Disproportionate redemption discounting: Mental accounting of discounted credit
•Gift cards and vouchers purchased at a discount are labeled “discounted credit”.•Multiple purchases made with discounted credit aren’t seen as equally discounted.•We make more expensive redemptions closer to the discounted credit’s depletion. Redeeming purchases using discounted credit (i.e., store...
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Veröffentlicht in: | Journal of business research 2021-05, Vol.128, p.156-163 |
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Format: | Artikel |
Sprache: | eng |
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Zusammenfassung: | •Gift cards and vouchers purchased at a discount are labeled “discounted credit”.•Multiple purchases made with discounted credit aren’t seen as equally discounted.•We make more expensive redemptions closer to the discounted credit’s depletion.
Redeeming purchases using discounted credit (i.e., store credit bought at a lower price than its face value) is widespread, but its mental accounting implications remain unclear. This work finds that consumers making multiple redemptions on separate occasions with the same discounted credit do not perceive all redemptions as equally discounted. Redemptions made earlier in that discounted credit’s spending life cycle (upstream redemptions) are perceived as less discounted than redemptions made later (downstream redemptions). This “disproportionate redemption discounting” effect occurs because users feel more certain that they can deplete their credit when they make downstream redemptions and feel like they have the freedom to mentally assign the discounted credit savings unevenly among multiple redemptions. Relatedly, individuals have higher willingness to pay when making downstream redemptions than upstream redemptions. Disproportionate redemption discounting and its’ behavioral consequences are unique to discounted credit and do not generalize to all store credit. |
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ISSN: | 0148-2963 1873-7978 |
DOI: | 10.1016/j.jbusres.2021.02.010 |