Fri, 10/01/2021 - 14:30 / 16:00
Luiss Research Seminars, Luiss
Speaker: Heeyoung Yoon , New York University - Stern School of Business
As firms strategically extend assortments to satisfy heterogeneous consumer preferences, consumers are more likely to encounter items that they personally find unappealing. In this research, we find that, although adding unattractive items to an assortment does not affect actual consumption, people erroneously believe that this addition will negatively affect their experience, reducing both their enjoyment and the amount they will consume. We propose that this erroneous prediction derives from two mechanisms. First, whereas consumption decisions focus on the items being consumed, predictions tend to take the entire assortment into account, including the unattractive items (i.e., predictions are more holistic). Second, consumers believe that considering the unattractive items will reduce how much they will enjoy the attractive items (i.e., consumers intuit hedonic assimilation). As a result, we find that consumers expect they will enjoy the extended assortment less, will consume fewer items from it, are willing to pay less for it, and are more likely to trade it. However, the negative effect of the additional unattractive items can be eliminated when predictions are made for individual items (countering holistic processing) or when consumers cannot consume the unattractive items (countering imagined hedonic assimilation).