virtues and vices (read, loewenstein, and kalyanarman, 1999)

Mixing Virtue & Vice

Read, Loewenstein, and Kalyanarman, 1999

Combining the Immediacy Effect and the Diversification Heuristic

Paul M. Cohen | MGMT 758

Vices, Virtues, and Choice

Virtuesexchange small immediate cost for large delayed rewards (more long-run utility)

Vicesexchange small immediate rewards for large delayed costs

Simultaneous Choice Sequential Choice

4 11

11

Simonson (1990)

Simultaneous Choice

Take into account preference interactions

between goods (complements or

substitutes)

Not think about preference interactions

Apply diversification heuristic

More variety

No need for diversification heuristic

Not so much variety

Simonson & Winer (1992)

Sequential Choice

Diversification Heuristic

Immediacy EffectSimultaneous Choice

Simonson & Winer (1992)

Sequential Choice

Alternatives are not consumed immediately

Favor an initial immediate reward but

will wait for later rewards

Alternatives are consumed immediately

Favor small immediate rewards over big rewards

Predictions

More variety

Not so much

variety

Simultaneous Choice Sequential ChoiceDiversification | Immediacy Diversification | Immediacy

Favor an initial immediate reward

but will wait for later rewards

Favor immediate rewards over big

rewards

Uniform stream of vices

Begin with viceMix of

vices and virtues

Either vices or virtues

More vicesVices and virtues

Experiments & ResultsFi

lms

Lowbrow Highbrow

Ch

oic

e Ty

pe

s

Sequential

chose each movie the day you watch it

chose three movies on one day, watch one per day with two days in between

Simultaneous

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