Luc Wathieu

Consumer Control and Empowerment: A Primer

This paper introduces consumer empowerment as a promising research area. Going beyond lay wisdom that more control is always better, we outline several hypotheses concerning (a) the factors that influence the perception of empowerment, and (b) the consequences of greater control and the subjective experience of empowerment on consumer satisfaction and confidence.

Go Green! Should Environmental Messages Be So Assertive?

Environmental communications often contain assertive commands, even though research in consumer behavior, psycholinguistics, and communications has repeatedly shown that gentler phrasing is more effective when seeking consumer compliance. This article shows that the persuasiveness of assertive language depends on the perceived importance of the issue at hand: Recipients respond better to pushy requests in domains that they view as important, but they need more suggestive appeals when they lack initial conviction. The authors examine this effect in three laboratory studies and one field experiment using Google AdWords. Their findings refer to various environmental contexts (i.e., economizing water, recycling plastic containers, reducing air and sea pollution). The key implication of these findings is that issue importance needs to be carefully assessed (or affected) before the language of effective environmental campaigns can be selected.

Research Note---Attention Arousal Through Price Partitioning

Existing evidence suggests that preferences are affected by whether a price is presented as one all-inclusive expense or partitioned into a set of mandatory charges. To explain this phenomenon, we introduce a new mechanism whereby price partitioning affects a consumers perception of the secondary (i.e., nonfocal) benefits derived from a transaction. Four experiments support the hypothesis that a partitioned price increases the amount of attention paid to secondary attributes tagged with distinct price components. Characteristics of the offered secondary attributes such as their perceived value, relative importance, and evaluability can therefore determine whether price partitioning stimulates or hinders demand. Beyond its descriptive and prescriptive implications, this theory contributes to the emerging notion that pricing can transform, as well as capture, the utility of an offer.

Ambiguity Aversion and the Preference for Established Brands

We propose that ambiguity aversion, as introduced in the literature on decision making under uncertainty, drives a preference for established brands in multiattribute choices among branded alternatives. Established brands are those for which belief in quality is held with greater confidence, even if specific attributes might be inferior to those of competing, less-established brands. In five experiments, we examine the role of ambiguity aversion in the preference for dominated, established brands. We first show a correlation between ambiguity aversion (revealed through choices among monetary lotteries) and the preference for established brands. We then show that the preference for established brands is enhanced when ambiguity aversion is made more salient in unrelated preceding lottery choices. Thus, ambiguity aversion carries across choices. In addition, ambiguity aversion and the preference for established brands are both enhanced when subjects anticipate that others will evaluate their lottery choices. Finally, ambiguous information about brand attributes tends to increase the preference for established brands.

Enjoy! Hedonic Consumption and Compliance with Assertive Messages

This paper examines the persuasiveness of assertive language (as in Nike’s slogan “Just do it”) as compared to nonassertive language (as in Microsoft’s slogan “Where do you want to go today?”). Previous research implies that assertive language should reduce consumer compliance. Two experiments show that assertiveness is more effective in communications involving hedonic products, as well as hedonically advertised utilitarian products. This prediction builds on sociolinguistic research addressing relationships between mood, communication expectations, and compliance to requests. A third experiment reaffirms the role of linguistic expectations by showing that an unknown product advertised using assertive language is more likely to be perceived as hedonic.

The Asymmetric Effect of Discount Retraction on Subsequent Choice

This article examines the subsequent impact of a temporary price discount on brand preference after the promotion is retracted. Theorizing that price salience has an impact on price sensitivity, we propose that the effects of retracting a discount depend on the promoted brands regular price-quality positioning. In a first experiment in which we track consumer choices across a sequence of choice occasions, we show that retracting a discount posted by a higher quality, higher price brand is detrimental to that brand. In contrast, a discount posted by a lower quality, lower price brand is capable of enduringly diverting consumers away from high-end brands. A second experiment relies on process measures to provide evidence for the underlying price salience mechanism. A third experiment tests our hypotheses with real incentives and offers additional support for our price salience theory by testing its most peculiar behavioral implication.

Risk Perception in the Short Run and in the Long Run

There is an ongoing controversy in financial economics regarding the role of time horizon in portfolio selection. This problem is relevant in a broader context, wherever consumers or managers make decisions that involve both time and risk. The purpose of this paper is to review recent findings from the decision making literature so as to shed new light on how the short run vs. long run contingency may determine risk taking and perception.

The Generosity Effect: Fairness in Sharing Gains and Losses

We explore the interaction between fairness attitudes and reference dependence both theoretically and experimentally. Our theory of fairness behavior under reference-dependent preferences in the context of ultimatum games, defines fairness in the utility domain and not in the domain of dollar payments. We test our model predictions using a within-subject design with ultimatum and dictator games involving gains and losses of varying amounts. Proposers indicated their offer in gain- and (neatly comparable) loss- games; responders indicated minimum acceptable gain and maximum acceptable loss. We find a significant “generosity effect” in the loss domain: on average, proposers bear the largest share of losses as if anticipating responders’ call for a smaller share. In contrast, reference dependence hardly affects the outcome of dictator games -where responders have no veto right- though we detect a small but significant “compassion effect”, whereby dictators are on average somewhat more generous sharing losses than sharing gains.

Putting Customer Back into Customization: A Pricing Intervention

The benefits of customization are not always self-evident to consumers who seek to minimize decision costs or are generally uncertain of what they really want. We argue that the mere posting of a starting price can increase a consumer’s readiness to appreciate customized goods. We discuss this phenomenon in the context of a simple model of reference-dependent preferences and propose four experiments to support our predictions. In experiment 1 and 2, we show that announcing a starting price accentuates consumer sensitivity to the match quality and relevance of customization, respectively, enhancing purchase intent and perceived product value to the extent that these qualities are present. Experiment 3 reveals that the effect of starting prices implicates the judgments of novices more so than those of experts. In experiment 4, we revert the effect and demonstrate that consumers who seek conformism and avoid personalization will be more likely to reject customized products when exposed to a starting price.

Hierarchies and the Self-Control of Risk Attitude

In hierarchies, top members are not continuously informed about the intermediary outcomes of their policies. This feature of organizational decision making is often regarded as a drawback caused by communication costs. On the contrary, we argue that such information decentralization creates a valuable interface between a decision maker and his environment. We assume a reference-dependent utility function a la Kahneman and Tversky. Personal contact with an intermediary outcome provokes a shift of reference point, and thereby a change of attitude towards the forthcoming alternative risks. Information decentralization stabilizes the reference point. We characterize classes of dynamic choice situations where this effect should prove desirable. Then, we show that hierarchical systems can help decision makers overcome their personal conservative tendencies.