy:v:32:y:2011:i:6:p:951-961

    Contact details of provider:
    Web page: http://www.elsevier.com/locate/joep

    Related research

    Keywords: Discount; Risk perception; Price promotion; Preference; Consumer decision making;

    Find related papers by JEL classification:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
    2. Halamish, Vered & Liberman, Nira & Higgins, E. Tory & Idson, Lorraine Chen, 2008. "Regulatory focus effects on discounting over uncertainty for losses vs. gains," Journal of Economic Psychology, Elsevier, vol. 29(5), pages 654-666, November.
    3. Sanjay K. Dhar & Claudia González-Vallejo & Dilip Soman, 1999. "Modeling the Effects of Advertised Price Claims: Tensile Versus Precise Claims?," Marketing Science, INFORMS, vol. 18(2), pages 154-177.
    4. Hyeong Kim & Thomas Kramer, 2006. "The moderating effects of need for cognition and cognitive effort on responses to multi-dimensional prices," Marketing Letters, Springer, vol. 17(3), pages 193-203, July.
    5. Richard H. Thaler & Eric J. Johnson, 1990. "Gambling with the House Money and Trying to Break Even: The Effects of Prior Outcomes on Risky Choice," Management Science, INFORMS, vol. 36(6), pages 643-660, June.
    6. Elke U. Weber & Richard A. Milliman, 1997. "Perceived Risk Attitudes: Relating Risk Perception to Risky Choice," Management Science, INFORMS, vol. 43(2), pages 123-144, February.
    7. Holbrook, Morris B & Hirschman, Elizabeth C, 1982. " The Experiential Aspects of Consumption: Consumer Fantasies, Feelings, and Fun," Journal of Consumer Research, University of Chicago Press, vol. 9(2), pages 132-40, September.
    8. Richard Thaler, 1985. "Mental Accounting and Consumer Choice," Marketing Science, INFORMS, vol. 4(3), pages 199-214.
    9. Heath, Timothy B & Chatterjee, Subimal & France, Karen Russo, 1995. " Mental Accounting and Changes in Price: The Frame Dependence of Reference Dependence," Journal of Consumer Research, University of Chicago Press, vol. 22(1), pages 90-97, June.
    10. LAURENT, Gilles & CHANDON, Pierre & WANSINK, Brian, 2000. "A benefit congruency framework of sales promotion effectiveness," Les Cahiers de Recherche 698, HEC Paris.
    11. Thaler, Richard, 1980. "Toward a positive theory of consumer choice," Journal of Economic Behavior & Organization, Elsevier, vol. 1(1), pages 39-60, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Choi, Sungchul & Park, Sang-June & Qiu, Chun (Martin) & Stanyer, Mike, 2013. "The discount is unfair: Egocentric fairness in risky discounts," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 32-43.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:eee:joepsy:v:32:y:2011:i:6:p:951-961. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.