Intertemporal Spillovers in Consumer Experiences: Empirical Evidence and Service Design Implications

57 Pages Posted: 20 Jul 2023 Last revised: 23 Oct 2023

See all articles by Abhishek Deshmane

Abhishek Deshmane

Georgia Institute of Technology - Scheller College of Business

Victor Martinez-de-Albeniz

IESE Business School - University of Navarra

Guillaume Roels

INSEAD - Technology and Operations Management

Date Written: July 12, 2023

Abstract

In consumer experiences, the consumption of activities may impact the evaluation of future ones, either positively (due to assimilation) or negatively (due to contrast). How salient are these intertemporal spillovers and what are their implications for service experience design? To answer these questions, we develop a model that encompasses both types of spillover, by separating, for each activity consumed by a particular individual, its inherent quality from the consumer’s individual satisfaction. To disentangle the positive and negative intertemporal spillovers, we test our model with retrospective data in four experiential contexts, namely: watching movies, reading books, visiting tourist attractions, and eating out. We consistently find the presence of both positive and negative intertemporal spillovers, with higher salience when activities are more similar to each other and when they are experienced in closer time intervals. Our empirical results have several implications for the design of experiences to maximize a consumer’s total discounted utility. First, it may be optimal to schedule the best activity in the middle of an experience, in contrast to the common peak-end rule. Second, under uncertainty, it may be valuable to save the best activity as a “wild card” in case bad outcomes happen, to recover from them. Our study not only documents the salience of both positive and negative spillovers across four experiential contexts using large-scale observational datasets, it also offers new prescriptions for service experience design.

Keywords: Service experience design, Behavioral operations management, Prospect theory, Analysis of reviews, Reduced-form econometric analysis, Dynamic programming

Suggested Citation

Deshmane, Abhishek and Martinez-de-Albeniz, Victor and Roels, Guillaume, Intertemporal Spillovers in Consumer Experiences: Empirical Evidence and Service Design Implications (July 12, 2023). INSEAD Working Paper No. 2023/58/TOM, Available at SSRN: https://ssrn.com/abstract=4507191 or http://dx.doi.org/10.2139/ssrn.4507191

Abhishek Deshmane (Contact Author)

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

Victor Martinez-de-Albeniz

IESE Business School - University of Navarra ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

Guillaume Roels

INSEAD - Technology and Operations Management ( email )

Boulevard de Constance
77 305 Fontainebleau Cedex
France

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