Opportunity Cost Neglect
Shane Frederick, Nathan Novemsky, Jing Wang, Ravi Dhar, Stephen Nowlis
Journal of Consumer Research · 2009 · Volume 36 · Issue 4
Abstract
To properly consider the opportunity costs of a purchase, consumers must actively generate the alternatives that it would displace. The current research suggests that consumers often fail to do so. Even under conditions promoting cognitive effort, various cues to consider opportunity costs reduce purchase rates and increase the choice share of more affordable options. Sensitivity to such cues varies with chronic dispositional differences in spending attitudes. We discuss the implications of these results for the marketing strategies of economy and premium brands.
Keywords
Behavioral Decision Theory, Judgment and Decision Making, Experimental Design and Analysis (ANOVA)
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