Tag Archives: Behavioral Economics

I pay more because this is my game

Li, Y., & Joo, J. (2023). The mediating effect of psychological ownership on the relationship between value co-creation and the in-app purchasing intention of mobile games players. Behavioral Sciences, 13 (3), 205.

Abstract

In previous research on in-app purchasing, one of the revenue sources for mobile games focuses on users’ unilateral relationships, such as their achievement, loyalty, and perception. However, little has been discussed about the commercial impact of the bilateral relationship. We extend discussions by examining an unprecedented issue, that is, the role of the bilateral relationships between users and mobile game companies in increasing in-app purchasing intention. We borrow from the business literature and psychology to hypothesize that when mobile game users co-create value with a mobile game company, their psychological ownership of the mobile game increases, which in turn increases their in-app purchasing intentions. To test this hypothesis, we conducted a carefully designed study by recruiting eighty-six Chinese game users. Half of the participants were exposed to an imaginary mobile game whose interface allowed them to co-create value with the mobile game company and the other half were exposed to an identical mobile game whose interface did not. We recruited participants from the two online platforms in which Chinese mobile game players gather—Weibo and WeChat Moment. Using SPSS 26, we conducted an independent samples test to test the effect of value co-creation and employed Hayes Model 4 to test whether psychological ownership mediated the relationship between value co-creation and in-app purchasing intention. We found that (1) when participants were allowed to co-create value, their in-app purchasing intentions increased, and (2) the relationship between value co-creation and in-app purchasing intention was mediated by psychological ownership. Our findings provide fresh insights for mobile game designers and marketers.

Keywords

value co-creationpsychological ownershipin-app purchasingmobile game

How to write and when to send traffic-boosting mobile coupons?

Chu, W., & Joo, J. (2024). Targeting effectiveness of mobile coupons: from exposure to purchase. Journal of Marketing Analytics, 12, 342-354.

Abstract

This research examines the effectiveness of traffic-boosting mobile coupons through a randomized field experiment of over half a million South Korean consumers. The research question analyzes the effectiveness of the content (six message types) and context (three days out of the week for coupon distribution) of mobile coupons on response-to-coupon, store visits, and purchase amount for a health and beauty retail chain. Big data on individual customers, gathered from a field experiment, was analyzed through bivariate probit, mediation analysis, and tobit regression. The results show that message content affects store visits, which was fully mediated through response-to-coupon. In particular, messages that “made the amount of discount salient” and “formed a personal connection” were more effective than other messages. In terms of context, messages sent during the weekdays were more effective in increasing store visit, than those sent during the weekend.

Keywords

Mobile promotion · Mobile coupon · Message content · Message context · Coupon distribution · Field experiment

Acknowledgements

We would like to express our deep gratitude to Hyojung Kim, Sul Namgoong, and Joongjae Lee at Shinhan Card for their assistance with the collection of our data.

Please see the case study in Korean language here

If people have to control themselves, avoid cuteness

Yoon, N., Park, W., & Joo, J. (2022). Dark side of cuteness: Effect of whimsical cuteness on new product adoption. In G. Bruyns & H. Wei (Eds.), [ _ ] With Design: Reinventing Design Modes (pp. 617–633). Singapore: Springer.

Abstract

A wide range of businesses actively use cute characters such as the globally popular LINE FRIENDS characters for product design to increase consumers’ product adoption. Prior research has found that whimsical cuteness—which elicits fun and playful mental representations—can lead to higher product adoption. The effectiveness, however, has been investigated mostly in indulgent contexts. This article aims to uncover the opposite phenomenon, that is, whimsical cuteness could be detrimental for product adoption, in particular, in a non-indulgent context. In a pre-test, we measured the different types of cuteness of nine LINE FRIENDS characters, selecting one pair of characters differed only in terms of whimsical cuteness. Additionally considering product newness, the main study tested whether product adoption differed depending on the level of whimsical cuteness and product newness. The results demonstrate that participants were less likely to adopt a non-indulgent product when it was highly whimsically cute compared to less whimsically cute because the indulgence provoked by fun and playful mental representations conflicted against the restraint reinforced by a product for self-control. The adverse effect increases when the product has lower product newness whereas high product newness dampens the effect. The findings suggest that practitioners should carefully consider product nature and newness when applying whimsically cute features to product design and marketing promotions. This study has originality in that it is the first to demonstrate the adverse effect of whimsical cuteness on new product adoption and verify the moderating effect of product newness.

Keywords

Whimsical cuteness, New product adoption, Product newness, Self-control, LINE FRIENDS

The key practical significance is that a product design which makes products seem whimsically cute has potentially detrimental effects on consumers’ product adoption, especially when the products are non-indulgent. Although nudge is an interesting lens for designers (Chen et al. 2019), our finding suggests that whimsical cuteness can have counter-nudging effects (Saghai 2013; Sunstein 2017) that make consumers not to adopt self-control products, contrary to the expectation of designers and marketers. For instance, cute characters with high whimsical cuteness might in fact hinder consumers’ adoption of products for self-control such as diet foods and time and study management products. Thus, practitioners should beware of using whimsically cute characters on products related to self-control (pg. 629).

Play a video game and meet a psychiatrist

Piao, S., & Joo, J. (2022). A Behavioral Strategy to Nudge Young Adults to Adopt In‐Person Counseling: Gamification. In G. Bruyns & H. Wei (Eds.), [ _ ] With Design: Reinventing Design Modes (pp. 1348–1363). Singapore: Springer.

Abstract

Mental illness has always been an important issue for young adults. Moreover, initiatives resulting from the outbreak of COVID‐19 have had an even greater impact on the mental health of young adults. This study sought to examine the effect of gamification on whether young adults adopt in‐person counseling. One hundred twenty young adults (42 males and 78 females) with an average age of 29 years participated in our experiment. In the experiment, a 2 (Gamification: no vs. yes) × 2 (Vividness: low vs. high) between‐subjects design was employed. In the “yes” gamification condition, participants decided whether or not to read introductory material about in‐person counseling, and also whether or not to adopt in‐person counseling in the future. The results of the study show that: (1) gamification increased adoption, (2) participants’ perception of subjective usability of in‐person counseling mediated the effect of gamification to adoption, and (3) vividness of presentation moderated subjective usability. Our study demonstrated that gamification nudges young adults to adopt in‐person counseling while subjective usability mediates the relationship, and vividness moderates the relationship between gamification and subjective usability. Our findings provide counselors fresh insights into motivating people to access counseling services.

Keywords

Gamification, Adoption, Usability, Vividness, Counselling

“… gamification has the primary purpose of promoting human motivation and performance in a particular activity. The importance of gamification has been thoroughly discussed theoretically and practically in an increasing number of research studies for health professions education (Van Nuland et al. 2015; Verkuyl et al. 2017;Buttetal. 2018). Ourexperimental study found that gamification does have a positive effect on people adopting in-person counselling” (pg. 1360).

Bundling smart products better by considering consumers’ goals

Abstract

Contemporary electronic manufacturers struggle with how to develop attractive bundles by combining their existing smart products. In the present work, we propose Goal Based Bundling (GBB) by drawing on the academic research of goal systems theory (Kruglanski et al., 2018) and shed light on two previously ignored aspects of bundling strategy: service and glue product. We applied our GBB to a collaborative project with Samsung Electronics, whose goal was to develop new product bundles for kids by combining multiple smart home products. We constructed a framework of Samsung Electronics’ smart products and then visualized it on its sales website. A UI design conveying the value of smart products bundle was developed based on GBB structure. We discuss the process and the result of our project to provide insights into the product managers who combine existing smart products to develop a bundle.

Keywords

Product bundle; Smart products; Goal systems theory; Service; Glue product; Samsung Electronics

“Although bundling tactics are frequently called upon in business, marketing research on product bundles is surprisingly sparse (Russell et al., 1999). This paper represents an attempt to identify bundling smart products by borrowing the key concepts from the Goal Systems Theory (Kruglanski et al., 2018). We posit that constructing a products bundle following a hierarchical goal structure overcomes the limitation of combining categorically dissimilar products. Moreover, it addresses an important role of service in smart product bundling.” (pg. 2898)

How could we encourage young people to meet psychiatrists?

Piao, S., & Joo, J. (2022). A behavioral strategy to nudge young adults to adopt in-person counseling: Gamification. Behavioral Sciences, 12(2), 40.

Abstract

Mental illness has always been an important issue for young adults. Moreover, initiatives resulting from the outbreak of COVID‐19 have had an even greater impact on the mental health of young adults. This study sought to examine the effect of gamification on whether young adults adopt in‐person counseling. One hundred twenty young adults (42 males and 78 females) with an average age of 29 years participated in our experiment. In the experiment, a 2 (Gamification: no vs. yes) × 2 (Vividness: low vs. high) between‐subjects design was employed. In the “yes” gamification condition, participants decided whether or not to read introductory material about in‐person counseling, and also whether or not to adopt in‐person counseling in the future. The results of the study show that: (1) gamification increased adoption, (2) participants’ perception of subjective usability of in‐person counseling mediated the effect of gamification to adoption, and (3) vividness of presentation moderated subjective usability. Our study demonstrated that gamification nudges young adults to adopt in‐person counseling while subjective usability mediates the relationship, and vividness moderates the relationship between gamification and subjective usability. Our findings provide counselors fresh insights into motivating people to access counseling services.

Keywords

gamification; adoption; usability; vividness; counseling; nudge

How to force myself to read a book?

I find myself reading books challenging. Most books are too long to start and I am too busy to finish reading book. Therefore, I have applied numerous insights obtained from behavioral research to force myself to read books.

So far, the most effective method is to buy a physical book. This is particularly effective when the book is not available at a local book store and it needs to be delivered to me in the mail. My intention to finish reading the book *irrationally* increases because it has a physical form and I do not want to waste, interestingly, its delivery cost.

Atasoy, O., & Morewedge, C. K. (2018). Digital Goods Are Valued Less Than Physical Goods. Journal of Consumer Research, 44(6), 1343–1357.

Digital goods are, in many cases, substantive innovations relative to their physical counterparts. Yet, in five experiments, people ascribed less value to digital than to physical versions of the same good. Research participants paid more for, were willing to pay more for, and were more likely to purchase physical goods than equivalent digital goods, including souvenir photographs, books (fiction and nonfiction), and films. Participants valued physical goods more than digital goods whether their value was elicited in an incentive compatible pay-what-you-want paradigm, with willingness to pay, or purchase intention. Greater capacity for physical than digital goods to garner an association with the self (i.e., psychological ownership), underlies the greater value ascribed to physical goods. Differences in psychological ownership for physical and digital goods mediated the difference in their value. Experimentally manipulating antecedents and consequents of psychological ownership (i.e., expected ownership, identity-relevance, perceived control) bounded this effect, and moderated the mediating role of psychological ownership. The findings show how features of objects influence their capacity to garner psychological ownership before they are acquired, and provide theoretical and practical insights for the marketing, psychology, and economics of digital and physical goods.

The second most effective method is to bookmark with sticky notes after briefly reading the table of contents. I often stick only three notes on the pages I want to read to relieve burden. When I see them, I *mistakenly* think I already started reading the book.

Kivetz, R., Urminsky, O., & Zheng, Y. (2006). The Goal-Gradient Hypothesis Resurrected: Purchase Acceleration, Illusionary Goal Progress, and Customer Retention. Journal of Marketing Research, 43(1), 39–58.

The goal-gradient hypothesis denotes the classic finding from behaviorism that animals expend more effort as they approach a reward. Building on this hypothesis, the authors generate new propositions for the human psychology of rewards. They test these propositions using field experiments, secondary customer data, paper-and-pencil problems, and Tobit and logit models. The key findings indicate that (1) participants in a real café reward program purchase coffee more frequently the closer they are to earning a free coffee; (2) Internet users who rate songs in return for reward certificates visit the rating Web site more often, rate more songs per visit, and persist longer in the rating effort as they approach the reward goal; (3) the illusion of progress toward the goal induces purchase acceleration (e.g., customers who receive a 12-stamp coffee card with 2 preexisting “bonus” stamps complete the 10 required purchases faster than customers who receive a “regular” 10-stamp card); and (4) a stronger tendency to accelerate toward the goal predicts greater retention and faster reengagement in the program. The conceptualization and empirical findings are captured by a parsimonious goal-distance model, in which effort investment is a function of the proportion of original distance remaining to the goal. In addition, using statistical and experimental controls, the authors rule out alternative explanations for the observed goal gradients. They discuss the theoretical significance of their findings and the managerial implications for incentive systems, promotions, and customer retention.

Certainly, I want to read more books without these tricks. However, I have insufficient self control resources and frequently mispredict my available time. I wish these tricks drive me to start as well as complete reading books.

How did Samsung designers overcome an unofficial heuristic?

Hwang, S., Park, H., Oh, K., Hwang, S., & Joo, J. (2021). Rethinking a Designers’ Rule of Thumb: Influence of Information Seeking and Consumption Goals on Mobile Commerce Interface Design. Journal of Theoretical and Applied Electronic Commerce Research, 16 (5), 1631–1647.

Abstract: We investigated whether adding product information in mobile commerce improved consumers’ attitudes toward a product and whether this relationship was moderated by consumption goals. We conducted two field experiments in which we recruited parents in Korea and the USA and asked them how they evaluated two childcare hybrid products (HPs) newly developed by Samsung Electronics designers. The results revealed that participants exposed to additional information about the HPs evaluated them more favorably than those who were not exposed. However, this relationship disappeared when a consumption goal was activated. Our findings establish a dynamic relationship between information seeking and consumption goals, asking designers to rethink their rule of thumb in the mobile commerce context.

Keywords: information seeking; consumption goal; hybrid product; Samsung Electronics; mobile commerce

Less is better for flower?

Less is often better. Chris Hsee demonstrated in his experiment that an overfilled ice cream serving with 7 oz of ice cream was valued more than an underfilled serving with 8 oz of ice cream. However, participants indicated greater willingness to pay for an underfilled ice cream than an overfilled one ($1.85 vs. $1.56). This is because, according to him, when participants determined the value of each option alone (i.e., separate evaluation), they focused on an easy-to-evaluate attribute (whether an ice cream is overfilled or underfilled) and failed to consider a hard-to-evaluate attribute (the amount of ice cream). However when indicating their willingness to pay together (i.e., joint evaluation), they considered the hard-to-evaluate attribute important. Note that a hard-to-evaluate attribute is an attribute that “people do not know whether a given value on that attribute is good or bad.”

I had a similar experience at the Nicolai Bergmann, a flower shop located in Seoul, Korea. A preserved, overfilled flower attracted my attention when I entered the store. However, I found another flower next to it and it was in a square box. Although the overfilled flower attracted me first, I chose the boxed one for several reasons. The primary reason was that when comparing these two flowers side-by-side, I considered their hard-to-evaluate attribute (the amount of flower) seriously. I expect many other visitors may reach the same conclusion.

Hsee, C. K. (1998). Less is better: When low‐value options are valued more highly than high‐value options. Journal of Behavioral Decision Making11(2), 107-121.

This research demonstrates a less-is-better effect in three contexts: (1) a person giving a $45 scarf as a gift was perceived to be more generous than one giving a $55 coat; (2) an overfilled ice cream serving with 7 oz of ice cream was valued more than an underfilled serving with 8 oz of ice cream; (3) a dinnerware set with 24 intact pieces was judged more favourably than one with 31 intact pieces (including the same 24) plus a few broken ones. This less-is-better effect occurred only when the options were evaluated separately, and reversed itself when the options were juxtaposed. These results are explained in terms of the evaluability hypothesis, which states that separate evaluations of objects are often infuenced by attributes which are easy to evaluate rather than by those which are important.

How to attract attention of pedestrians?

How could we make passing pedestrians stop and look at something? One solution is to apply technology. For instance, tactile pavings or tactile ground surface indicators tell them when to cross roads.

Another solution is to apply design. While I stayed in Curitiba, Brazil, fire extinguishers always attract my attention successfully. This is because they are located inside red-yellow squares painted on the ground.

Interestingly, the same rule applies when fire extinguishers are above the ground. Red-yellow squares are painted on the ground when fire extinguishers are hung on the wall.

Design beats technology in Curitiba. 🙂

Labrecque, L. I., & Milne, G. R. (2012). Exciting red and competent blue: the importance of color in marketing. Journal of the Academy of Marketing Science40(5), 711-727.

From beverages to consumer electronics, marketers are using color in innovative ways. Despite this, little academic research has investigated the role that color plays in marketing. This paper examines how color affects consumer perceptions through a series of four studies. The authors provide a framework and empirical evidence that draws on research in aesthetics, color psychology, and associative learning to map hues onto brand personality dimensions (Study 1), as well as examine the roles of saturation and value for amplifying brand personality traits (Study 2). The authors also demonstrate how marketers can strategically use color to alter brand personality and purchase intent (Study 3), and how color influences the likability and familiarity of a brand (Study 4). The results underscore the importance of recognizing the impact of color in forming consumer brand perceptions.