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Risky discounts: Do people prefer them on a per-item or per-purchase basis and why?

Kamleitner, B, Mandel, DR and Dhami, MK (2011) Risky discounts: Do people prefer them on a per-item or per-purchase basis and why? Journal of Economic Psychology, 32 (6). 951 - 961. ISSN 0167-4870

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Abstract

Risky discounts differ from other discount formats in that the actual discount level is determined by chance (e.g., “scratch & save” cards). Four studies investigated whether consumers prefer to receive risky discounts on a per-purchase or per-item basis. Although these options do not differ with regard to expected value, they entail multiple differences (e.g., savings distribution, amount of individual gains, excitement, and effort involved) that may lead to differential consumer perceptions and experiences. Controlling for expected value of savings, participants preferred per-item over per-purchase discounts. As hypothesized, the main reasons for this preference were a partly incorrect perception of the properties of the savings distribution, the adoption of a narrow mindset focusing on the best outcome in a series of discount gambles, and the greater excitement provided by multiple discount gambles.

Item Type: Article
Additional Information: This is the author's version of a work that was accepted for publication in Journal of Economic Psychology. Changes resulting from the publishing process such as editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definite version was subsequently published in Journal of Economic Psychology, 32(6):951-961 DOI: 10.1016/j.joep.2011.07.009
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Divisions: Faculty of Arts and Human Sciences > Psychology
Depositing User: Symplectic Elements
Date Deposited: 31 Oct 2012 17:13
Last Modified: 23 Sep 2013 19:29
URI: http://epubs.surrey.ac.uk/id/eprint/577009

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