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One of the most dramatic shifts in recent years has been consumers’ increased use of smartphones for making purchases and choices—but does using a smartphone influence what consumers choose? This article shows that, compared with using a personal computer (PC), making choices using a personal smartphone leads consumers to prefer more unique options. The authors theorize that because smartphones are considerably more personal and private than PCs, using them activates intimate self-knowledge and increases private self-focus, shifting attention toward individuating personal preferences, feelings, and inner states. Consequently, making choices using a personal smartphone, compared with a PC, tends to increase the preference for unique and self-expressive options. Six experiments and several replications examine the effects of personal smartphone use on the preference for unique options and test the underlying role of private self-focus. The findings have important implications for theories of self-focus, uniqueness seeking, and technology’s impact on consumers, as well as tangible implications for many online vendors, brands, and researchers who use mobile devices to interact with their respective audiences. more...

We show that the Bayesian equilibrium correspondence of a Tullock contest with incomplete information is upper semicontinuous. Further, we show that when equilibrium is unique and players’ costs of effort are either state independent or uniformly bounded, then it is also lower semicontinuous, and it is robust to small perturbations of the players’ information, value for the prize, and cost of effort, as well as of the contest success function. more...

We study all-pay auctions under incomplete information in which contestants have non-linear effort functions. The designer offers the option of insurance for which a contestant pays a premium to the contest designer. If a contestant does not win he is reimbursed the cost of his effort. We demonstrate that contests with insurance may be profitable for a designer who wishes to maximize his expected revenue as based on the contestants’ expected total effort, the premium of the insured contestants, and their reimbursement. more...

Consumers often try to visually identify a previously encountered product among a sequence of similar items, guided only by their memory and a few general search terms. What determines their success at correctly identifying the target product in such “product lineups”? The current research finds that the longer consumers search sequentially, the more conservative and—ironically—inaccurate judges they become. Consequently, the more consumers search, the more likely they are to erroneously reject the correct target when it finally appears in the lineup. This happens because each time consumers evaluate a similar item in the lineup, and determine that it is not the option for which they have been looking, they draw an implicit inference that the correct target should feel more familiar than the similar items rejected up to that point. This causes the subjective feeling of familiarity consumers expect to experience with the true target to progressively escalate, making them more conservative but also less accurate judges. The findings have practical implications for consumers and marketers, and make theoretical contributions to research on inference-making, online search, and product recognition. more...

We study an elimination tournament with four contestants, each of whom has either a high value of winning (a strong player) or a low value of winning (a weak player) and these values are common knowledge. Each pairwise match is modeled as an all-pay auction. The winners of the first stage (semifinal) compete in the second stage (final) for the first prize, while the losers of the first stage compete for the third prize. We examine whether or not the game for the third prize is profitable for the designer who wishes to maximize the total effort of the players. We demonstrate that if the players are asymmetric and there are at least two strong players, then there is always a seeding of the players such that the third place game is not profitable. On the other hand, if there are at least two weak players, then there is always a seeding of the players such that the third place game is profitable. more...

Self‐customization in online shopping contexts readily offers an abundance of options for consumers. However, the sheer amount of information can quickly become overwhelming. One way to give people the freedom to choose without overwhelming them with information is to simplify the decision process by breaking it down into a series of smaller steps. Contrary to a common assumption that simpler decisions increase choice likelihood, however, this study demonstrates that a simple by-attribute self‐customization process may activate a maximizing mindset, which increases people's desire to find better options and decreases their satisfaction with the ones available. Consequently, simplifying the self‐customization process can sometimes backfire by decreasing choice likelihood. Three studies suggest that although by‐attribute self‐customization formats are easier to choose from, compared with more complex matrix formats, they may sometimes—paradoxically—increase choice deferral. The findings suggest that a maximizing mindset mediates this effect, casting doubt on information‐based alternative explanations. The findings also suggest that whether by‐attribute self‐customization increases or decreases choice likelihood may depend on the presence of objective quality cues, which indicate that an objectively‐best option can be found. This study furthers the understanding of how decision difficulty and maximizing influence self‐customization decisions. more...

We study a sequential two-stage Tullock contest with two asymmetric players. The players compete for two prizes; the player with the highest effort in the first stage wins the secondary prize while the player with the highest total effort in both stages wins the first prize. Both players have the same cost functions where the marginal cost in the first stage is higher than in the second one. We analyze the subgame perfect equilibrium of this contest and reveal a paradoxical behavior such that the players’ utilities increase in their marginal effort cost. more...

We study two-stage elimination Tullock contests. In the first stage all the players compete against each other; then some advance to the second stage while the others are removed. The finalists compete against each other in the second stage, and one of them wins the prize. To maximize the expected total effort, the designer can give a head start to the winner of the first stage when he competes against the other finalists in the second stage. We show that the optimal head start, independent of the number of finalists, always increases the players’ expected total effort. We also show how the number of players and finalists affect the value of the optimal head start. more...

We study a multistage sequential search model with n agents who compete for one job. The agents arrive sequentially, each one in a different stage. The agents' abilities, which are private information, are derived from heterogeneous distribution functions. In each stage, the designer chooses an ability threshold. If an agent has a higher ability than the threshold in the stage in which he arrives, he gets the job and the search is over. The agent's ability is not revealed when he wins the job and the designer has only an estimation of this ability according to the threshold placed by him. We analyze the optimal ability thresholds imposed by the designer who wishes to maximize the ability estimation of the agent who gets the job net of the search cost. We also investigate the relation between the optimal ability thresholds as well as the optimal order of agents in all stages according to the agents' distributions of abilities. more...

Why are people often uncomfortable dealing with financial decisions? We propose that people perceive financial decisions – more so than decisions in many other equally complex and important domains – as compatible with a cold, analytical mode of thinking and as incompatible with feelings and emotions. Consequently, the more people perceive themselves as inclined to rely on affect in their decisions, the more they experience self-concept incongruity with financial decisions (i.e., feeling that financial decisions are “not them”), and consequently show an increased tendency to avoid such decisions. Five studies demonstrate this phenomenon using both consequential and hypothetical decisions, provide evidence for the proposed mechanism, and rule out alternative accounts, including perceived financial knowledge, expertise and self-efficacy perceptions, decision confidence, and preference for numerical information. The findings contribute to research on thinking styles and decision avoidance, and they underscore a characteristic of financial decisions that makes them stand out among many other decision types. In addition to their theoretical significance, the findings have practical implications for the communication of financial products and services. more...

Due to its origins in the literature on judgment and decision-making, context effects in marketing are construed exclusively in terms of how choices deviate from utility maximization principles as a function of how choices are presented (e.g., framing, sequence, composition). This limits our understanding of a range of other relevant context effects on choice. This paper broadens the scope of context effects to include social (e.g., with friends or family) and situational factors (e.g., location (home/store), time, weather).We define contexts as any factor that has the potential to shift the choice outcomes by altering the process by which the decision is made. We use this lens to integrate the psychology literature on habitual choice, System I and II decision-making, and a recent stream of empirical work that involves social and situational effects into the scope of context effects. We distinguish between exogenous and endogenous context effects, based on whether the decision-maker chooses the context. We then discuss issues of empirically identifying context effects when using either experimentally generated data or naturally occurring secondary data. We conclude with a discussion of trends and opportunities for new research on context effects. more...

We study two-stage all-pay contests in which synergy exists between the stages. The value of winning for each contestant is fixed in the first stage while it is effort-dependent in the second one. We assume that a player’s effort in the first stage either increases (positive synergy) or decreases (negative synergy) his value of winning in the second stage. The subgame perfect equilibrium of this contest is analyzed with either positive or negative synergy. We show, in particular, that whether the contestants are symmetric or asymmetric their expected payoffs may be higher under negative synergy than under positive synergy. Consequently, they prefer smaller values of winning (negative synergy) over higher ones (positive synergy). more...

To properly evaluate a potential product upgrade, consumers should compare the upgraded option with the product they already own to assess the upgrade's added utility. However, although consumers explicitly and spontaneously acknowledge the importance of comparing the upgrade with the status quo, the authors find that they often fail to do so. Consequently, consumers frequently buy product upgrades that they would not have bought had they followed their own advice. Five experiments, involving both real and hypothetical upgrade decisions, show that even when the status quo option is represented in the decision context, if consumers are not explicitly prompted to reflect on it or compare it with the upgraded option, they often do not compare it with the upgrade and thus show an elevated likelihood of upgrading. The experiments suggest that this “comparison neglect” increases upgrade likelihood by making people overlook the similarities between the upgraded and status quo options and that it persists even when deliberation effort is high. The findings have important implications for theory, marketing practice, and consumer welfare. more...

We propose that choice construction strategies often meet the criteria for “habits.” As an example of a constructed preference habit, we focus on extremeness aversion, namely, the tendency ...