Virtues and Vices (Read, Loewenstein, and Kalyanarman, 1999)
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Virtues and Vices (Read, Loewenstein, and Kalyanarman, 1999)

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Mixing Virtue & Vice : Combining the Immediacy Effect and the Diversification Heuristic (Read, Loewenstein, and Kalyanarman, 1999)

Mixing Virtue & Vice : Combining the Immediacy Effect and the Diversification Heuristic (Read, Loewenstein, and Kalyanarman, 1999)

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Virtues and Vices (Read, Loewenstein, and Kalyanarman, 1999) Virtues and Vices (Read, Loewenstein, and Kalyanarman, 1999) Presentation Transcript

  • Mixing Virtue & ViceCombining the Immediacy Effectand the Diversification HeuristicRead, Loewenstein, and Kalyanarman, 1999 Paul M. Cohen | MGMT 758
  • Vices, Virtues, and Choice Vices Virtues exchange small exchange small immediate rewards immediate cost for for large delayed costs large delayed rewards (more long-run utility)Simultaneous Choice Sequential Choice 4 1 1 1 1 Simonson (1990)
  • Diversification HeuristicSimultaneous Choice Sequential Choice Take into account preference interactions Not think about preference between goods interactions (complements or substitutes) Apply diversification No need for diversification heuristic heuristic More variety Not so much variety Simonson & Winer (1992)
  • Immediacy EffectSimultaneous Choice Sequential Choice Alternatives are not Alternatives are consumed immediately consumed immediately Favor an initial Favor small immediate immediate reward but rewards over big rewards will wait for later rewards Simonson & Winer (1992)
  • PredictionsSimultaneous Choice Sequential ChoiceDiversification | Immediacy Diversification | Immediacy Favor an initial Not so Favor immediate More immediate reward much rewards over big variety but will wait for variety rewards later rewards Mix of Either Uniform stream of vices and Begin with vice vices or vices virtues virtues Vices and virtues More vices
  • Experiments & Results Lowbrow Highbrow Sequential Simultaneous Choice Types chose each chose three movies on movie the one day, watch oneFilms day you per day with two days watch it in between Results • More highbrow movies were chosen in simultaneous (59%) versus sequential (43%) conditions [p < 0.05] • No difference in proportion of highbrow movies selected for first day in either condition (since they were viewed immediately) • More highbrow movies were chosen in later days for the simultaneous choice group (67%) than on the first day (44%) [p< 0.02] + correlation between day and percentage choosing highbrow movies