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Broad and narrow bracketing in gift certificate spending

  • Felső, Flóra Á
  • Soetevent, Adriaan R.

We survey 1050 consumers who have just redeemed one or more open loop gift certificates to learn whether they view gift certificate income, cash gifts and non-gift income as substitutes. We find that the majority (83%) of recipients spend the certificates in the same way as cash. The other respondents (17%) bought an item they would not have bought otherwise but adjustments in their shopping pattern do not seem to result from constraints in redeeming the certificates: 80% of all respondents in this group says they have used the certificate to buy an item they really love to have. While inconsistent with standard microeconomic demand theory, this behavior can be explained by narrow bracketing: in spending gift certificates, these consumers consider a limited choice set of nice, personal items. Our data show that females are more likely to narrow bracket gift certificate income and that positive reciprocity towards the giver induces narrow bracketing in case the giver is a household member who suggests to buy a particular item using the certificate.

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Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 66 (2014)
Issue (Month): C ()
Pages: 284-302

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Handle: RePEc:eee:eecrev:v:66:y:2014:i:c:p:284-302
Contact details of provider: Web page: http://www.elsevier.com/locate/eer

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