Balancing Giving-Up Vs. Taking-In: Does the Pattern of Payments and Benefits Matter to Customers in a Financing Decision Context?

Seigyoung Auh, Brock University
Chuan-Fong Shih, Wake Forest University

Balancing Giving-Up Vs. Taking-In: Does the Pattern of Payments and Benefits Matter to Customers in a Financing Decision Context?


Seigyoung Auh, Yonsei University
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Chuan-Fong Shih, Wake Forest University

 

ABSTRACT

Despite the relevance of mental accounting as a framework in addressing consumer behavior decision making, very little has been documented about the applicability of mental accounting to financial marketing and behavioral financing. This paper attempts to build and extend the literature on financial decision making by drawing on mental accounting and prospect theory. Specifically, we take the current literature one step further by testing the alignment hypothesis which states that consumers prefer financing schemes that not only match the length of benefits with payments but also the corresponding patterns as well. Through three studies, our paper finds general support for the alignment hypothesis.  Implications for financial decision making along with retailing strategies are discussed.

 

[ to cite ]:
Seigyoung Auh and Chuan-Fong Shih (2006) ,"Balancing Giving-Up Vs. Taking-In: Does the Pattern of Payments and Benefits Matter to Customers in a Financing Decision Context?", in NA - Advances in Consumer Research Volume 33, eds. Connie Pechmann and Linda Price, Duluth, MN : Association for Consumer Research, Pages: 139-146.