Violence Against Women and Household Ownership of Radios, Computers, and Phones in 20 Countries. Lauren Cardoso & Susan Sorenson. American Journal of Public Health, July 2017, Pages 1175-1181, https://www.ncbi.nlm.nih.gov/pubmed/28520478
Methods: Women aged 15 to 49 years in 20 countries were surveyed via UNICEF’s Multiple Indicator Cluster Surveys between 2006 and 2014. Multivariate logistic regressions accounted for individual-, household-, and structural-level variables.
Results: Household ownership of any ICT (radio, computer, fixed phone, or mobile phone but not television) was associated with increased odds of women rejecting wife beating. The largest association was with computer ownership: women in homes with a computer were more likely to reject wife beating (adjusted odds ratio [AOR] = 1.81; 97.5% confidence interval [CI] = 1.69, 1.93). Number of ICTs was important: women in households with 1, 2, 3, 4, and 5 ICTs (vs 0) were more likely to reject wife-beating justifications (AOR = 1.10 [97.5% CI = 1.03, 1.17]; AOR = 1.10 [97.5% CI = 1.03, 1.18]; AOR = 1.19 [97.5% CI = 1.11, 1.29]; AOR = 1.71 [97.5% CI = 1.54, 1.88]; and AOR = 2.85 [97.5% CI = 2.48, 3.26]; respectively).
Conclusions: Independent of household wealth, country development, and other sociodemographic factors, the more ICTs in a household, the more likely that women will reject wife-beating justifications. Policymakers and program planners should consider potential implications of ICT access relating to intimate partner violence.
Saturday, July 29, 2017
Cross-Disciplinary Survey of Beliefs about Human Nature, Culture, and Science
Joseph Carroll et al.: Cross-Disciplinary Survey of Beliefs about Human Nature, Culture, and Science. Evolutionary Studies in Imaginative Culture, Vol. 1 | No. 1 | Spring 2017. http://journals.academicstudiespress.com/index.php/ESIC/article/view/10/52
Abstract: How far has the Darwinian revolution come? To what extent have evolutionary ideas penetrated into the social sciences and humanities? Are the “science wars” over? Or do whole blocs of disciplines face off over an unbridgeable epistemic gap? To answer questions like these, contributors to top journals in 22 disciplines were surveyed on their beliefs about human nature, culture, and science. More than 600 respondents completed the survey. Scoring patterns divided into two main sets of disciplines. Genetic influences were emphasized in the evolutionary social sciences, evolutionary humanities, psychology, empirical study of the arts, philosophy, economics, and political science. Environmental influences were emphasized in most of the humanities disciplines and in anthropology, sociology, education, and women’s or gender studies. Confidence in scientific explanation correlated positively with emphasizing genetic influences on behavior, and negatively with emphasizing environmental influences. Knowing the current actual landscape of belief should help scholars avoid sterile debates and ease the way toward fruitful collaborations with neighboring disciplines.
Keywords: human nature, culture, science, science wars, cultural construction, evolutionary social science, social science, humanities, biocultural theory
Abstract: How far has the Darwinian revolution come? To what extent have evolutionary ideas penetrated into the social sciences and humanities? Are the “science wars” over? Or do whole blocs of disciplines face off over an unbridgeable epistemic gap? To answer questions like these, contributors to top journals in 22 disciplines were surveyed on their beliefs about human nature, culture, and science. More than 600 respondents completed the survey. Scoring patterns divided into two main sets of disciplines. Genetic influences were emphasized in the evolutionary social sciences, evolutionary humanities, psychology, empirical study of the arts, philosophy, economics, and political science. Environmental influences were emphasized in most of the humanities disciplines and in anthropology, sociology, education, and women’s or gender studies. Confidence in scientific explanation correlated positively with emphasizing genetic influences on behavior, and negatively with emphasizing environmental influences. Knowing the current actual landscape of belief should help scholars avoid sterile debates and ease the way toward fruitful collaborations with neighboring disciplines.
Keywords: human nature, culture, science, science wars, cultural construction, evolutionary social science, social science, humanities, biocultural theory
Increasing consumer well-being: Risk as potential driver of happiness
Increasing consumer well-being: Risk as potential driver of happiness. Nawel Ayadi, Corina Paraschiv & Eric Vernette. Applied Economics, Summer 2017, Pages 4321-4335, http://dx.doi.org/10.1080/00036846.2017.1282142
Abstract: This article investigates the relation between risk and individual well-being. We propose a theoretical model of happiness that makes a distinction between ex ante evaluations of happiness and ex post assessments. The main assumptions of the model are tested through three studies based on anchoring vignettes. We show that, even if, ex ante, consumers fear high risk and do not associate it to a high level of happiness, their ex post evaluation of well-being is generally higher when identical consequences result from a high-risk situation than from a low-risk situation. Control over risk-taking reinforces the gap between ex ante and ex post measures of happiness. Thus, our article provides empirical evidence about a positive relation between risk and individual well-being, suggesting that risky experiences have the potential to increase consumer well-being.
Keywords: Well-being, happiness, risk, vignettes
JEL classific'n: D12, D81, I31
Abstract: This article investigates the relation between risk and individual well-being. We propose a theoretical model of happiness that makes a distinction between ex ante evaluations of happiness and ex post assessments. The main assumptions of the model are tested through three studies based on anchoring vignettes. We show that, even if, ex ante, consumers fear high risk and do not associate it to a high level of happiness, their ex post evaluation of well-being is generally higher when identical consequences result from a high-risk situation than from a low-risk situation. Control over risk-taking reinforces the gap between ex ante and ex post measures of happiness. Thus, our article provides empirical evidence about a positive relation between risk and individual well-being, suggesting that risky experiences have the potential to increase consumer well-being.
Keywords: Well-being, happiness, risk, vignettes
JEL classific'n: D12, D81, I31
How Unequal Perceptions of User Reviews Impact Price Competition
How Unequal Perceptions of User Reviews Impact Price Competition. By Pelin Pekgün, Michael Galbreth & Bikram Ghosh
Decision Sciences, http://onlinelibrary.wiley.com/doi/10.1111/deci.12273/abstract
Abstract: When a consumer cannot fully assess her valuations of competing products prior to purchase, she must make a purchase decision based on imperfect product information. However, with the advent of online channels for widely disseminating individual user reviews, consumers are now able to learn from the experiences of others and update their expectations regarding product valuations. We analyze the interaction of user reviews and experience uncertainty, with a specific focus on the potential for negative and positive reviews to be weighted differently in a consumer's assessment of the valence of the posted reviews. We find that overweighting of negative reviews by consumers can lead to surprising results in terms of pricing and profits in a competitive context. In particular, if consumer awareness is higher for the lower quality product, it can charge higher prices and realize higher profits in equilibrium than its higher quality competitor when consumers are strongly influenced by negative reviews. We also show that a higher weighting on positive reviews by consumers always helps the firm with a lower consumer awareness.
Decision Sciences, http://onlinelibrary.wiley.com/doi/10.1111/deci.12273/abstract
Abstract: When a consumer cannot fully assess her valuations of competing products prior to purchase, she must make a purchase decision based on imperfect product information. However, with the advent of online channels for widely disseminating individual user reviews, consumers are now able to learn from the experiences of others and update their expectations regarding product valuations. We analyze the interaction of user reviews and experience uncertainty, with a specific focus on the potential for negative and positive reviews to be weighted differently in a consumer's assessment of the valence of the posted reviews. We find that overweighting of negative reviews by consumers can lead to surprising results in terms of pricing and profits in a competitive context. In particular, if consumer awareness is higher for the lower quality product, it can charge higher prices and realize higher profits in equilibrium than its higher quality competitor when consumers are strongly influenced by negative reviews. We also show that a higher weighting on positive reviews by consumers always helps the firm with a lower consumer awareness.
Dispositional Negativity in the Wild: Social Environment Governs Momentary Emotional Experience
Dispositional Negativity in the Wild: Social Environment Governs Momentary Emotional Experience. Alexander Shackman et al. Emotion, https://www.ncbi.nlm.nih.gov/pubmed/28604044
Abstract: Dspositional negativity - the tendency to experience more frequent or intense negative emotions - is a fundamental dimension of temperament and personality. Elevated levels of dispositional negativity have profound consequences for public health and wealth, drawing the attention of researchers, clinicians, and policymakers. Yet, relatively little is known about the factors that govern the momentary expression of dispositional negativity in the real world. Here, we used smart phone-based experience-sampling to demonstrate that the social environment plays a central role in shaping the moment-by-moment emotional experience of 127 young adults selectively recruited to represent a broad spectrum of dispositional negativity. Results indicate that individuals with a more negative disposition derive much larger emotional benefits from the company of close companions - friends, romantic partners, and family members - and that these benefits reflect heightened feelings of social connection and acceptance. These results set the stage for developing improved interventions and provide new insights into the interaction of emotional traits and situations in the real world, close to clinically and practically important end-points.
Abstract: Dspositional negativity - the tendency to experience more frequent or intense negative emotions - is a fundamental dimension of temperament and personality. Elevated levels of dispositional negativity have profound consequences for public health and wealth, drawing the attention of researchers, clinicians, and policymakers. Yet, relatively little is known about the factors that govern the momentary expression of dispositional negativity in the real world. Here, we used smart phone-based experience-sampling to demonstrate that the social environment plays a central role in shaping the moment-by-moment emotional experience of 127 young adults selectively recruited to represent a broad spectrum of dispositional negativity. Results indicate that individuals with a more negative disposition derive much larger emotional benefits from the company of close companions - friends, romantic partners, and family members - and that these benefits reflect heightened feelings of social connection and acceptance. These results set the stage for developing improved interventions and provide new insights into the interaction of emotional traits and situations in the real world, close to clinically and practically important end-points.
Relative and Absolute Deprivation’s Relationship With Violent Crime in the US: Testing an Interaction Effect Between Income Inequality & Disadvantage
Relative and Absolute Deprivation’s Relationship With Violent Crime in the United States: Testing an Interaction Effect Between Income Inequality and Disadvantage. By Bert Burraston, James C. McCutcheon, Stephen J. Watts, http://journals.sagepub.com/doi/abs/10.1177/0011128717709246
Abstract: Relative deprivation and absolute deprivation both have effects on crime. Although these two concepts are often treated as separate, some scholarship has suggested that the two may be complementary. The current study assesses whether the effects of relative and absolute deprivation interact statistically in their effect on violent crime by testing an interaction effect between income inequality and disadvantage. Using data from U.S. counties, hierarchical linear modeling (HLM) regression models show that there is a significant interaction between relative and absolute deprivation predicting violent crime rates. The plot of this interaction shows that when absolute deprivation is high, there is less violence in high inequality counties than in counties with medium levels of inequality. The implication of this finding is discussed.
Abstract: Relative deprivation and absolute deprivation both have effects on crime. Although these two concepts are often treated as separate, some scholarship has suggested that the two may be complementary. The current study assesses whether the effects of relative and absolute deprivation interact statistically in their effect on violent crime by testing an interaction effect between income inequality and disadvantage. Using data from U.S. counties, hierarchical linear modeling (HLM) regression models show that there is a significant interaction between relative and absolute deprivation predicting violent crime rates. The plot of this interaction shows that when absolute deprivation is high, there is less violence in high inequality counties than in counties with medium levels of inequality. The implication of this finding is discussed.
Sexuality Leads to Boosts in Mood and Meaning in Life With No Evidence for the Reverse Direction
Sexuality Leads to Boosts in Mood and Meaning in Life With No Evidence for the Reverse Direction: A Daily Diary Investigation. Todd Kashdan et al. Emotion, https://www.ncbi.nlm.nih.gov/pubmed/28604041
Abstract: Sex is rarely discussed in theories of well-being and rarely empirically examined using methods other than cross-sectional surveys. In the present study, a daily diary approach was used (for 21 days with 152 adults) to explore the relationship between the presence and quality of sexual episodes and well-being (positive affect, negative affect, meaning in life). Time-lagged analyses demonstrated that sexual activity on 1 day was related to greater well-being the next. As for the quality of episodes, higher reported sexual pleasure and intimacy predicted greater positive affect and lower negative affect the following day. When the reverse direction was tested, well-being did not predict next-day sexual activity, pleasure, or intimacy. These results suggest a unidirectional relationship in which the presence and quality of sexual activity lead to gains in well-being the following day. Contextual moderators (gender, relationship status, relationship closeness, and relationship length) allowed for tests of conditions altering the link between sexuality and well-being. Relationship closeness was the most robust moderator in predicting greater levels of meaning in life and positive affect following sexual episodes. These data provide evidence to support the continual consideration of sex in empirical work and theoretical models of elements that comprise healthy relationships and a good life.
Abstract: Sex is rarely discussed in theories of well-being and rarely empirically examined using methods other than cross-sectional surveys. In the present study, a daily diary approach was used (for 21 days with 152 adults) to explore the relationship between the presence and quality of sexual episodes and well-being (positive affect, negative affect, meaning in life). Time-lagged analyses demonstrated that sexual activity on 1 day was related to greater well-being the next. As for the quality of episodes, higher reported sexual pleasure and intimacy predicted greater positive affect and lower negative affect the following day. When the reverse direction was tested, well-being did not predict next-day sexual activity, pleasure, or intimacy. These results suggest a unidirectional relationship in which the presence and quality of sexual activity lead to gains in well-being the following day. Contextual moderators (gender, relationship status, relationship closeness, and relationship length) allowed for tests of conditions altering the link between sexuality and well-being. Relationship closeness was the most robust moderator in predicting greater levels of meaning in life and positive affect following sexual episodes. These data provide evidence to support the continual consideration of sex in empirical work and theoretical models of elements that comprise healthy relationships and a good life.
Perceptions of socioeconomic mobility influence academic persistence among low socioeconomic status students
Perceptions of socioeconomic mobility influence academic persistence among low socioeconomic status students. By Alexander Browman et al.
Journal of Experimental Social Psychology, September 2017, Pages 45–52, http://www.sciencedirect.com/science/journal/00221031/72/supp/C?sdc=1
Abstract: Despite facing daunting odds of academic success compared with their more socioeconomically advantaged peers, many students from low socioeconomic status (SES) backgrounds maintain high levels of academic motivation and persist in the face of difficulty. We propose that for these students, academic persistence may hinge on their perceptions of socioeconomic mobility, or their general beliefs regarding whether or not socioeconomic mobility — a powerful academic motivator — can occur in their society. Specifically, low-SES students' desire to persist on a primary path to mobility (i.e., school) should remain strong if they believe that socioeconomic mobility can occur in their society. By contrast, those who believe that socioeconomic mobility generally does not occur should be less motivated to persist academically. One correlational and two experimental studies provide support for this hypothesis among low (but not high) SES high school and university students. Implications for future intervention efforts are discussed.
Journal of Experimental Social Psychology, September 2017, Pages 45–52, http://www.sciencedirect.com/science/journal/00221031/72/supp/C?sdc=1
Abstract: Despite facing daunting odds of academic success compared with their more socioeconomically advantaged peers, many students from low socioeconomic status (SES) backgrounds maintain high levels of academic motivation and persist in the face of difficulty. We propose that for these students, academic persistence may hinge on their perceptions of socioeconomic mobility, or their general beliefs regarding whether or not socioeconomic mobility — a powerful academic motivator — can occur in their society. Specifically, low-SES students' desire to persist on a primary path to mobility (i.e., school) should remain strong if they believe that socioeconomic mobility can occur in their society. By contrast, those who believe that socioeconomic mobility generally does not occur should be less motivated to persist academically. One correlational and two experimental studies provide support for this hypothesis among low (but not high) SES high school and university students. Implications for future intervention efforts are discussed.
It’s Too Pretty to Use! When and How Enhanced Product Aesthetics Discourage Usage and Lower Consumption Enjoyment
It’s Too Pretty to Use! When and How Enhanced Product Aesthetics Discourage Usage and Lower Consumption Enjoyment. By Freeman Wu et al.
Journal of Consumer Research, https://academic.oup.com/jcr/article-abstract/doi/10.1093/jcr/ucx057/3096199/It-s-Too-Pretty-to-Use-When-and-How-Enhanced?redirectedFrom=fulltext
Abstract: Marketers invest a lot of resources in product aesthetics and design, but does this strategy always lead to favorable consumer outcomes? While prior research suggests enhanced aesthetics should have a uniformly positive influence on pre-usage evaluations and choice, the present research examines the downstream effects of nondurable product aesthetics on consumption behavior and post-consumption affect. First, we document an inhibiting effect of aesthetics on actual consumption. We find that highly aesthetic products elicit greater perceptions of effort in their creation, and that consumers have an intrinsic appreciation for such effort. Because the consumption process indirectly destroys the effort invested to make the product beautiful, people reduce consumption of such products because usage would entail destroying something they naturally appreciate. Second, we show that in cases where individuals do consume a beautiful product, they exhibit lower consumption enjoyment and increased negative affect. These negative post-consumption outcomes are mediated in parallel by concerns over having actually destroyed the effort that made the product beautiful as well as the decrements in beauty that become visible when aesthetic products are made less attractive through consumption. Across a series of studies, we challenge the common assumption that enhanced aesthetics always lead to positive consumer outcomes.
Keywords: aesthetics, effort, product usage, consumption enjoyment, predicted vs. experienced utility, implicit self-theories
Journal of Consumer Research, https://academic.oup.com/jcr/article-abstract/doi/10.1093/jcr/ucx057/3096199/It-s-Too-Pretty-to-Use-When-and-How-Enhanced?redirectedFrom=fulltext
Abstract: Marketers invest a lot of resources in product aesthetics and design, but does this strategy always lead to favorable consumer outcomes? While prior research suggests enhanced aesthetics should have a uniformly positive influence on pre-usage evaluations and choice, the present research examines the downstream effects of nondurable product aesthetics on consumption behavior and post-consumption affect. First, we document an inhibiting effect of aesthetics on actual consumption. We find that highly aesthetic products elicit greater perceptions of effort in their creation, and that consumers have an intrinsic appreciation for such effort. Because the consumption process indirectly destroys the effort invested to make the product beautiful, people reduce consumption of such products because usage would entail destroying something they naturally appreciate. Second, we show that in cases where individuals do consume a beautiful product, they exhibit lower consumption enjoyment and increased negative affect. These negative post-consumption outcomes are mediated in parallel by concerns over having actually destroyed the effort that made the product beautiful as well as the decrements in beauty that become visible when aesthetic products are made less attractive through consumption. Across a series of studies, we challenge the common assumption that enhanced aesthetics always lead to positive consumer outcomes.
Keywords: aesthetics, effort, product usage, consumption enjoyment, predicted vs. experienced utility, implicit self-theories
The Relations Between Parental Socioeconomic Status, Personality, and Life Outcomes
The Relations Between Parental Socioeconomic Status, Personality, and Life Outcomes. By Mona Ayoub et al. Social Psychological and Personality Science, http://journals.sagepub.com/doi/abs/10.1177/1948550617707018?journalCode=sppa
Abstract: Studies have shown that cognitive ability is correlated with parental socioeconomic status (pSES). However, little is known about the correlation between personality and pSES. To better understand this relation, we conducted a meta-analysis of the correlations between pSES and personality traits and temperament dimensions. The correlations were generally very small with the exception of the correlation between pSES and openness to experience. Our results were replicated in a large (N = 2,183,377) data set of self-reported personality scores collected online. Using this data set, we also examined the interaction between pSES and personality on attained education and socioeconomic status. We found evidence for the resource substitution hypothesis, which proposes that personality compensates for background disadvantage.
Abstract: Studies have shown that cognitive ability is correlated with parental socioeconomic status (pSES). However, little is known about the correlation between personality and pSES. To better understand this relation, we conducted a meta-analysis of the correlations between pSES and personality traits and temperament dimensions. The correlations were generally very small with the exception of the correlation between pSES and openness to experience. Our results were replicated in a large (N = 2,183,377) data set of self-reported personality scores collected online. Using this data set, we also examined the interaction between pSES and personality on attained education and socioeconomic status. We found evidence for the resource substitution hypothesis, which proposes that personality compensates for background disadvantage.
Seeding the S-Curve? The Role of Early Adopters in Diffusion
Seeding the S-Curve? The Role of Early Adopters in Diffusion. Christian Catalini & Catherine Tucker. MIT Working Paper, August 2016, http://www.imapsource.org/doi/abs/10.4071/2016DPC-TA11
In October 2014, all 4,494 undergraduates at the Massachusetts Institute of Technology were given access to Bitcoin, a decentralized digital currency. As a unique feature of the experiment, students who would generally adopt first were placed in a situation where many of their peers received access to the technology before them, and they then had to decide whether to continue to invest in this digital currency or exit. Our results suggest that when natural early adopters are delayed relative to their peers, they are more likely to reject the technology. We present further evidence that this appears to be driven by identity, in that the effect occurs in situations where natural early adopters' delay relative to others is most visible, and in settings where the natural early adopters would have been somewhat unique in their tech-savvy status. We then show not only that natural early adopters are more likely to reject the technology if they are delayed, but that this rejection generates spillovers on adoption by their peers who are not natural early adopters. This suggests that small changes in the initial availability of a technology have a lasting effect on its potential: Seeding a technology while ignoring early adopters' needs for distinctiveness is counterproductive.
In October 2014, all 4,494 undergraduates at the Massachusetts Institute of Technology were given access to Bitcoin, a decentralized digital currency. As a unique feature of the experiment, students who would generally adopt first were placed in a situation where many of their peers received access to the technology before them, and they then had to decide whether to continue to invest in this digital currency or exit. Our results suggest that when natural early adopters are delayed relative to their peers, they are more likely to reject the technology. We present further evidence that this appears to be driven by identity, in that the effect occurs in situations where natural early adopters' delay relative to others is most visible, and in settings where the natural early adopters would have been somewhat unique in their tech-savvy status. We then show not only that natural early adopters are more likely to reject the technology if they are delayed, but that this rejection generates spillovers on adoption by their peers who are not natural early adopters. This suggests that small changes in the initial availability of a technology have a lasting effect on its potential: Seeding a technology while ignoring early adopters' needs for distinctiveness is counterproductive.
John Roberts, Chief Judge, US Supreme Court. Commencement speech at his son's school
John Roberts, Chief Judge, US Supreme Court. Commencement speech at his son's school. Jun 03, 2017, http://time.com/4845150/chief-justice-john-roberts-commencement-speech-transcript/
Now the commencement speakers will typically also wish you good luck and extend good wishes to you. I will not do that, and I’ll tell you why. From time to time in the years to come, I hope you will be treated unfairly, so that you will come to know the value of justice. I hope that you will suffer betrayal because that will teach you the importance of loyalty. Sorry to say, but I hope you will be lonely from time to time so that you don’t take friends for granted. I wish you bad luck, again, from time to time so that you will be conscious of the role of chance in life and understand that your success is not completely deserved and that the failure of others is not completely deserved either. And when you lose, as you will from time to time, I hope every now and then, your opponent will gloat over your failure. It is a way for you to understand the importance of sportsmanship. I hope you’ll be ignored so you know the importance of listening to others, and I hope you will have just enough pain to learn compassion.
Whether I wish these things or not, they’re going to happen. And whether you benefit from them or not will depend upon your ability to see the message in your misfortunes.
Now the commencement speakers will typically also wish you good luck and extend good wishes to you. I will not do that, and I’ll tell you why. From time to time in the years to come, I hope you will be treated unfairly, so that you will come to know the value of justice. I hope that you will suffer betrayal because that will teach you the importance of loyalty. Sorry to say, but I hope you will be lonely from time to time so that you don’t take friends for granted. I wish you bad luck, again, from time to time so that you will be conscious of the role of chance in life and understand that your success is not completely deserved and that the failure of others is not completely deserved either. And when you lose, as you will from time to time, I hope every now and then, your opponent will gloat over your failure. It is a way for you to understand the importance of sportsmanship. I hope you’ll be ignored so you know the importance of listening to others, and I hope you will have just enough pain to learn compassion.
Whether I wish these things or not, they’re going to happen. And whether you benefit from them or not will depend upon your ability to see the message in your misfortunes.
How much compensation is too much? An investigation of the effectiveness of financial overcompensation as a means to enhance customer loyalty
How much compensation is too much? An investigation of the effectiveness of financial overcompensation as a means to enhance customer loyalty. By Tessa Haesevoets et al.
Judgment and Decision Making, March 2017, Pages 183–197
http://journal.sjdm.org/16/16929/jdm16929.pdf
Abstract: The present paper examines the effectiveness of financial overcompensation as a means to enhance customer loyalty after a product failure. Overcompensation implies that customers are entitled to a refund that is larger than the purchase price. It is, however, still unclear whether large overcompensations entail saturation effects, or alternatively, result in an actual drop in customer loyalty. We predicted that the overcompensation-loyalty relationship is generally characterized by an inverted U-shaped function. In line with this prediction, the results of four studies showed that mild overcompensations had, on average, a positive effect on customer loyalty beyond equal compensation, but only up to compensation levels of approximately 150% of the purchase price of faulty products. Beyond this level, the effectiveness of overcompensation diminished, eventually leading to a general drop in customer loyalty. Despite this overall pattern, two studies revealed robust individual differences in how customers react to increasing overcompensation. A majority of customers increased their loyalty when the overcompensation enlarged, but the curve flattened out in the high range. However, there was also a smaller portion of customers who reacted negatively to every form of overcompensation. A practical implication of these findings, therefore, is that companies should not offer compensations that are greater than 150% of the initial price, as these do not contribute to greater loyalty in any category of customers.
Judgment and Decision Making, March 2017, Pages 183–197
http://journal.sjdm.org/16/16929/jdm16929.pdf
Abstract: The present paper examines the effectiveness of financial overcompensation as a means to enhance customer loyalty after a product failure. Overcompensation implies that customers are entitled to a refund that is larger than the purchase price. It is, however, still unclear whether large overcompensations entail saturation effects, or alternatively, result in an actual drop in customer loyalty. We predicted that the overcompensation-loyalty relationship is generally characterized by an inverted U-shaped function. In line with this prediction, the results of four studies showed that mild overcompensations had, on average, a positive effect on customer loyalty beyond equal compensation, but only up to compensation levels of approximately 150% of the purchase price of faulty products. Beyond this level, the effectiveness of overcompensation diminished, eventually leading to a general drop in customer loyalty. Despite this overall pattern, two studies revealed robust individual differences in how customers react to increasing overcompensation. A majority of customers increased their loyalty when the overcompensation enlarged, but the curve flattened out in the high range. However, there was also a smaller portion of customers who reacted negatively to every form of overcompensation. A practical implication of these findings, therefore, is that companies should not offer compensations that are greater than 150% of the initial price, as these do not contribute to greater loyalty in any category of customers.
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