Money vs. Gaming: Effect of Salient Monetary Payments in Double Oral Auctions

Marketing Science, Winter 2000 Vol. 19 No. 1, 4-21

University of Alberta School of Business Research Paper No. 2013-762

Posted: 2 Jul 2013

See all articles by Karim Jamal

Karim Jamal

University of Alberta - Department of Accounting, Operations & Information Systems

Date Written: 1999

Abstract

Despite the explosive growth of electronic commerce and the rapidly increasing number of consumers who use interactive media (such as the World Wide Web) for both pre-purchase information search and online shopping, very little is known about how consumers make purchase decisions in such settings. A unique characteristic of online shopping environments is that they allow vendors to create retail interfaces that include highly interactive features. One form of interactivity that is desirable from a consumer perspective is the implementation of sophisticated tools designed to assist shoppers in making their purchase decisions by customizing the electronic shopping environment to their individual preferences. The availability of such tools, which we refer to as interactive decision aids for consumers, may lead to a transformation of the way in which shoppers search for product information and make purchase decisions. The primary objective of this paper is to investigate the nature of the effects that interactive decision aids may have on consumer decision making in online shopping environments. A well-known phenomenon regarding purchase decision making is that consumers are often unable to evaluate all available alternatives in great depth and, thus, tend to use two-stage processes to reach their decisions. A typical purchase decision process may unfold as follows: First, the consumer screens a large set of relevant products and identifies a subset that includes the most promising alternatives. Subsequently, s/he evaluates the latter in more depth, performs relative comparisons across products on important attributes, and makes a purchase decision. Given the different tasks to be performed in the course of such a two-stage process, interactive tools that provide support to consumers in the following two respects are particularly valuable: (1) the initial screening of available products to determine which ones are worth considering further and (2) the indepth comparison of selected products before making the actual purchase decision. This paper examines the effects of two decision aids, each designed to assist consumers in performing one of the above tasks, on purchase decision making in an online store.

The first of the two interactive tools, a recommendation agent (RA), allows consumers to more efficiently screen the (potentially very large) set of alternatives available in an online shopping environment. Based on self-explicated information about a consumer’s own utility function (attribute importance weights and minimum-acceptable attribute levels), the RA generates a personalized list of recommended alternatives. The second decision aid, a comparison matrix (CM), is designed to assist consumers in making in-depth comparisons among those alternatives that appear most promising based on the initial screening. The CM allows consumers to organize attribute information about multiple products in an alternatives × attributes matrix and to have alternatives sorted by any attribute. Based on theoretical and empirical work in marketing, judgment and decision making, psychology, and decision support systems, we develop a set of hypotheses pertaining to the effects of each of these two interactive decision aids on various aspects of consumer decision making. In particular, we focus on how use of the RA and CM affects consumers’ search for product information, the size and quality of their consideration sets, and the quality of their purchase decisions in an online shopping environment. A controlled experiment using a simulated online store was conducted to test the hypotheses. The results of the study indicate that both interactive decision aids have a substantial impact on consumer decision making. As predicted, use of the RA reduces consumers’ search effort for product information, decreases the size but increases the quality of their consideration sets, and improves the quality of their purchase decisions. Use of the CM also leads to a decrease in the size but an increase in the quality of consumers’ consideration sets, and has a favorable effect on some indicators of decision quality. In sum, our findings suggest that interactive tools designed to assist consumers in the initial screening of available alternatives and to facilitate in-depth comparisons among selected alternatives in an online shopping environment may have strong favorable effects on both the quality and the efficiency of consumers’ purchase decisions in online shopping environments shoppers are able to make much better decisions while expending substantially less effort. This suggests that interactive decision aids have the potential to drastically transform the way in which consumers search for product information and make purchase decisions.

Keywords: Decision Making, Online Shopping, Electronic Commerce, Decision Aids, Recommendation Agents, Consumer Behavior, Information Search, Consideration Sets, Information Processing

Suggested Citation

Jamal, Karim, Money vs. Gaming: Effect of Salient Monetary Payments in Double Oral Auctions (1999). Marketing Science, Winter 2000 Vol. 19 No. 1, 4-21, University of Alberta School of Business Research Paper No. 2013-762 , Available at SSRN: https://ssrn.com/abstract=2279112

Karim Jamal (Contact Author)

University of Alberta - Department of Accounting, Operations & Information Systems ( email )

Edmonton, Alberta T6G 2R6
Canada
780-492-5829 (Phone)
780-492-3325 (Fax)

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