Self-Control and Optimal Goals: A Theoretical Analysis

It’s the Effort That Counts: The Effect of Self-Control on Goal Progress Perceptions

Does the amount of self-control consumers must exert to choose a goal-consistent action influence their perceptions of goal progress? For example, if you choose to go to the gym when one of your favorite TV shows is on (vs. when nothing interesting is on TV), do you perceive that you have made a differential amount of progress toward your goal, despite completing the exact same workout? In eight studies (N = 7,515), the authors demonstrate that consumers perceive that they have made more progress on their goals when more (vs. less) self-control is required to choose to complete an identical goal-consistent task. This is because when consumers exert more (vs. less) self-control to choose a goal-consistent task over the goal-inconsistent alternatives, they infer higher commitment to the goal. The higher inferred commitment, in turn, leads consumers to perceive that future goal pursuit will be easier. The authors demonstrate this effect across a variety of tasks and means of exerting self-control, as well as with both hypothetical scenarios and real-behavior studies.

Time-inconsistent Preferences and Consumer Self-Control

Abstract Why do consumers sometimes act against their own better judgment, engaging in behavior that is often regretted after the fact and that would have been rejected with adequate forethought? More generally, how do consumers attempt to maintain self-control in the face of time-inconsistent preferences? This article addresses consumer impatience by developing a decision-theoretic model based on reference points. The model explains how and why consumers experience sudden increases in desire for a product, increases that can result in the temporary overriding of long-term preferences. Tactics that consumers use to control their own behavior are also discussed. Consumer self-control is framed as a struggle between two psychological forces, desire and willpower. Finally, two general classes of self-control strategies are described: those that directly reduce desire, and those that overcome desire through will power.

The Benefits of Emergency Reserves: Greater Preference and Persistence for Goals that Have Slack with a Cost

Marketers of programs that are designed to help consumers reach goals face dual challenges of making the program attractive enough to encourage consumer signup while still motivating consumers to reach desirable goals and thus stay satisfied with the program. The authors offer a possible solution to this challenge: the emergency reserve, or slack with a cost. They demonstrate how an explicitly defined emergency reserve not only is preferred over other options for goal-related programs but can also lead to increased persistence. Study 1 demonstrates that consumers prefer programs with emergency reserves to programs that do not have them, and Study 2 further clarifies that consumers' preference for an emergency reserve depends on the presence of a superordinate goal. Study 3 reveals that consumers prefer goals with emergency reserves because they perceive them to have both higher attainability and value than other goals. Study 4 demonstrates that reserves can lead to increased goal persistence in a realistic task that involves persistence over time. Finally, Studies 5 and 6 reveal that consumers persist more with reserve goals because they want to avoid using the “emergency” reserve.

Behavioural economics, consumer behaviour and consumer policy: state of the art

Counter to the traditional assumption of neoclassical economics that individuals are rational Homo oeconomici that always seek to maximize their utility and follow their ‘true’ preferences, research in behavioural economics has demonstrated that people's judgements and decisions are often subject to systematic biases and heuristics, and are strongly dependent on the context of the decision. In this article, we briefly review the transition of research from neoclassical economics to behavioural economics, and discuss how the latter has influenced research in consumer behaviour and consumer policy. In particular, we discuss the impacts of key principles such as status quo bias, the endowment effect, mental accounting and the sunk-cost effect, other heuristics and biases related to availability, salience, the anchoring effect and simplicity rules, as well as the effects of other supposedly irrelevant factors such as music, temperature and physical markers on consumers’ decisions. These principles not only add significantly to research on consumer behaviour – they also offer readily available practical implications for consumer policy to nudge behaviour in beneficial directions in consumption domains including financial decision making, product choice, healthy eating and sustainable consumption.

Self-Control and the Theory of Consumption

To study the behavior of agents who are susceptible to temptation in infinite horizon consumption problems under uncertainty, we define and characterize dynamic self-control (DSC) preferences. DSC pr...

Malleable Mental Accounting: The Effect of Flexibility on the Justification of Attractive Spending and Consumption Decisions

Mental accounts are often characterized as self‐control devices that consumers employ to prevent excess spending and consumption. However, under certain conditions of ambiguity, the mental accounting process is malleable; that is, consumers have flexibility in assigning expenses to different mental accounts. We demonstrate how consumers flexibly classify expenses, or construct accounts, to justify spending. An expense that can be assigned to more than one account (i.e., an ambiguous expense) is more likely to be incurred than an unambiguous expense that is constrained either by existing budgets or by previously constructed accounts. We explore the justification processes that underlie these results and their implications for mental accounts as self‐control devices.

Anticipation and Choice Heuristics in the Dynamic Consumption of Pain Relief

Humans frequently need to allocate resources across multiple time-steps. Economic theory proposes that subjects do so according to a stable set of intertemporal preferences, but the computational demands of such decisions encourage the use of formally less competent heuristics. Few empirical studies have examined dynamic resource allocation decisions systematically. Here we conducted an experiment involving the dynamic consumption over approximately 15 minutes of a limited budget of relief from moderately painful stimuli. We had previously elicited the participants’ time preferences for the same painful stimuli in one-off choices, allowing us to assess self-consistency. Participants exhibited three characteristic behaviors: saving relief until the end, spreading relief across time, and early spending, of which the last was markedly less prominent. The likelihood that behavior was heuristic rather than normative is suggested by the weak correspondence between one-off and dynamic choices. We show that the consumption choices are consistent with a combination of simple heuristics involving early-spending, spreading or saving of relief until the end, with subjects predominantly exhibiting the last two.

Yielding to Temptation: Self‐Control Failure, Impulsive Purchasing, and Consumer Behavior

Abstract. Self-control is a promising concept for consumer research, and self-control failure may be an important cause of impulsive purchasing. Three caus

Double Mental Discounting: When a Single Price Promotion Feels Twice as Nice

This research finds that when a single gain has strong associations with multiple costs, consumers often mentally deduct that gain from perceived costs multiple times. For example, with some price promotions (e.g., spend $200 now and receive a $50 gift card to spend in the future), consumers mentally deduct the value of the price promotion from the cost of the first purchase when they receive the promotion, as well as from the cost of the second purchase when they use the promotion. Multiple mental deductions based on a single gain result in consumers' perceptions that their costs are lower than they actually are, which can trigger higher expenditures. This mental accounting phenomenon, referred to as “double mental discounting,” is driven by the extent to which gains feel associated, or coupled, with multiple purchases. This article also documents methods to decouple promotional gains from purchases, thus mitigating double mental discounting.

A Generalizable Scale of Propensity to Plan: The Long and the Short of Planning for Time and for Money

Abstract. Planning has pronounced effects on consumer behavior and intertemporal choice. We develop a six-item scale measuring individual differences in pr

Save More Today or Tomorrow: The Role of Urgency in Precommitment Design

To encourage farsighted behaviors, previous research suggests that marketers should invite consumers to precommit to adopting these behaviors “later.” However, the authors propose that people will draw different inferences from different types of precommitment offers, and that these inferences can help explain when precommitment is (and is not) effective at increasing adoption of farsighted behaviors. Specifically, the authors theorize that simultaneously offering consumers the opportunity to adopt a farsighted behavior now or later (i.e., offering “simultaneous precommitment”) may signal that the behavior is not urgently recommended; however, offering consumers the opportunity to adopt that behavior immediately and then, only if they decline, inviting them to adopt it later (i.e., offering “sequential precommitment”) may signal just the opposite. In a multisite field experiment (N = 5,196), the authors find that simultaneously giving consumers the chance to increase their savings now or later reduced retirement savings. Two preregistered lab studies (N = 5,080) show that simultaneous precommitment leads people to infer that taking action is not urgently recommended, and such inferences predict less adoption of recommended behaviors. Importantly, offering sequential precommitment increases inferred urgency, predicting greater adoption. Together, this research advances knowledge about the limits and potential of precommitment.

When Motivation is against Debtors' Best Interest: The Illusion of Goal Progress in Credit Card Debt Repayment

The authors explore the illusion of goal progress by consumers who own multiple credit cards and pay off their debt balances to facilitate the achievement of their subgoal rather than the superordinate goal of being debt-free. The first experiment shows that debtors use their savings toward the credit card debt they can pay off entirely or substantially, even if it is associated with the smallest balance and the lowest annual percentage rate rather than toward the debt with the highest annual percentage rate. The second experiment reveals that when the income available to pay down the debt is in the form of effortless money (i.e., windfall or reward money) as opposed to hard-earned savings, the tendency to allocate money toward the smallest credit card debt is exacerbated. However, people tend to pay their debt more rationally when the number of debt accounts increases. Finally, the third experiment shows that credit card debt repayment decisions depend on the nature of the debt (hedonic vs. utilitarian) and the timing of consumption benefits (past vs. future). The article concludes with a discussion of managerial and public policy implications.

The Exception Is the Rule: Underestimating and Overspending on Exceptional Expenses

Abstract Purchases fall along a continuum from ordinary (common or frequent) to exceptional (unusual or infrequent), with many of the largest expenses (e.g., electronics, celebrations) being the most exceptional. Across seven studies, we show that, while people are fairly adept at budgeting and predicting how much they will spend on ordinary items, they both underestimate their spending on exceptional purchases overall and overspend on each individual purchase. Based on the principles of mental accounting and choice bracketing, we show that this discrepancy arises in part because consumers categorize exceptional expenses too narrowly, construing each as a unique occurrence and consequently overspending across a series of discretely exceptional expenses. We conclude by proposing an intervention that diminishes this tendency by helping consumers consider their spending on exceptional items as part of a larger set of purchases.

Mental Budgeting and Consumer Decisions

Abstract. Consumers often set budgets for categories of expenses (e.g., entertainment) and track expenses against their budget. Because budgets cannot perf

The Challenge of Understanding What Users Want: Inconsistent Preferences and Engagement Optimization

Online platforms have a wealth of data, run countless experiments, and use industrial-scale algorithms to optimize user experience. Despite this, many users seem to regret the time they spend on these platforms. One possible explanation is that incentives are misaligned: platforms are not optimizing for user happiness. We suggest the problem runs deeper, transcending the specific incentives of any particular platform, and instead stems from a mistaken foundational assumption. To understand what users want, platforms look at what users do. This is a kind of revealed-preference assumption that is ubiquitous in the way user models are built. Yet research has demonstrated, and personal experience affirms, that we often make choices in the moment that are inconsistent with what we actually want. The behavioral economics and psychology literatures suggest, for example, that we can choose mindlessly or that we can be too myopic in our choices, behaviors that feel entirely familiar on online platforms. In this work, we develop a model of media consumption where users have inconsistent preferences. We consider a platform which wants to maximize user utility, but only observes behavioral data in the form of the user’s engagement. We show how our model of users’ preference inconsistencies produces phenomena that are familiar from everyday experience but difficult to capture in traditional user interaction models. These phenomena include users who have long sessions on a platform but derive very little utility from it, and platform changes that steadily raise user engagement before abruptly causing users to go “cold turkey” and quit. A key ingredient in our model is a formulation for how platforms determine what to show users: they optimize over a large set of potential content (the content manifold) parametrized by underlying features of the content. Whether improving engagement improves user welfare depends on the direction of movement in the content manifold: For certain directions of change, increasing engagement makes users less happy, whereas in other directions on the same manifold, increasing engagement makes users happier. We provide a characterization of the structure of content manifolds for which increasing engagement fails to increase user utility. By linking these effects to abstractions of platform design choices, our model thus creates a theoretical framework and vocabulary in which to explore interactions between design, behavioral science, and social media. This paper was accepted by Yan Chen, behavioral economics and decision analysis. Funding: This work was supported by the Vannevar Bush Faculty Fellowship and Multidisciplinary University Research Initiative [Grant W911NF-19-0217]. Supplemental Material: The online appendices are available at https://doi.org/10.1287/mnsc.2022.03683 .

Small Probabilistic Discounts Stimulate Spending: Pain of Paying in Price Promotions

AbstractWe find that small probabilistic price promotions effectively stimulate demand, even more so than comparable fixed price promotions (e.g., “1% chance it’s free” vs. “1% off,” respectively), because they more effectively reduce the pain of paying. In three field experiments at a grocer, we exogenously and endogenously manipulated the salience of pain of paying via elicitation timing (e.g., at entrance or checkout) and payment method (i.e., cash/debit cards or credit cards). This modulated the attractiveness of probabilistic discounts and their ability to stimulate spending. Shoppers paying with cash or debit cards, for example, spent 54% more if they received a 1% probabilistic discount than a 1% fixed discount (experiment 2). A fourth experiment showed that consumers’ sensitivity to pain of paying modulates the greater comparative efficacy of small probabilistic than fixed discounts. More broadly, the results elucidate a novel affective route through which price promotions stimulate demand––pain of paying.