Moty Amar

Winning the Battle But Losing the War: The Psychology of Debt Management

When consumers carry multiple debts, how do they decide which debt to repay first? Normatively, consumers should repay the debt with the highest interest rate most quickly. However, because people tend to break complicated tasks into more manageable parts, and because losses are most distressing when segregated, the authors hypothesize that people will pay off the smallest loan first to reduce the total number of outstanding loans and achieve a sense of tangible progress toward debt repayment. To experimentally examine how consumers manage multiple debts, the authors develop an incentive-compatible debt management game, in which participants are saddled with multiple debts and need to decide how to repay them over time. Consistent with the hypothesis, four experiments reveal evidence of debt account aversion: Participants consistently pay off small debts first, even though the larger debts have higher interest rates. The authors also find that restricting participants’ ability to completely pay off small debts, and focusing their attention on the amount of interest each debt has accumulated, helps them reduce overall debt more quickly.

Can political cookies leave a bad taste in one’s mouth?: Political ideology influences taste

Purpose This study aims to examine whether companies’ donations to political parties can impact product experience, specifically taste. Design/methodology/approach Research design consists of four studies; three online, one in person. Participants were shown a cookie (Studies 1-3) or cereal (Study 4) and told that the producing company donated to either the Republican Party or the Democratic Party (Studies 1-3) or an unspecified party (Study 4). Findings Participants rated food products as less tasty if told they came from a company that donated to a party they object to. These effects were shown to be mediated by moral disgust (Study 3). Effects were restricted to taste and willingness to buy (Study 4), with no effects on other positive product dimensions. Research limitations/implications The studies provide a first piece of evidence that political donations by companies can negatively impact product experience. This can translate to purchase decisions through an emotional, rather than calculated, route. Practical implications Companies should be careful about making donations some of their consumers may find objectionable. This might impact both purchase and consumption decisions, as well as post-consumption word-of-mouth. Originality/value Companies’ political involvement can negatively impact subjective product experience, even though such information has no bearing on product quality. The current findings demonstrate that alterations in subjective product quality may underlie alterations in consumer decision-making because of ideologically tinged information, and reveals moral disgust as the mechanism underlying these effects. In this, it provides a first demonstration that even mild ideological information that is not globally bad or inherently immoral can generate moral disgust, and that such effects depend on consumers’ own attitudes.