consumer choice between hedonic and utilitarian goods

60Journal of Marketing ResearchVol. XXXVII (February 2000), 6071

*Ravi Dhar is Associate Professor of Marketing, Yale School ofManagement (e-mail: [email protected]). Klaus Wertenbroch is AssistantProfessor of Marketing, INSEAD (e-mail: [email protected]).This article has benefited from the comments of Steve Hoch, Eric Johnson,Daniel Kahneman, Ann McGill, Subrata Sen, Itamar Simonson, and threeanonymous JMR reviewers. The authors thank Mike Ziolkowski at theDecision Research Laboratory at the University of Chicago for his helpwith part of the data collection and cole des Hautes Etudes Commercialesfor funding, which we received as visiting researchers there. To interactwith colleagues on specific articles in this issue, see Feedback on theJMR Web site at www.ama.org/pubs/jmr.

RAVI DHAR and KLAUS WERTENBROCH*

In this article, the authors examine how consumer choice between he-donic and utilitarian goods is influenced by the nature of the decision task.Building on research on elaboration, the authors propose that the relativesalience of hedonic dimensions is greater when consumers decide whichof several items to give up (forfeiture choices) than when they decidewhich item to acquire (acquisition choices). The resulting hypothesis thata hedonic item is relatively preferred over the same utilitarian item in for-feiture choices than in acquisition choices was supported in two choiceexperiments. In a subsequent experiment, these findings were extendedto hypothetical choices in which the acquisition and forfeiture conditionswere created by manipulating initial attribute-level reference states in-stead of ownership. Finally, consistent with the experimental findings, afield survey showed that, relative to market prices, owners of relatively he-donic cars value their vehicles more than do owners of relatively utilitar-ian cars. The authors discuss theoretical implications of these reference-dependent preference asymmetries and explore consequences for

marketing managers and other decision makers.

Consumer Choice Between Hedonic andUtilitarian Goods

Consumer choices are driven by utilitarian and hedonicconsiderations. Consumers choosing among new automo-biles, for example, may care about utilitarian features (e.g.,gas mileage) as well as about hedonic attributes (e.g., sportydesign). Research suggests that these different considera-tions map onto independent components of product evalua-tions and attitudes and enable people to distinguish betweengoods according to their relative hedonic or utilitarian na-ture (Batra and Ahtola 1990; Mano and Oliver 1993).Broadly speaking, hedonic goods provide more experientialconsumption, fun, pleasure, and excitement (designerclothes, sports cars, luxury watches, etc.), whereas utilitar-ian goods are primarily instrumental and functional (mi-crowaves, minivans, personal computers, etc.; Hirschmanand Holbrook 1982; Strahilevitz and Myers 1998). If con-

sumers make choices between goods or characteristics withsuch different appeal, an account of consumer behaviorneeds to address the manner in which they make these fun-damental trade-offs.

In this article we examine consumer choice between twogoods, one of which is seen as superior on a hedonic di-mension and the other is seen as superior on a utilitarian di-mension. We compare preferences for these goods in an ac-quisition condition, in which the consumer chooses which ofthe two to acquire, and in a forfeiture condition, in which theconsumer chooses which of the same two items to give up.On the basis of the literature on the effect of elaboration onmessage evaluation (e.g., Tybout and Artz 1994), we pro-pose that greater spontaneous elaboration in forfeiturechoices increases the impact of hedonic aspects in overallevaluation. As a result, relative preferences for hedonic ascompared with the same utilitarian goods will be stronger inforfeiture than in acquisition choices. Consistent with ourunderlying theory, we show that the predicted asymmetrycan be attenuated using a thought-listing task that sup-presses the differential elaboration on the hedonic and utili-tarian dimensions.

We further propose that even in the absence of actual pos-session a choice can be framed as a forfeiture or as an ac-quisition decision on the basis of the attribute levels thatcharacterize a reference option. Consider, for example,someone who is debating between two apartments. One has

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Hedonic and Utilitarian Goods 61

1Wertenbroch (1998) distinguishes between vice and virtue goods,providing a formal conceptualization of goods that are subject to impulsivepreferences.

a nicer view (a relatively hedonic feature), but the other pro-vides a shorter commute to work (a relatively utilitarian fea-ture). If the persons current apartment has a nice view anda short commute, the choice will be viewed as a forfeituredecisiona trade-off between a loss of quality of view anda loss of commuting convenience. In contrast, if the currentapartment has a poor view and a long commute, the choiceappears as an acquisition decisiona trade-off between again in quality of view and a gain in commuting conven-ience. We propose an increase in the relative preference forthe apartment that is superior on the hedonic dimensionwhen the decision is viewed as forfeiting a benefit ratherthan acquiring a benefit. We show that this asymmetry inpreferences due to the manipulation of the reference optioncan also be expressed in terms of differential loss aversionfor hedonic and utilitarian attributes (see Tversky and Kah-neman 1991).

The remainder of the article is organized as follows. Abrief review of prior research relevant to reference effectsand the role of elaboration in decision making leads to ourprediction of asymmetric preferences for hedonic and utili-tarian products in forfeiture and acquisition choices. Next,we test this prediction in three experiments involving realand hypothetical choices. As is illustrated in the apartmentexample, we use simple manipulations that determinewhether the hedonicutilitarian trade-offs involve forfeitingor acquiring benefits. We then illustrate marketplace impli-cations of the experimental results in a field survey withused car data. We conclude with a discussion of the theoret-ical and managerial implications of our findings for pricing,promotion, and product modification strategies, which sug-gests that relative market shares for hedonic as comparedwith utilitarian products may depend on the frame of refer-ence used to evaluate these products.

PREFERENCE FOR HEDONIC AND UTILITARIANGOODS IN ACQUISITION VERSUS FORFEITURE

DECISIONS

Although the consumption of many goods involves bothdimensions to varying degrees (Batra and Ahtola 1990),there is little doubt that consumers characterize some prod-ucts as primarily hedonic and others as primarily utilitarian.We define hedonic goods as ones whose consumption is pri-marily characterized by an affective and sensory experienceof aesthetic or sensual pleasure, fantasy, and fun (Hirschmanand Holbrook 1982). Utilitarian goods are ones whose con-sumption is more cognitively driven, instrumental, and goaloriented and accomplishes a functional or practical task(Strahilevitz and Myers 1998). Similar to these findings onperceived product characteristics, recent work by Bazerman,Tenbrunsel, and Wade-Benzoni (1998) suggests that we candistinguish between affective preferences (wants) andcognitive or reasoned preferences (shoulds) that underlieconsumer choice (see Shiv and Fedorikhin 2000;Wertenbroch 1998).1 The want/should distinction is broadlycompatible with the distinction between hedonic and utili-tarian goodsitems that are high on hedonic value arelikely to be subject to want preferences, and items that are

high on utilitarian value are likely to be subject to shouldpreferences. What has not been examined previously, how-ever, is whether evaluations of hedonic and utilitarian di-mensions and consequently the trade-offs between them aresystematically affected by the choice task.

Our focus on differences between acquisition and forfei-ture choices is motivated by the research on loss aversionthat demonstrates an asymmetry in evaluations dependingon the direction of the proposed trade, that is, whether agood is being acquired or forfeited relative to the con-sumers present state (Kahneman, Knetsch, and Thaler1990; Tversky and Kahneman 1991). The conclusion fromthis body of work is that an item that is to be traded is gen-erally valued more when it is part of ones endowment thanwhen it is not. However, to the extent that both a hedonicand a utilitarian item are valued more when they are for-feited than when they are acquired, the concept of loss aver-sion by itself does not provide any insight into relative as-sessments. Because acquisition and forfeiture choicespotentially involve different decision processes, we rely onthe compatibility principle that suggests that the evaluationof stimulus components may depend on the particular eval-uation task, affecting the decision makers relative prefer-ences among the options (Shafir 1993; Tversky, Sattath, andSlovic 1988).

Previous research suggests why trade-offs between hedo-nic and utilitarian dimensions depend on the task. For ex-ample, a choice (as opposed to rating) task generally favorsthe option that is higher on the utilitarian dimension. Tver-sky and Griffin (1991; Shafir, Simonson, and Tversky 1993)propose that decision makers search for reasons and argu-ments to justify their choices. Similarly, Tversky, Sattath,and Slovic (1988) show that alternatives that provide deci-sion makers with compelling and justifiable arguments aremore likely to be preferred in choice tasks. In line with thisview, Bhm and Pfister (1996) show that contexts that fos-ter justification enhance preferences for utilitarian features.Recently, Bazerman, Tenbrunsel, and Wade-Benzoni (1998)have suggested that choice forces decision makers to focuson should preferences so that they are more likely to favormore utilitarian options. In summary, choice tasks enhancethe relative salience of utilitarian consequences in overallevaluation in both acquisition and forfeiture.

Yet because acquisition and forfeiture choices representdifferent choice tasks, the evaluation of each stimulus willalso depend on differences in how consumers process thesetasks. We propose that forfeiture choices stimulate morespontaneous elaboration than do acquisition choices, and wesuggest two reasons for this differential elaboration. First, itis likely that the more time consumers have to examine andinteract with the object in the forfeiture condition, the morethey will tend to elaborate on the objects potential benefits(see Strahilevitz and Loewenstein 1998). Yet, although theextent to which consumers engage in elaboration dependson the time or resources available, it is unlikely to be thesole cause of differential elaboration. A second argument forgreater elaboration in the forfeiture condition builds on theliterature on counterfactual thinking. Counterfactuals aremental representations of alternative realities compared withthose actually obtained. Research distinguishes betweencomparisons of actual outcomes with more preferred alter-natives (i.e., upward counterfactuals) and comparisons with

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62 JOURNAL OF MARKETING RESEARCH, FEBRUARY 2000

2One reason for this asymmetry in counterfactual thinking is that thenegative affect associated with worse outcomes is more likely to trigger theimagination of (better) alternatives to reality (Kahneman and Miller 1986;Roese 1997). A second, adaptive reason is that people who experience neg-ative or unpleasant outcomes are more likely to focus on actions that couldhave been taken to avoid these outcomes (Lewin 1935; Roese 1997).

less preferred alternatives (i.e., downward counterfactuals)and suggests that upward counterfactuals are spontaneouslygenerated more frequently than downward counterfactuals(Roese and Olson 1997).2 Recent research has extendedthese ideas to prefactual thinking, that is, the imagination ofalternative possible outcomes prior to choice (Sanna 1996).These findings suggest that consumers are more likely toelaborate spontaneously on alternative future outcomeswhen they have to forfeit an item (i.e., an upward prefactual)than when they acquire an item (i.e., a downward prefactual;see also Carmon and Ariely 2000). For example, someonewho has so far enjoyed a nice view and a short commute towork from his or her apartment but now has to forgo one ofthese two features in deciding between two new apartmentsis more likely to imagine what it is like not to have the viewand the commute and contrast this with the old apartmentthan someone who has not possessed these features in thepast and is about to acquire one of them. In summary, wepropose greater elaboration in forfeiture choices.

We also propose that the presence of such differentialspontaneous elaboration in the forfeiture choice conditionenhances the relative valuation of hedonic attributes. This isbased on two arguments. First, a well-documented findingin the literature is that elaboration on a positive stimulusmessage can enhance the favorableness of judgment (Ty-bout and Artz 1994). Thus, imagining the use of a superior,

positively valued item should increase its attractiveness (seeShiv and Huber 1999; Strahilevitz and Loewenstein 1998).In particular, elaboration increases the influence of moreeasily imaginable attributes on product evaluations, makingthem more salient (Keller and McGill 1994; Sherman et al.1985; Shiv and Huber 1999). To the extent that hedonic at-tributes are more sensory and imagery-evoking (MacInnisand Price 1987), the relative attractiveness of an item that issuperior on the hedonic dimension should thus be enhanced.Second, upward prefactual thinking induces negative emo-tions, because one is about to be worse off than before(Roese 1997; Sanna 1999). To the extent that forfeiturechoices spontaneously trigger upward comparisons thathighlight (negative) affective consequences, respondentsmay be motivated to minimize the anticipated negativeemotions by retaining the more hedonic good. Figure 1 sum-marizes the proposed process, by which differential elabo-ration influences the relative salience of hedonic and utili-tarian attributes.

This leads to the following hypothesis about choices be-tween hedonic and utilitarian goods. Consider consumerswho may have to choose one of two options neither of whichthey currently own; alternatively, consider consumers whomay have to forfeit one of two options, both of which theycurrently own. Although the two decisions are logicallyequivalent (i.e., the choice sets are identical), we predict thathedonic attributes will be weighed more heavily in relativeterms when consumers are deciding which one of two op-tions to give up as opposed to which one of two options toacquire. We now test this hypothesis in three experimentsand a field survey. The first two experiments show how rel-ative preferences for hedonic and utilitarian goods can

Figure 1DIFFERENTIAL ELABORATION IN ACQUISITION AND FORFEITURE CHOICES

DECI SI ON TASK

ACQUI SI TI ON CHOI CE FORFEI TURE CHOI CE

Less elapsed time till task Mor e elapsed time till task + +

Spontaneous pr ef actuals less likely Spontaneous pr ef actuals mor e likely Less spontaneous elabor ation More spontaneous elaboration

Hedonic f eatur es easier to imagine and elaborate on

Relative salience of and Relative salience of and pr ef er ence f or ut ilit arian f eatur es pr ef er ence f or hedonic f eatur es

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change as a result of whether subjects choose which of themto acquire or which of them to forfeit. Experiment 2 also in-volves examining the role of elaboration in the relative as-sessment of hedonic and utilitarian goods. Experiment 3shows that our predictions for ownership-dependent acqui-sition and forfeiture choices also apply to reference depend-ence in the absence of actual possession. Finally, the fieldsurvey shows that, relative to market prices, owners of rela-tively hedonic cars value their vehicles more than do own-ers of relatively utilitarian cars.

EXPERIMENT 1: FORFEITURE VERSUS ACQUISITIONCHOICE BETWEEN HEDONIC AND UTILITARIAN

GOODS

Method

Fifty-one undergraduate and graduate students at a pri-vate Midwestern university were recruited for this experi-ment with flyers posted around the campus. The stimuliwere two gift certificates with $7 face values, one for an au-dio tape (or as partial payment for a compact disc [CD]) ofthe subjects choice at a nearby local record store, the otherfor a 10-pack of brand-name computer disks at the nearbyuniversity book store. These stores were chosen to equalizetransaction costs.

The between-subjects experimental design consisted ofan acquisition condition and a forfeiture condition. Subjectswere randomly assigned to one of the two conditions. Thedependent variable was subjects choices between the giftcertificates. Subjects in both conditions were shown the twocertificates when they entered the laboratory. In the acquisi-tion condition, they were told that they would first need tofill out a series of questionnaires and then could choose oneof the certificates as compensation. In contrast, subjects inthe forfeiture condition were told at the outset that theycould keep both certificates as compensation. When theyhad completed the (unrelated) questionnaires, the experi-menter asked subjects in the acquisition condition to chooseone of the certificates. She informed subjects in the forfei-ture condition that there had been a procedural error whenshe had given away both gift certificates and therefore askedthem to return one certificate. After recording subjectschoices, the experimenter debriefed them about the purposeof the experiment and gave them back the gift certificatethat they had just returned. Thus, subjects in the acquisitioncondition received one $7 certificate, whereas subjects inthe forfeiture condition ultimately received a total of $14worth of certificates.

Results and Discussion

Pretest. We chose the two gift certificates as stimuli onthe basis of the results of two pretests. In the first pretest,which we adopted from Strahilevitz and Myers (1998), sub-jects from the same population categorized several everydayconsumer goods as primarily utilitarian (defined as useful,practical, functional, something that helps achieve a goal,e.g., a vacuum cleaner), as primarily hedonic (defined aspleasant and fun, something that is enjoyable and appeals tothe senses, e.g., perfume), as both utilitarian and hedonic, oras neither. The majority of subjects classified music audiotapes and CDs as primarily hedonic (17 of 22 subjects, 2 =6.55, p < .02) and computer disks as primarily utilitarian (18of 22 subjects, 2 = 8.91, p < .01). A second pretest showed

3Bateman and colleagues (1997), for example, find marginally greaterreference dependence for rarely bought, harder-to-evaluate chocolates thanfor frequently bought soft drinks.

that the gift certificates for these two kinds of items wereseen as equally attractive.

Experiment. We predicted that the relative preference forthe more hedonic item over the utilitarian item would begreater in the forfeiture condition. In support of this hypoth-esis, subjects were significantly more likely to give up thedisk certificate (and therefore to prefer the music certificate)when they were faced with a decision of which item to for-feit than they were to select the music certificate when theywere faced with a decision of which item to acquire. Eighty-four percent of the subjects (21 of 25 subjects) preferred themusic certificate in the forfeiture condition compared with54% (14 of 26 subjects) in the acquisition condition (2 =5.382, p = .02). This suggests that the relative evaluation ofthe hedonic characteristics of goods is more favorable inchoice when the options represent potential losses thanwhen they represent potential gains.

EXPERIMENT 2: SUPPRESSING DIFFERENTIAL ELAB-ORATION IN FORFEITURE AND ACQUISITION

CHOICES BETWEEN HEDONIC AND UTILITARIANGOODS

Experiment 1 demonstrated the predicted interaction be-tween type of good and decision task. The purpose of thenext experiment is threefold. First, we want to replicate theresults of Experiment 1 with different products to show thegenerality of the effect. Second, we want to rule out the pos-sibility that the observed choice patterns arise from a differ-ence in consumers uncertainty in their evaluations of hedo-nic and utilitarian goods.3 For example, if consumers aremore uncertain about the precise value of hedonic than ofutilitarian goods, the decision may be seen as a choice be-tween a sure (utilitarian) and an uncertain (hedonic) out-come. Risk aversion would then predict the pattern of pref-erences observed in Experiment 1. Because both goods werestandard market goods, there is no a priori reason to believethat subjects associated greater uncertainty with the morehedonic good. To rule out this explanation empirically, wepretested the stimuli by measuring subjects uncertaintyabout their monetary valuations of the stimuli (Nowlis andSimonson 1997).

Third and most important, Experiment 2 involves using athought-listing task to examine whether the increased pref-erence for the hedonic good in forfeiture choices resultsfrom greater spontaneous elaboration on the hedonic object.On the basis of previous research, we suggest that requiringsubjects to list reasons for their choices should diminish thiseffect for two reasons. First, if spontaneous elaboration fo-cuses decision makers on affective consequences, listingreasons should de-emphasize the hedonic relative to the util-itarian focus of subjects evaluations. General evaluations ofattitude objects reflect more utilitarian components whensubjects think about reasons for their attitudes (Bhm andPfister 1996; Millar and Tesser 1986; Wilson et al. 1993).Second, to the extent that spontaneous elaboration favors thehedonic good because it is easier to imagine or elaborate on(see Keller and McGill 1994; MacInnis and Price 1987), atask that forces elaboration on both items should suppressdifferential elaboration. Thus, the difference in subjects


Table 1RELATIVE CHOICE FREQUENCIES FOR HEDONIC AND

UTILITARIAN GOODS WITH AND WITHOUT REASONS IN

EXPERIMENT 2 (n = 114)

Reasons Forfeiture Acquisition

Without reasonsM&Ms (hedonic) 85% 50%Glue stick (utilitarian) 15% 50%

Total n in each choice 26 30

With reasonsM&Ms (hedonic) 62% 55%Glue stick (utilitarian) 38% 45%

Total n in each choice 29 29

preferences between hedonic and utilitarian goods in the ac-quisition and forfeiture choices should be smaller when theylist reasons before choosing than when they do not.

Method

One hundred fourteen undergraduate students from a pri-vate Northeastern university were recruited in their collegedormitories. Subjects were run in small batches of severalindividuals. In return for their participation in an unrelatedquestionnaire study, they were offered a large pack ofM&Ms chocolate candies and a UHU glue stick, each witha retail value of approximately $1.25.

The study design was a 2 2 between-subjects full facto-rial. Similar to Experiment 1, the first factor manipulatedwhether subjects decided between the alternatives in a for-feiture or acquisition condition. In the acquisition condition,subjects were first shown the two items and were told thatthey would have to choose one of them as compensation atthe end of the study. Next, they filled out the unrelated ques-tionnaire and then made their choice. In the forfeiture con-dition, subjects were given both items at the beginning ofthe procedure and were told that these were theirs to keep ascompensation for their participation. Upon completion ofthe questionnaire, the experimenter informed these subjectsthat there had been a procedural error and asked them to re-turn one of the items. To prevent subjects in the forfeiturecondition from feeling misled to expect to receive twoitems, they were told that they would later be provided witha consolation item. After recording each subjects decisionof which item to forgo, the experimenter debriefed subjectsand gave back the forfeited item. The second factor was in-tended to suppress differential spontaneous elaboration inthe forfeiture condition. Specifically, subjects were asked towrite down the reasons they would like to own M&Ms andglue sticks. Subjects in the control group received no suchinstructions. Subjects were randomly assigned to the fourconditions.


Pretests. The stimuli had been selected on the basis of theresults of two pretests with samples from the same subjectpopulation. The first pretest was the same as the one used indesigning the stimuli for Experiment 1 and showed that themajority of subjects regarded M&Ms as primarily hedonic(40 of 46 subjects, 2 = 25.13, p < .001) and UHU gluesticks as primarily utilitarian (34 of 46 subjects, 2 = 10.52,p < .001). In the second pretest, subjects stated their will-ingness to pay for a pack of M&Ms (M = $.83) and for aUHU glue stick (M = $1.27; t(31) = 3.70, p < .001, two-sided) and rated how confident they were in these valuationsof the two items. Subjects showed greater confidence intheir ability to evaluate M&Ms (M = 6.59 on a nine-pointscale) compared with UHU glue sticks (M = 5.72; t(31) =1.98, p < .06, two-sided). Thus, greater relative preferencefor M&Ms in forfeiture choices cannot be explained bygreater uncertainty in evaluating M&Ms compared with aglue stick.

Experiment. We predicted a relative increase in the pref-erence for the hedonic item in the forfeiture condition. Theresults are reported in Table 1. Across the two without-reasons conditions, subjects showed a relatively strongerpreference for the hedonic good in forfeiture choice. The

M&Ms were preferred by 85% of the subjects (22 of 26) inthe forfeiture condition and by 50% of the subjects (15 of30) in the acquisition condition. This replicated the findingin Experiment 1. We further predicted that the asymmetry inpreferences between forfeiture and acquisition would be at-tenuated if subjects first provided reasons for their prefer-ences. Consistent with this prediction, 62% of the subjects(18 of 29) preferred the M&Ms in the forfeiture conditioncompared with 55% (16 of 29) in the acquisition condition.We used a logit model to conduct an overall test of the mainand interaction effects. The dependent variable was a 01dummy variable, where 1 denoted preference for theM&Ms. The independent variables were as follows: (1) adummy variable for task (1 = acquisition), (2) a dummyvariable for the reasons manipulation (1 = reasons listing),and (3) the interaction of these two main effects. Consistentwith the hypotheses, the coefficient for task was significant(TASK = .50, p < .01), as was the coefficient for the inter-action (TASK REASONS = .36, p < .10). This result providesadditional evidence that hedonic characteristics loom largerin forfeiture choices. When subjects engaged in an activitythat reduced the hypothesized difference in elaboration onthe two goodsfor example, listing reasons for owningboth itemsthe choice differential was considerablysmaller.

If, as we have suggested, the increased evaluation of he-donic characteristics is due to differential spontaneous elab-oration in the forfeiture condition, the imagined impact offorfeiting a hedonic item should be greater than the imag-ined impact of forfeiting an equivalent utilitarian item.Thus, in a brief follow-up study, we directly compared theimagined impact of forfeiting a hedonic and an equally at-tractive utilitarian good by having subjects evaluate hypo-thetical outcomes. This approach is similar to previous re-search on evaluations of imagined outcomes (e.g.,Kahneman and Miller 1986; Schkade and Kahneman 1998).We used ratings instead of choice to reinforce the centralfinding from Experiments 1 and 2 with a different evalua-tion mode. Because the objects in each of the two item pairsin these experiments had been shown to be equally attractivein acquisition choices, we focused on the imagined impactof forfeiture only.

In a within-subjects design, subjects evaluated the lossexperienced by two hypothetical consumers, A and B, one ofwhom was described as having lost the more hedonic of twopreviously owned goods, whereas the other was described as


Figure 2REFERENCE DEPENDENCE FOR A HEDONIC AND A

UTILITARIAN PRODUCT ATTRIBUTE

Hedonicattribute

Utilitarianattributef

hs

i

U

U

i

s

4Similar results were obtained with a between-subjects design.

having lost the more utilitarian of the same two goods.4 Inone scenario, they had each won the two $7 gift certificatesdescribed in Experiment 1 (i.e., one for an audio tape or CDof the persons choice, the other for a 10-pack of disks). Ahad subsequently lost the music certificate but not the diskcertificate, whereas B had lost the disk certificate but not themusic certificate. In another scenario, A and B had each wona small bag of M&Ms and a UHU glue stick. A had subse-quently lost the M&Ms but not the glue stick, whereas Bhad lost the glue stick but not the M&Ms. Note that thesescenarios paralleled the forfeiture conditions in Experiments1 and 2, except that forfeiture resulted from a loss in cir-cumstances beyond the target persons control (theft orbreakage) rather than from choice.

Sixty-seven subjects compared on nine-point rating scales(1) which of the target persons felt worse and (2) whichmissed the lost prize more (1 = A who lost the music certifi-cate/M&Ms, 9 = B who lost the disk certificate/glue stick).Subjects predicted that the target person who lost the hedo-nic music certificate would feel worse (t = 6.17, p < .0001)and miss the item more (t = 9.16, p < .0001) than would theperson who lost the utilitarian disk certificate. Similarly,subjects predicted that the person who lost the hedonicM&Ms would feel worse (t = 3.18, p < .01) and miss theitem more (t = 2.47, p < .05) than would the person wholost the utilitarian glue stick. These results cannot be ex-plained by greater overall preferences for the M&Ms or themusic certificate, because the two utilitarian items wereevaluated at least as highly as the corresponding hedonicitems in the pretests. Instead, hedonic characteristics be-come more salient when subjects imagine the impact of for-feiture independent of choice.

EXPERIMENT 3: REFERENCE EFFECTS IN CHOICESBETWEEN HEDONIC AND UTILITARIAN GOODS

Experiments 1 and 2 created acquisition and forfeiturechoices by manipulating actual ownership of a hedonic anda utilitarian good. Subjects either owned both and had togive one up or owned neither and had to choose one. Weused this design to obtain externally valid findings for actualconsumer goods of real monetary value. Recent researchsuggests that asymmetric valuations can also occur in theabsence of physical possession (Sen and Johnson 1997;Tversky and Kahneman 1991). Specifically, when con-sumers are provided with a reference point, they may eval-uate alternatives with respect to that reference point. Thus, achoice between the same two alternatives can be framed asa forfeiture or as an acquisition decision depending on theattribute levels that characterize a reference alternative.Evidence of a shift in preference due to a manipulation ofthe reference option would extend the scope of our previousfindings beyond the realm of ownership effects. We test thishypothesis using hypothetical choice problems betweencomparable alternatives that are described at the attributelevel.

The asymmetry in preferences due to a reference pointshift can be expressed in terms of relative loss aversion forhedonic and utilitarian attributes. Consider the four stimulusitems in Figure 2. Choice option h is characterized by a highscore in the hedonic attribute and a low score in the utilitar-

ian attribute. Choice option f is characterized by the reversescores. A superior reference item s has high scores in bothattributes, and an inferior reference item i has low scores inboth. When the reference item is s, so that the decision iswhich of two superior attribute levels to forfeit, consumershave a relatively stronger preference for h over f (as shownby indifference curve Us) than when the reference item is i(as illustrated by the steeper indifference curve Ui).

Our hypothesis implies that the ratio of the choice shareof h to the choice share of f is greater in forfeiture choices.These ratios can be transformed into a coefficient hf ofrelative loss aversion for hedonic and utilitarian goods asfollows:

where fs and fi denote strong preference, given a superior(s) or an inferior (i) reference item, and h and f are the pa-rameters of loss aversion for h and f (see Tversky andKahneman 1991). Our prediction of stronger preferences forthe hedonic good when the reference item is superior im-plies that the relative loss-aversion coefficient hf is greaterthan 1. Because such differential loss aversion may be afunction of attribute importance (Tversky and Kahneman1991), we design choice problems such that the utilitarianattributes are at least as important as the hedonic attributes.

Method

Subjects were 141 undergraduate students at a privateNortheastern university. There were four choice problems(within subjects, in counterbalanced order), each with tworeference item conditions (superior versus inferior; betweensubjects). The reference options were designed according toFigure 2. In each problem, subjects decided between two al-

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ternatives, one of which was superior in a utilitarian attrib-ute (point f in Figure 2), and the other was superior in a he-donic attribute (point h in Figure 2), all else being equal. Anexample is provided in the Appendix. The alternatives wereas follows:

apartments: utilitarian attribute, distance to work (10 minutesversus 45 minutes); hedonic attribute, view from the apartment(breathtaking view of sunset and city skyline versus view of aparking lot).

coworkers: utilitarian attribute, reliability (very reliable versusnot very reliable); hedonic attribute, fun to work with (a lot offun versus somewhat arrogant).

college lunch plans: utilitarian attribute, walking distance tocafeteria (5 minutes versus 10 minutes); hedonic attribute,dessert menu (cookies, pastry, and fresh fruit for dessert versusno dessert).

shampoos: utilitarian attribute, cleansing efficacy (very effec-tive cleansing agent versus moderately effective cleansingagent); hedonic attribute, softness of hair (hair feels soft andsilky versus hair feels dry after shampooing).

We had conducted a pretest to ensure that these pairs ofattributes differed in their hedonic and utilitarian contentand that the more hedonic attributes were not seen as moreimportant than the corresponding utilitarian attributes.Thirty-five subjects rated the relative hedonic and utilitariancontent as well as the importance of each attribute used inthe four problems. Using a measure adopted from Leclerc,Schmitt, and Dub (1994), the hedonic ratings were an-chored at 1 = utilitarian and 9 = hedonic, where the termsutilitarian and hedonic were defined as in the pretests inExperiments 1 and 2, and the importance ratings were an-chored at 1 = not at all important and 9 = very important.

A brief cover story for each problem manipulated the ref-erence item. In the superior reference item condition (equiv-alent to a forfeiture condition; point s in Figure 2), subjectswere instructed to imagine themselves as currently consum-ing an alternative that was characterized by superior valuesin both attributes (e.g., a 10-minute drive to work and abeautiful view of the sunset from their current apartment). Incontrast, in the inferior reference item condition (equivalentto an acquisition condition; point i in Figure 2), they wereasked to imagine themselves as currently consuming an al-ternative that was characterized by inferior values in both at-tributes (e.g., a 45-minute drive to work and a view of aparking lot from their apartment). In both conditions, theywere told that they then had to switch to one of the two de-cision alternatives (e.g., because they had to move out oftheir current apartment). Subjects were randomly assignedto the two conditions. The dependent variable was subjectschoices.


Pretest. The pretest results supported our manipulation ofthe relative hedonic and utilitarian content and importanceof the attributes. First, subjects distinguished clearly be-tween hedonic and utilitarian attributes in all four cases.Distance to work was seen as a highly utilitarian attribute ofapartments (M = 1.80), whereas the view from an apartmentwas rated as highly hedonic (M = 7.86; t = 16.52, p

consumer choice between hedonic and utilitarian goods

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