Oleg Urminsky

The Goal-Gradient Hypothesis Resurrected: Purchase Acceleration, Illusionary Goal Progress, and Customer Retention

The goal-gradient hypothesis denotes the classic finding from behaviorism that animals expend more effort as they approach a reward. Building on this hypothesis, the authors generate new propositions for the human psychology of rewards. They test these propositions using field experiments, secondary customer data, paper-and-pencil problems, and Tobit and logit models. The key findings indicate that (1) participants in a real café reward program purchase coffee more frequently the closer they are to earning a free coffee; (2) Internet users who rate songs in return for reward certificates visit the rating Web site more often, rate more songs per visit, and persist longer in the rating effort as they approach the reward goal; (3) the illusion of progress toward the goal induces purchase acceleration (e.g., customers who receive a 12-stamp coffee card with 2 preexisting “bonus” stamps complete the 10 required purchases faster than customers who receive a “regular” 10-stamp card); and (4) a stronger tendency to accelerate toward the goal predicts greater retention and faster reengagement in the program. The conceptualization and empirical findings are captured by a parsimonious goal-distance model, in which effort investment is a function of the proportion of original distance remaining to the goal. In addition, using statistical and experimental controls, the authors rule out alternative explanations for the observed goal gradients. They discuss the theoretical significance of their findings and the managerial implications for incentive systems, promotions, and customer retention.

On Intertemporal Selfishness: How the Perceived Instability of Identity Underlies Impatient Consumption

How does the anticipated connectedness between one’s current and future identity help explain impatience in intertemporal preferences? The less consumers are closely connected psychologically to their future selves, the less willing they will be to forgo immediate benefits in order to ensure larger deferred benefits to be received by that future self. When consumers’ measured or manipulated sense of continuity with their future selves is lower, they accept smaller-sooner rewards, wait less in order to save money on a purchase, require a larger premium to delay receiving a gift card, and have lower long-term discount rates.

To Know and to Care: How Awareness and Valuation of the Future Jointly Shape Consumer Spending

Reducing spending in the present requires the combination of being both motivated to provide for one’s future self (valuing the future) and actively considering long-term implications of one’s choices (awareness of the future). Feeling more connected to the future self—thinking that the important psychological properties that define your current self are preserved in the person you will be in the future—helps motivate consumers to make far-sighted choices by changing their valuation of future outcomes (e.g., discount factors). However, this change only reduces spending when opportunity costs are considered. Correspondingly, cues that highlight opportunity costs reduce spending primarily when people discount the future less or are more connected to their future selves. Implications for the efficacy of behavioral interventions and for research on time discounting are discussed.

Making Sense of Nonsense The Visual Salience of Units Determines Sensitivity to Magnitude

When are people sensitive to the magnitude of numerical information presented in unfamiliar units, such as a price in a foreign currency or a measurement of an unfamiliar product attribute? We propose that people exhibit deliberational blindness, a failure to consider the meaning of even unfamiliar units. When an unfamiliar unit is not salient, people fail to take their lack of knowledge into account, and their judgments reflect sensitivity to the magnitude of the number. However, subtly manipulating the visual salience of the unit (e.g., enlarging its font size relative to the font size of the number) prompts recognition of the unit’s unfamiliarity and reduces magnitude sensitivity. In five experiments, we demonstrated this unit-salience effect, provided evidence for deliberational blindness, and ruled out alternative explanations, such as nonperception and fluency. These findings have implications for decision making involving numerical information expressed in both unfamiliar units and familiar but poorly calibrated units.

Scope Insensitivity and the 'Mere Token' Effect

Decisions often involve trade-offs between a more normative option and a less normative but more tempting one. The authors propose that the intrapersonal conflict that is evoked by choices involving incompatible goals can be resolved through scope-insensitive justifications. The authors describe one such mechanism, the “mere token” effect, a new phenomenon in decision making. They demonstrate that adding a certain and immediate mere token amount to both options increases choices of the later-larger option in intertemporal choice and of the riskier-larger option in risky choice. The authors find this effect to be scope insensitive, such that the size of the token amount does not moderate the effect. They show that intrapersonal choice conflict underlies the mere token effect and that reducing the degree of conflict by increasing the psychological distance to the choice outcomes debiases the effect. Moreover, they show that the mere token effect is enhanced when (1) opposing goals in choice are made salient and (2) the choice options represent a starker contrast that generates greater conflict. The authors empirically rule out alternative explanations, including diminishing marginal utility, normative and descriptive utility-based models, liquidity constraints, and naive diversification. They discuss the direct implications of the mere token effect for the marketing of financial services and, more generally, for consumer preference toward bundles and multiattribute products.

Beliefs About the Causal Structure of the Self-Concept Determine Which Changes Disrupt Personal Identity:

Personal identity is an important determinant of behavior, yet how people mentally represent their self-concepts and their concepts of other people is not well understood. In the current studies, we examined the age-old question of what makes people who they are. We propose a novel approach to identity that suggests that the answer lies in people’s beliefs about how the features of identity (e.g., memories, moral qualities, personality traits) are causally related to each other. We examined the impact of the causal centrality of a feature, a key determinant of the extent to which a feature defines a concept, on judgments of identity continuity. We found support for this approach in three experiments using both measured and manipulated causal centrality. For judgments both of one’s self and of others, we found that some features are perceived to be more causally central than others and that changes in such causally central features are believed to be more disruptive to identity.

When Should the Ask Be a Nudge? The Effect of Default Amounts on Charitable Donations

How does setting a donation option as the default in a charitable appeal affect peoples decisions? In eight studies, comprising 11,508 participants making 2,423 donation decisions in both experimental settings and a large-scale natural field experiment, the authors investigate the effect of “choice-option” defaults on the donation rate, average donation amount, and the resulting revenue. They find (1) a “scale-back” effect, in which low defaults reduce average donation amounts; (2) a “lower-bar” effect, in which defaulting a low amount increases donation rate; and (3) a “default-distraction” effect, in which introducing any defaults reduces the effect of other cues, such as positive charity information. Contrary to the view that setting defaults will backfire, defaults increased revenue in the field study. However, the findings suggest that defaults can sometimes be a “self-canceling” intervention, with countervailing effects of default option magnitude on decisions and resulting in no net effect on revenue. The authors discuss the implications of the findings for research on fundraising specifically, for choice architecture and behavioral interventions more generally, and for the use of “nudges” in policy decisions.

The Role of Psychological Connectedness to the Future Self in Decisions Over Time

What motivates people to make decisions in the present that benefit their self in the future? An emerging literature suggests that farsightedness is influenced by the degree of connection people perceive between their present and future self. People who see their core identity as changing substantially over time, into a substantially different future self, are less likely to forgo benefits in the present to ensure larger deferred benefits to be enjoyed by that future self they are not as connected to. Recent lab, field, and neural evidence has related such connectedness to time discounting, as well as more generally to a range of provident behaviors. This review discusses what is known and what remains to be studied about the bases of perceived connectedness, how people incorporate connectedness into their decision-making, and which psychological and contextual factors may influence the role of connectedness in decision-making.

Smile-Seeking Givers and Value-Seeking Recipients: Why Gift Choices and Recipient Preferences Diverge

Prior research on gift giving has often treated “making recipients happy” as interchangeable with “improving recipients’ welfare.” We propose givers’ motive to make recipients happy is better understood as a desire to induce positive affective reactions, such as a smile from recipients. This “smile-seeking” motive yields a mismatch between gift choices and recipients’ preferences, because attributes that promote recipient happiness upon gift reception are often not the same attributes that augment recipients’ overall welfare. We find a considerable givers-recipients preference discrepancy that cannot be explained by extant theories of perspective taking (Studies 1 & 2), is mitigated when the affective reactions are not immediately obtainable (Studies 3 & 4), and is mediated by the anticipation of these affective reactions (Studies 4 & 5). Moreover, in a longitudinal field survey (Study 6), givers derive more enjoyment from their observation of the recipients’ initial affective reactions than from their observation of recipients’ long-term satisfaction. Our findings challenge extant assumptions about gift-giving motives, and attest to the importance of affective reactions in interpersonal decision making.

Eager to Help Yet Reluctant to Give: How Pro-Social Effort and Pro-Social Choices Diverge

Charity marketers face the challenge of understanding how pro-social decisions are made. Are all solicitations made equal? The authors found that a helping opportunity and a giving opportunity reveal different pro-social preferences. In a series of four studies, involving hypothetical and real pro-social opportunities, participants showed high willingness to help (i.e. exerted more task effort for a charitable cause than for themselves), as well as reluctance to give (i.e. the majority kept resources for themselves rather than giving to charity, when given a choice). The authors propose that the consideration of direct self-interest plays a key role in the observed discrepancy. When deliberate consideration of direct self-interest is activated, as in direct choices, it trumps other motives, resulting in more selfish behaviors. When the direct self-interest remains implicit, as in effort persistence, pro-social behaviors can be effectively driven by other indirectly beneficial motives, such as the pursuit of meaningfulness. These findings have important practical implications for how charitable organizations can convey their needs effectively and design persuasive marketing messages.