When you add your possible choices to a wish list, you are more likely to choose pleasure over utility, writes Amitav Chakravart

Chakravarti, Amitav

LSE Research Online

12/7/2015A fun toy or a useful watch? How do people makepurchasing decisions?blogs.lse.ac.uk /businessreview/2015/12/07/a-fun-toy-or-a-useful-watch-how-do-people-make-purchasing-decisions/‘Tis the season to shop and ‘tis the time to be torn apart by shopping dilemmas — which “it” items to buyand which ones to forgo?!Imagine that David is browsing through his favourite retailer’s website and he is stopped dead on his (digital) tracksby scores of must-have items. To make his shopping task easier he decides to use the website’s “wish list” feature.Like in many other online stores (e.g., Google Shopping’s “My Shortlist”, Amazon’s “My Wish List”), the “wish list”feature in this website allows David to set aside, with a single click, items that really catch his fancy. David looks atall the must-have items on the website, one by one, and after a lot of browsing he is now ready to make a purchasedecision. So he decides to peek into the “wish list” that he created.Looking into the “wish list” he finds that he has narrowed down his choices to two bestselling items. One of them isthe Hoverboard, a self-balancing two-wheeled board that is a portable, rechargeable battery-powered vehicle.Reviews describe it as “fun,” “exciting,” “delightful,” “thrilling,” and “enjoyable!” The other object of his desire is thenew Samsung Gear 2 smart watch, which is a sleek computerized wristwatch with advanced functionalities likeemail, calendar, translations, and activity (run/walk), heart rate, and calorie monitors. Reviews are equally raving,describing it as extremely “necessary,” “practical,” “functional,” “helpful,” and “effective!” Both are similarly priced(~$400) and both seem to be equally popular, bestselling items on the website. He has enough money to buy onebut not both items; he is torn!So which option would David pick: the very utilitarian, extremely functional, and highly useful Samsung Gear 2smart watch, or the very hedonic, multisensory, and highly experiential Hoverboard?What would you predict David will do?1/3Across a series of recent studies, we find that decisions in such multi-stage decisions (e.g., first “wish-list” thenchoose) are significantly slanted towards the hedonic option. In short, it is highly likely that David will pick thehedonically superior option (i.e., the Hoverboard) over the option that is superior on utilitarian criterion (i.e., thesmart watch).When choosing from multiple options, decision-makers may directly choose an option (single-stage decision), orinitially shortlist a subset of options, and then choose an option from this shortlist (two-stage decision). We find thattwo-stage decisions (e.g., like the “wish list” first, followed by a final choice, scenario described above)systematically increase preference for hedonically superior choice options.Besides shopping scenarios (like the one described in the opening example), this phenomenon is relevant for awide variety of decisions that may be demarcated into two stages. For example, many firms have a policy of makingimportant decisions (e.g., choice of employees, vendors, clients, projects, etc.) in a way that draws attention to thedemarcated structure of the decision (e.g., shortlist, then choose). Web-based online tools make such two-stageprocesses easy to implement. Hiring and selection committees might find our results relevant and accordingly, takesteps to ensure that these two-stage decisions are not overly hedonic-slanted. In a similar vein, in personal sellingcontexts, salespeople can suitably structure the sales process as a two-stage process, contingent on whether theywish to push hedonic options.Our research finds that this effect is fairly robust. It replicates across different (i) decision domains (hiringemployees, apartments, snacks, pens), (ii) types of attribute information (e.g., text description vs. names vs.pictures), (iii) choice sets that varied in terms of the number of choice options (3 to 16 options) and decision difficulty(easy vs. difficult choices), and (iv) participant populations (e.g., U.S. vs. European participants).So why does the effect occur?The effect occurs because short-listing (or any other form of two-stage decisions) differentially affects the twomotivations that often govern our shopping impulses: a promotion goal that motivates us to seek positive outcomes(e.g., eat a very tasty snack), and a prevention goal that motivates us to avoid negative outcomes (e.g., avoid ahigh-calorie snack). Usually these twin motivations are pursued in a somewhat balanced manner. A two-stagedecision, however, disrupts this delicate balance.More specifically, the effect occurs because short-listing influences the extent to which the final choice is pursuedwith a prevention goal (i.e., goal of avoiding negative outcomes). In a two-stage process, after the short-listingstage, decision-makers feel that they have sufficiently advanced their prevention goals, which in turn dampens thecontinued activation of prevention focus. After all, labels like “wish list” or “favourite” have an aspirational connotationand imply that items contained in a “wish list” are relatively superior or, at minimum, not as bad as the ones that didnot make it into the “wish list.” Thus the decision maker’s prevention goal dissipates. However, the decision maker’spromotion focus (i.e., goal of approaching positive outcomes) does not dissipate. Thus, when it comes to making thefinal choice, the promotion goals have a greater influence than the prevention goals. Untrammelled by preventionconcerns, the promotion goals then disproportionately favour choice options that are hedonic, pleasurable, andrelatively discretionary. Consequently, choice shares of the relatively hedonic options increase significantly.This is how, relative to single-stage decisions, two-stage decisions increase preference for relatively hedonic (vs.utilitarian) options during the final choice.♣♣♣Notes:This article is based on the paper Two-stage decisions increase preference for hedonic options, co-authoredby Amitav Chakravarti, Rajesh Bhargave and Abhijit Guha, and published in Organizational Behavior andHuman Decision Processes, Volume 130, September 2015, Pages 123–135. 2/3This post gives the views of its author, and not the position of LSE Business Review or the London School ofEconomics.Featured image credit: Hoverboard Soar Boards CC-BY-2.0 Inside photo: Amazon wish list print screen Amitav Chakravarti is Professor of Marketing at LSE’s Department of Management. He waspreviously an Associate Professor at the Stern School of Business, New York University. He hasalso served on the faculties of MIT Sloan School of Management, Johnson School ofManagement, Cornell University, and University of California, Riverside. Prior to his PhD heworked with IMRB (Indian Market Research Bureau) in India. His research has been published inleading journals. He was awarded the inaugural Google-WPP Marketing Research Award, theMarketing Science Institute (MSI) Young Scholar Award (awarded by MSI to faculty members whoare “likely leaders of the next generation of marketing academics”), and the ART (AdvancedResearch Techniques) Forum Best Paper Award. He has coauthored a book on consumer insights(with Manoj Thomas, Cornell University) titled, “GO & STOP Signals: Why Consumers (Don’t) Buy” (PalgraveMacmillan).Copyright © 2015 London School of Economics3/3

A fun toy or a useful watch? How do people make purchasing decisions?

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