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