Special Session Summary on the Elusive Value of Value: Determinants of Consumers’ Value Perceptions

Citation:

Dan Ariely and Ziv Carmon (1997) ,"Special Session Summary on the Elusive Value of Value: Determinants of Consumers’ Value Perceptions", in NA - Advances in Consumer Research Volume 24, eds. Merrie Brucks and Deborah J. MacInnis, Provo, UT : Association for Consumer Research, Pages: 333.

Advances in Consumer Research Volume 24, 1997      Page 333

SPECIAL SESSION SUMMARY

ON THE ELUSIVE VALUE OF VALUE: DETERMINANTS OF CONSUMERS’ VALUE PERCEPTIONS

Dan Ariely?, Duke University

Ziv Carmon, Duke University

The first paper, presented by Dan Ariely and Ziv Carmon, examines a well documented and systematic discrepancy between value assessments based on a buyer’s versus a seller’s perspective (WTP vs. WTS estimates, hereafter). This WTP-WTS gap, often termed the endowment effect, has been attributed in the literature to loss aversion. That is, giving up an entity is seen as a loss while forgoing the opportunity to own an item is not. While the traditional notion of loss aversion can account for the direction of this gap, it cannot be used to predict variations in the magnitude of the gap without invoking additional assumptions such as differential loss aversion across individuals and attributes. This paper proposes a parsimonious account for the WTP-WTS-disparity, whereby the two judgments share the underlying task-goal of protecting what one forgoes. As a result, WTP and WTS assessments of exchanges focus on different aspects, each representing what the person may lose in the exchange. Specifically, WTP corresponds more closely with the attitude toward the monetary (expenditure) aspects of the exchange, whereas WTS corresponds more closely with the attitude toward its benefits. Based on this account we made a series of predictions about moderators of the gap and their differential correspondence with WTP and WTS judgments. We found strong support for our hypotheses in four studies that examine value assessments of tickets to NCAA basketball games. Specifically, items related to attitude toward monetary aspects (such as self reported frugality, or reference price) corresponded more closely to WTP judgments than to those of WTS. Measures relating to aspects of the benefits (such as one’s level of "fan-ness", the game’s perceived importance) corresponded more closely to WTS than to WTP. The paper concludes with a discussion of the implication of the findings and opportunities for further research.

The second paper, presented by George Loeenstein, Drazen Prelec and Catherine Shatto, dealt with cold-to-hot empathy gaps. Hot states refer to periods of elevated drives (e.g., hunger, sexual desire), moods and emotions (e.g., anger, depression), and other somatic states (e.g., pain, fatigue). Cold states represent the times when one is not experiencing those elevated drives or emotions. In day to day life, we must all negotiate through varying levels of hot and cold states. Moreover, we often need to make judgments from one state to another at both a personal and interpersonal level. Interestingly, in spite of the continual need to make such judgments, they argue that most people are systematically inaccurate at predicting their own and others’ preferences from one state to another. In support, they report two studies offering a simple demonstration that people who are not currently curious will under predict the force of their own future curiosity. In Study 1, conducted at the Pittsburgh International Airport, participants were shown a sample geography question and asked to complete a quiz that contains similar questions. Half of the participants were asked whether they would prefer a Dove candy bar or the answers as a reward for their participation before completing the quiz (cold condition), and half were asked to choose after taking the quiz (hot condition). Significantly more participants request the answer key in the hot state after taking the quiz than when they were asked in the cold state before the quiz. In study 2, conducted at Pittsburgh’s National Aviary, they replicated the finding in Study 1 and show that current curiosity increases the value of immediate, but not delayed information. In this 2x2 design, participants made their candy bar/answer choice either before or after taking the quiz when the answers were either given immediately or delayed by approximately one hour. As expected, participants who had just taken the quiz and would receive the answers immediately requested the answer significantly more than any of the other three conditions. Finally, the authors discuss insights that cold-to-hot empathy gaps hold for many behaviors thought to be "irrational" with special attention on drug addiction, social influences, spending, and advertising.

In summary, both papers consider the decision maker’s underlying goal to be crucial for his or her perception, formulation, and hence the judgment of the task. The first paper examines two perspectives of an exchange (that of sellers and that of buyers). The second paper examines changes in the decision maker’s perspective resulting from physical and temporal proximity to the stimulus. In both papers the psychological perspective was shown to be related to the goal of the decision maker. In the first paper the goal was to protect what one stands to lose, and in the second paper it was to reduce the visceral drive of curiosity. The two papers suggest that the utility function partly reflects the underlying goals of the decision maker and his or her perspective. Indeed, the session’s synthesizer Drazen Prelec called for a more inclusive formulation of utility that includes such factors as needs and goals of the decision maker.

REFERENCES

Carmon Ziv, and Dan Ariely (1996), "Minding to What They Surrender: A Task-goal View of Why Value Can Appear So Different to Buyers and Sellers," working paper, Fuqua School, Duke University.

Loewenstein, George, Drazen Prelec and Catherine D Shatto (1996), "Cold-to-Hot Empathy Gaps: Predicting Future Curiosity," working paper, Carnegie Mellon University.

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