Medium Maximization

14 Pages Posted: 11 Oct 2006

See all articles by Christopher K. Hsee

Christopher K. Hsee

University of Chicago - Booth School of Business

Frank Yu

China Europe International Business School

Jiao Zhang

University of Chicago - Booth School of Business

Yan Zhang

University of Chicago - Booth School of Business

Abstract

A medium - for example, points or money - is a token people receive as the immediate reward of their effort.It has no value in and of itself, but it can be traded for a desired outcome. Experiments demonstrate that, when people are faced with options entailing different outcomes, the presence of a medium can alter what option they choose. This effect occurs because the medium presents an illusion of advantage to an otherwise not so advantageous option, an illusion of certainty to an otherwise uncertain option, or an illusion of linearity to an otherwise concave effort-outcome return relationship. This work has implications for how points influence consumer choice and how money influences human behavior.

Keywords: decision-making, loralty program, utility construction, consumer satisfaction

JEL Classification: D11, D12, D81, D91

Suggested Citation

Hsee, Christopher K. and Yu, Fang and Zhang, Jiao and Zhang, Yan, Medium Maximization. Journal of Consumer Research, Vol. 30, 2003. Available at SSRN: https://ssrn.com/abstract=929944

Christopher K. Hsee (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Fang Yu

China Europe International Business School ( email )

669 Hongfeng Road
Pudong
Shanghai, 201206
China

Jiao Zhang

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Yan Zhang

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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