Marketing Publications

Investor memory of past performance is positively biased and predicts overconfidence.

Erik William Jeffries — Thu, 03 Jul 2025 21:19:50 +0000

Investor memory of past performance is positively biased and predicts overconfidence. Erik William J… Thu, 07/03/2025 - 15:19

Walters, Daniel J.; Fernbach, Philip M. Investor memory of past performance is positively biased and predicts overconfidence. Proceedings of the National Academy of Sciences of the United States of America. 9/7/2021, Vol. 118 Issue 36, p1-8.

We document a memory-based mechanism associated with investor overconfidence. In Studies 1 and 2, investors were asked to recall their most important trades in the recent past and then reported investing confidence and trading frequency. After the study, they looked up and reported the actual returns of these trades. In both studies, investors were biased to recall returns as higher than achieved, and larger memory biases were associated with greater overconfidence and trading frequency. The design of Study 2 allowed us to separately investigate the effects of two types of memory biases: distortion and selective forgetting. Both types of bias were present and were independently associated with overconfidence and trading frequency. Study 3 was an incentive-compatible experiment in which overconfidence and trading frequency were reduced when participants looked up previous consequential trades compared to when they reported them from memory.

https://www.pnas.org/doi/10.1073/pnas.2026680118

Traditional

White

Methodological Advances in Consumer Research. Advances in Consumer Research

Erik William Jeffries — Thu, 03 Jul 2025 20:29:13 +0000

Methodological Advances in Consumer Research. Advances in Consumer Research Erik William J… Thu, 07/03/2025 - 14:29

André, Quentin. Methodological Advances in Consumer Research. Advances in Consumer Research. 2021, Vol. 49, p821-826.

Noise in the Process: A Meta-Analysis of Mediation Effects in Marketing Journals Aaron Charlton, College of Business, Illinois State University, USA Amanda Montoya, Department of Psychology, University of California Los Angeles, USA John Price, WU, Vienna University of Economics and Business, Austria Joe Hilgard, College of Arts and Sciences, Illinois State University, USA Paper #2: The same year, Simonsohn, Simmons and Nelson's "False-Positive Psychology" (2011) showed that common practices in behavioral research (e.g., not reporting all conditions and measures, or deciding when to stop data collection) allowed researchers to provide significant evidence for impossible results (e.g., that listening to "When I'm 64" by The Beatles can lower people's age by more than a year). Like the afore-mentioned meta-analyses, the current research examines the average power of mediation tests through analysis of reported statistics-specifically confidence intervals from mediation tests. To simulate true effects, we created a series of 3-variable datasets with a weak population-level indirect effect (ß=.O4) that fully mediated the relationship between X and Y. We settled on ß=.O4 because it allowed us to achieve desired power levels using sample sizes that are similar to those reported in marketing journals.

https://www.proquest.com/docview/3090688396?pq-origsite=gscholar&fromopenview=true&sourcetype=Conference%20Papers%20&%20Proceedings

Traditional

White

Beliefs about Whether Spending Implies Wealth

Erik William Jeffries — Wed, 02 Jul 2025 00:41:03 +0000

Beliefs about Whether Spending Implies Wealth Erik William J… Tue, 07/01/2025 - 18:41

Spending is influenced by many factors. One that has received little attention is the meaning that people give to the act of spending. Spending money might imply that someone is relatively wealthy—since they have money to spend—or relatively poor—since spending can deplete assets. We show that people differ in the extent to which they believe that spending implies wealth (SIW beliefs). We develop a scale to measure these beliefs and find that people who more strongly believe that SIW spend their own money relatively lavishly and are, on average, more financially vulnerable. We find correlational evidence for these relationships using objective financial-transaction data, including over 2 million transaction records from the bank accounts of over 2,000 users of a money management app, as well as self-reported financial well-being. We also find experimental evidence by manipulating SIW beliefs and observing causal effects on spending intentions. These results show how underlying beliefs about the link between spending and wealth play a role in consumption decisions, and point to beliefs about the meaning of spending as a fruitful direction for further research.

June 2021 Marketing Kappes, Heather Barry; Gladstone, Joe J; Hershfield, Hal E. . Journal of Consumer Research. Jun2021, Vol. 48 Issue 1, p1-21.

https://academic.oup.com/jcr/article-abstract/48/1/1/6031914?redirectedFrom=fulltext

Traditional

White

Consumers' minimum time investments in meaningful consumption.

Erik William Jeffries — Tue, 10 Dec 2024 22:33:27 +0000

Consumers' minimum time investments in meaningful consumption. Erik William J… Tue, 12/10/2024 - 15:33

Consumer well-being involves not only the pursuit of pleasure, but also the pursuit of meaning. However, little is known about how people perceive the costs and benefits of meaning- versus pleasure-oriented experiences. We find that compared to pleasure-oriented experiences, people expect meaning-oriented experiences to be more satisfying after meeting a minimum time investment (i.e., the perceived minimum amount of time needed to derive benefits from consumption; study 1). As a consequence, people choose to prolong their exposure to meaningful (vs. pleasurable) experiences following interruptions (study 2). We discuss the implications of minimum time investments for firms' relationships with consumers and marketing communication design.

Carter, Erin Percival; Williams, Lawrence E.; Light, Nicholas. Consumers' minimum time investments in meaningful consumption. Marketing Letters. Dec2024, Vol. 35 Issue 4, p561-573.

https://link.springer.com/article/10.1007/s11002-023-09709-z

Traditional

White

Keep It Simple? Consumer Perceptions of Brand Simplicity and Risk.

Erik William Jeffries — Tue, 10 Dec 2024 20:12:39 +0000

Keep It Simple? Consumer Perceptions of Brand Simplicity and Risk. Erik William J… Tue, 12/10/2024 - 13:12

Evoking simplicity in marketing communications has become popular among marketing practitioners, but little is known about its effects on consumers and firms. The current work focuses on consumers' perceptions of the simplicity or complexity of brands and a previously overlooked consequence of those perceptions. Results from six experiments and analysis of a proprietary customer satisfaction dataset from Consumer Reports (N = 147,600) show that when consumers think brands are simple, they judge them to be less likely to experience product or service failures. Although these lower risk judgments could be positive for brands, they can also lead consumers to punish simpler brands more in the event of failures. Results also suggest that consumers' simplicity/complexity perceptions reflect the dimensionality of their mental representations of brands, and the relationship between simplicity and lower risk is attenuated when additional brand dimensionality is framed in terms of redundancy. The findings cast doubt on the degree to which evoking simplicity is a uniformly positive marketing strategy and encourage practitioners to more thoughtfully consider simplicity's implications for consumer and firm welfare.

Light, Nicholas; Fernbach, Philip M. Keep It Simple? Consumer Perceptions of Brand Simplicity and Risk. Journal of Marketing Research (JMR). Dec2024, Vol. 61 Issue 6, p1152-1170.

Read the Full Article Here.

Traditional

White

Pre-Registered Interim Analysis Designs (PRIADs): Increasing the Cost-Effectiveness of Hypothesis Testing.

Erik William Jeffries — Tue, 10 Dec 2024 20:08:40 +0000

Pre-Registered Interim Analysis Designs (PRIADs): Increasing the Cost-Effectiveness of Hypothesis Testing. Erik William J… Tue, 12/10/2024 - 13:08

The difficulty of determining how many observations to collect is a source of inefficiency in consumer behavior research. Group sequential designs, which allow researchers to perform interim analyses while data collection is ongoing, could offer a remedy. However, they are scarcely used in consumer behavior research, probably owing to low awareness, perceived complexity, or concerns about the validity of this approach. This article offers a tutorial on group sequential designs and introduces Pre-Registered Interim Analysis Designs (PRIADs): A practical five-step procedure to facilitate the adoption of these designs in marketing. We show that group sequential designs can be easily adopted by marketing researchers, and introduce a companion app to help researchers implement them. We demonstrate multiple benefits of PRIADs for researchers engaged in confirmatory hypothesis testing: They facilitate sample size decisions, allow researchers to achieve a desired level of statistical power with a smaller number of observations, and help conduct more efficient pilot studies. We validate this cost-saving potential through a comprehensive re-analysis of 212 studies published in the Journal of Consumer Research , which shows that using PRIADs would have reduced participant costs by 20–29%. We conclude with a discussion of limitations and possible alternatives to PRIADs.

André, Quentin; Reinholtz, Nicholas. Pre-Registered Interim Analysis Designs (PRIADs): Increasing the Cost-Effectiveness of Hypothesis Testing. Journal of Consumer Research. Dec2024, Vol. 51 Issue 4, p845-865.

Read the Full Article

Traditional

White

Probabilistic Outcomes Are Valued Less in Expectation, Even Conditional on Their Realization

Erik William Jeffries — Mon, 11 Nov 2024 01:39:12 +0000

Probabilistic Outcomes Are Valued Less in Expectation, Even Conditional on Their Realization Erik William J… Sun, 11/10/2024 - 18:39

Most theories of decision making under risk assume that payoffs and probabilities are separable. In the context of a lottery, the subjective value of a prospective outcome (the payoff) is assumed to be independent of the likelihood that the outcome will occur (the probability). In violation of this assumption, we present eight experiments showing that people anticipate less utility from uncertain outcomes than from certain outcomes, even conditional on their realization. The devaluation of uncertain outcomes is observed across different measures of utility (willingness to spend money or time; choice between different options), different populations (student and online samples), and different manipulations of uncertainty. We show that this result does not simply reflect a misunderstanding of the instructions or people's aversion toward a "weird" transaction with unexplained features. We highlight the implications of this phenomenon for empirical investigations of risk preferences and conclude with a discussion of the psychological mechanisms that might drive the devaluation of probabilistic outcomes.

Paolacci, Gabriele; André, Quentin. Probabilistic Outcomes Are Valued Less in Expectation, Even Conditional on Their Realization. Management Science. Nov2024, Vol. 70 Issue 11, p7524-7536.

https://pubsonline.informs.org/doi/10.1287/mnsc.2021.02284

Traditional

White

Financial Education Effects on Financial Behavior and Well-Being: The Mediating Roles of Improved Objective and Subjective Financial Knowledge and Parallels in Physical Health.

Erik William Jeffries — Thu, 10 Oct 2024 21:30:39 +0000

Financial Education Effects on Financial Behavior and Well-Being: The Mediating Roles of Improved Objective and Subjective Financial Knowledge and Parallels in Physical Health. Erik William J… Thu, 10/10/2024 - 15:30

How does financial education lead to improved financial behavior and higher financial well-being? An influential Consumer Financial Protection Bureau model introduced in 2015 proposes that the goal of financial education is to improve financial well-being and that financial education does so by increasing financial knowledge, which improves financial behavior, which improves financial well-being. In this study, the authors test links in the Consumer Financial Protection Bureau model, examining the differential roles of objective and subjective knowledge. They also test whether an analogous model might capture effects of physical health education on physical health knowledge, behavior, and well-being. They report a quasi-experiment comparing changes in financial and physical health knowledge, behavior, and well-being at two time points in a semester for students enrolled in a personal finance class, a personal health class, or neither. This study reports the first causal estimates of flow from financial education to financial knowledge to financial behaviors to a validated measure of subjective financial well-being. Financial education caused large changes in both objective and subjective knowledge. Yet only subjective knowledge mediated the large effects of financial education on changes in downstream behaviors. The authors find weaker but similar results for physical health. The findings suggest that financial education efforts should be refocused to foster subjective knowledge and improved behavior.

Netemeyer, Richard G.; Lynch Jr., John G.; Lichtenstein, Donald R.; Dobolyi, David. Financial Education Effects on Financial Behavior and Well-Being: The Mediating Roles of Improved Objective and Subjective Financial Knowledge and Parallels in Physical Health. Journal of Public Policy & Marketing. Oct2024, Vol. 43 Issue 4, p254-275.

https://journals.sagepub.com/doi/abs/10.1177/07439156241228197

Traditional

White

Cut me some slack! How perceptions of financial slack influence pain of payment

Erik William Jeffries — Fri, 10 May 2024 22:35:47 +0000

Cut me some slack! How perceptions of financial slack influence pain of payment Erik William J… Fri, 05/10/2024 - 16:35

Consumers often experience pain of payment, a tug of negative affect that holds back their spending. While the literature has long viewed pain of payment as self‐regulatory in nature, it has left the dynamics of self‐regulation that lead to the pain of paying largely unaddressed. In self‐regulation, affect arises when people move away from a goal they hold. Thus, understanding the specific goals that people consider when making a payment can help us better predict when pain of payment will arise. We propose that people have a goal to maintain financial slack, and that violating this goal contributes to pain of payment. Thus, people experience more pain of payment when the goal to maintain financial slack is stronger or when it is particularly salient that a purchase entails losing financial slack. Critically, subjective changes in financial slack are not equivalent to objective changes in wealth, altering pain of payment for economically equivalent trades. This research contributes to the existing literature by identifying a novel antecedent to the pain of payment. It additionally expands our understanding of people's preferences between payment systems. Finally, it offers guidance to practitioners who wish to minimize pain of payment among their consumers.

Pomerance, Justin; Reinholtz, Nicholas. Cut me some slack! How perceptions of financial slack influence pain of payment. Psychology & Marketing. May2024, Vol. 41 Issue 5, p1100-1114.

https://onlinelibrary.wiley.com/doi/abs/10.1002/mar.21970

Traditional

White

Statistical Significance" and Statistical Reporting: Moving Beyond Binary

Erik William Jeffries — Fri, 10 May 2024 21:25:08 +0000

Statistical Significance" and Statistical Reporting: Moving Beyond Binary Erik William J… Fri, 05/10/2024 - 15:25

Null hypothesis significance testing (NHST) is the default approach to statistical analysis and reporting in marketing and the biomedical and social sciences more broadly. Despite its default role, NHST has long been criticized by both statisticians and applied researchers, including those within marketing. Therefore, the authors propose a major transition in statistical analysis and reporting. Specifically, they propose moving beyond binary: abandoning NHST as the default approach to statistical analysis and reporting. To facilitate this, they briefly review some of the principal problems associated with NHST. They next discuss some principles that they believe should underlie statistical analysis and reporting. They then use these principles to motivate some guidelines for statistical analysis and reporting. They next provide some examples that illustrate statistical analysis and reporting that adheres to their principles and guidelines. They conclude with a brief discussion.

McShane, Blakeley B.; Bradlow, Eric T.; Lynch Jr., John G.; Meyer, Robert J. "Statistical Significance" and Statistical Reporting: Moving Beyond Binary. Journal of Marketing. May2024, Vol. 88 Issue 3, p1-19.

https://journals.sagepub.com/doi/10.1177/00222429231216910

Traditional

White

Marketing Publications

Investor memory of past performance is positively biased and predicts overconfidence.

Related Articles

Methodological Advances in Consumer Research. Advances in Consumer Research

Related Articles

Beliefs about Whether Spending Implies Wealth

Related Articles

Consumers' minimum time investments in meaningful consumption.

Related Articles

Keep It Simple? Consumer Perceptions of Brand Simplicity and Risk.

Related Articles

Pre-Registered Interim Analysis Designs (PRIADs): Increasing the Cost-Effectiveness of Hypothesis Testing.

Related Articles

Probabilistic Outcomes Are Valued Less in Expectation, Even Conditional on Their Realization

Related Articles

Financial Education Effects on Financial Behavior and Well-Being: The Mediating Roles of Improved Objective and Subjective Financial Knowledge and Parallels in Physical Health.

Related Articles

Cut me some slack! How perceptions of financial slack influence pain of payment

Related Articles

Statistical Significance" and Statistical Reporting: Moving Beyond Binary

Related Articles