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Where It’s from, Where It Goes: Categorical Retrieval and Comparative Judgments in Spending Small Windfall Income

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posted on 26.08.2022, 18:43 authored by Chuanye Chen

The present study proposes that when spending windfall income, consumers categorically retrieve a comparison set from the previous spending with the exact source of income and engage in two comparative judgments: (1) how similar is the target product of the retrieved category and (2) whether the price is acceptable compared to a reference level. In an experiment where participants shop in a hypothetical online store either using a COVIDstimulus check or Cyber Monday Gift Card, where we manipulate the reference price to be either in line with or much lower than the listing price, we show weak albeit significant evidence that a considerable income source effect occurs for electronic items only when the price of the target product is manipulated to look acceptable. The predicted interaction between income source and the reference price level is not significant for non-electronic items. This result cannot be fully accounted for by the differing marginal propensity to consume (MPC) in different mental accounts, and we discuss its theoretical and managerial implications.





Gretchen Chapman


Social and Decision Sciences