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- catalog abstract "Under the framework of "mental accounting" research suggests that an individual mentally tracks the costs and benefits of a consumer transaction for the purpose of hedonically integrating those costs and benefits upon completion of the transaction (Thaler, 1980, 1985). In transactions where costs precede benefits, this process is argued to lead to a systematic and economically irrational attention to sunk costs (Thaler, 1980; Arkes & Blumer, 1985). In this paper, we extend the mental accounting framework to consider economic exchanges in which costs significantly precede benefits, as with many prepayment types of consumer transactions. We predict a consumer will gradually adapt to an upstream cost with the passage of time, thereby decreasing its sunk cost impact on the consumption of a downstream benefit. We label this process of gradual adaptation to costs "payment depreciation." In a series of experiments, we find evidence in support of "payment depreciation" accross a range of consumer transactions and, in doing so, offer insight into the behavioral implications of temporally separating costs from benefits.".
- catalog contributor b10232699.
- catalog contributor b10232700.
- catalog created "1997.".
- catalog date "1997".
- catalog date "1997.".
- catalog dateCopyrighted "1997.".
- catalog description "Includes bibliographical references (p. 20-21).".
- catalog description "Under the framework of "mental accounting" research suggests that an individual mentally tracks the costs and benefits of a consumer transaction for the purpose of hedonically integrating those costs and benefits upon completion of the transaction (Thaler, 1980, 1985). In transactions where costs precede benefits, this process is argued to lead to a systematic and economically irrational attention to sunk costs (Thaler, 1980; Arkes & Blumer, 1985). In this paper, we extend the mental accounting framework to consider economic exchanges in which costs significantly precede benefits, as with many prepayment types of consumer transactions. We predict a consumer will gradually adapt to an upstream cost with the passage of time, thereby decreasing its sunk cost impact on the consumption of a downstream benefit. We label this process of gradual adaptation to costs "payment depreciation." In a series of experiments, we find evidence in support of "payment depreciation" accross a range of consumer transactions and, in doing so, offer insight into the behavioral implications of temporally separating costs from benefits.".
- catalog extent "27 p. :".
- catalog isPartOf "Working paper (Harvard University. Graduate School of Business Administration. Division of Research) ; HBS 97-059.".
- catalog isPartOf "Working paper / Division of Research, Harvard Business School ; 97-059".
- catalog issued "1997".
- catalog issued "1997.".
- catalog language "eng".
- catalog publisher "[Boston] : Division of Research, Harvard Business School,".
- catalog title "Payment depreciation : the effects of temporally separating payments from consumption / John T. Gourville, Dilip Soman.".
- catalog type "text".