The Relaxed Consumer & The Emotional Oracle Michel Tuan Pham Columbia University K U Leuven 2009 Marketing Camp

The Relaxed Consumer & The Emotional Oracle

Michel Tuan PhamColumbia University

K U Leuven 2009 Marketing Camp

Relaxation & Monetary Valuation


Iris W. Hung National University of Singapore

Gerald J. Gorn University of Hong Kong

Relaxation

A distinct physiological, emotional, and mental state, that is hedonically pleasant, and is characterized by low physiological arousal and low tension, feelings of calmness and peacefulness, and a lack of worry and preoccupation.

Research Questions

What are the effects of relaxation on consumer judgment and decision making?

Is there something unique about states of relaxation, beside being pleasant states? Need to compare to less-relaxed affective

states that is equally pleasant

Main Manipulation

10 min Relaxation DVD

Nature scenesSoft music

Relaxation instructions (e.g., breathing)

10 min TV documentary

World Expo in JapanScenes of robots

Relaxed Less-Relaxed but equally pleasant

Pretest

1 2 3 4 5 6 7 8 9

Feelings ofRelaxation

Feelings ofPleasantness

Subjective Intensity of Feelings

Less Relaxed (WorldExpo documentary)

Relaxed (RelaxationDVD)

Imagine you want to buy a new digital camera and that the camera that you want is the one depicted below. You find out that this camera is available brand new with free shipping on eBay, the popular auction site where people buy and sell goods among themselves (ebay.com.hk). Therefore, you may be able to obtain the camera you want (free of shipping) by biding for it on eBay.

1. What would be the maximum bid (offer) that you would be willing to make to get this camera on eBay? My maximum offer would be ________ dollars.

Main Features

Sensor Size ½.5 inch

Resolution 5 mega pixels

Zoom 3X Optical; 4X Digital

LCD Monitor 2.7 inch TFT; 640 x 240 pixels

Image Format JPEG

Self-Timer 2 sec. / 10 sec.

Recording Media SD Card, MMC

Power Lithium-ion Battery

Dimension (WxHxD) 88.5 x 57 x 20.5mm

Weight 112g (camera body only)

Suggested Retail Price $2,700

Shipping Fee Free shipping

2. How much do you think this camera is really worth? It is really worth _______ dollars

$2,000

$2,100

$2,200

$2,300

$2,400

$2,500

$2,600

$2,700

Bid Worth

Monetary Valuation

HK

Do

lla

rsRelaxed (n = 26) Less Relaxed (n = 25)

Study 2

How much is the vacuum cleaner worth?

The vacuum cleaner is worthA. $1500-2000B. $2000-2500C. $2500-3000D. $3000-3500E. $3500-4000

How much is the crystalline picture frame worth?

The crystalline picture frame is worth A. $100-500B. $500-1000C. $1000-1500D. $1500-2000E. $2000-2500

Study 1

1

2

3

4

5

Backpack CrystalTulip

DigitalGauge forCar Tires

LCDMonitor

MagazineRack

PaperShredder

PictureFrame

Scarf TennisRacquet

VacuumCleaner

Es

tim

ate

d P

ric

e B

rac

ke

tRelaxed (n = 21) Less Relaxed (n = 24)

*

*

*

*

**

Pretest 2

1 2 3 4 5 6 7

Feelings of Relaxation

Feelings of Pleasantness

Less Relaxed (Kenny G)

Relaxed (Shawntana)

Study 1b (Music Manipulation)

1

2

3

4

5

High relaxation Low relaxation

**

*

**

**

*

Product Attribute Ratings

Not easy to use 1 2 3 4 5 6 7 Very easy to use

Has poor features 1 2 3 4 5 6 7 Has good features

Not nice looking 1 2 3 4 5 6 7 Nice looking

Not convenient to use 1 2 3 4 5 6 7 Convenient to use

Main Features





Image Format JPEG








Main Features





Image Format JPEG








1. Monetary Valuations (Bid, Worth)

2. Specific Ratings (Ease of use, Features, Looks, Convenience)

1. Specific Ratings (Ease of use, Features, Looks, Convenience)

2. Monetary Valuations (Bid, Worth)

Study 3 (N = 159)

Study 3 (N = 159)

$1,900

$2,000

$2,100

$2,200

$2,300

$2,400

$2,500

$2,600

Monetary Valuation First Attribute Ratings First

Bid

Relaxed Less Relaxed

Construal-Level Priming

1. Meat is an example of ___2. Burger is an example of ___3. Singer is an example of ___4. Computer is an example of ___5. Magazine is an example of ___6. Dress is an example of ____7. Chair is an example of ____8. Taxis is an example of ____9. Fruit is an example of ____10. Beer is an example of ____11. …12. …

1. An example of meat is ___2. An example of burger is ___3. An example of singer is ___4. An example of computer is ___5. An example of magazine is ___6. An example of dress is ____7. An example of chair is ____8. An example of taxis is ____9. An example of fruit is ____10. An example of beer is ____11. …12. …

Abstract Construal Priming Concrete Construal Priming

Fujita, Trope, Liberman, Levin-Sagi (2006)

Study 4 (N = 199)

$1,800

$1,900

$2,000

$2,100

$2,200

$2,300

$2,400

$2,500

$2,600

Abstract Construal Prime Concrete Construal Prime

Bid


Study 4 (N = 199)

$1,800

$1,900

$2,000

$2,100

$2,200

$2,300

$2,400

$2,500

$2,600

Abstract Construal Prime Concrete Construal Prime

Bid


Estimated market Price (75.2% MRSP)

Not at all 1 2 3 4 5 6 7 Very much

When you were thinking about the bid, to what extent did you think about “why you might get this camera”?

Not at all 1 2 3 4 5 6 7

When you made the bid, to what extent did you think about “capturing moments, objects or faces” with it?

Abstract Valuation Thinking

Not at all 1 2 3 4 5 6 7 Very much

When you were thinking about the bid, to what extent did you think about ““how useful each specific feature of the camera was (e.g. number of pixel, zoom, LCD display, shutter speed, image format, flash etc)”?

Not at all 1 2 3 4 5 6 7

When you made the bid, to what extent did you think about “how to take good pictures with it”?

Concrete Valuation Thinking

3

3.5

4

4.5

5

5.5

6

Abstract Valuation Thinking Concrete Valuation Thinking

Ex

ten

t o

f T

hin

kin

gRelaxed Less Relaxed

Study 5 (N = 120)

Conclusions

Important to study effects of relaxation on consumer judgments and decisions

Relaxation increases monetary valuation even compared to equally-pleasant, less-relaxing state

Effect is inflation of value by relaxed individuals (rather than deflation of value by less-relaxed individuals)

Because relaxation triggers more abstract representations of product’s value

Being relaxed need not always be better in judgments and decisions

Could explain why luxury products often marketed in relaxing environments

The Emotional Oracle

Annual Meeting of the Society for Judgment and Decision MakingBoston, November 21-23, 2009


Leonard Lee Columbia University

Andrew T. Stephen Insead

Research Question

Should you trust or not trust your feelings in judgments and decisions?

Trust-of-Feelings Manipulation (TFM) as Method for Studying Reliance on Affect in JDM Avnet, Pham, & Stephen (2004-???)

Trust-of-Feelings Manipulation (TFM) (Avnet, Pham, & Stephen 2004-?, after Schwarz et al. 1991)

2 instances of successful reliance

on feelings

10 instances of successful reliance

on feelings

Perceived ease of retrieval

Perceived difficultyof retrieval

Higher momentarytrust of feelings

Lower momentarytrust of feelings

Higher relianceon feelings

Lower relianceon feelings

High Trust Low Trust

Avnet, Pham, & Stephen-Exp 2

4.33

5.675.97

5.69

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

High trust of feelings(easy to generate 2

examples)

Low trust of feelings(difficult to generate

10 examples)

Attitude toward reading

Unpleasant soundtrack Pleasant soundtrack

Avnet, Pham, & Stephen-Exp 3

2.88

4.58

5.13

4.63

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

High trust of feelings(easy to generate 2

examples)

Low trust of feelings(difficult to generate 10

examples)

Book E

valu

ati

on

Negative mood Positive mood

Other TFM Results

Does not affect task confidence Avnet, Pham, & Stephen-Exp 5 & Exp 6

Does not affect mood Stephen & Pham (2008) Avnet, Pham, & Stephen-Exp 7

Does not affect risk or risk preference Avnet, Pham, & Stephen-Exp 8

Does not affect self-awareness Avnet, Pham, & Stephen-Exp 5

The Ultimatum Game

Pie X = $20

Proposer

Responder

[$19,$1]

[$15,$5]

[$12,$8]

Accepts

Rejects

Proposer:$15Responder:$5

Proposer:$0Responder:$0

P

(1-P)

Possible Offer Strategies

Responder

Responder

Responder

Outcome

Trust of Feelings and Earnings in Ultimatum Game & Variants Stephen & Pham (2008), Psych. Sc.

Average % endowment won

ExperimentHigh trust Low trust

Standard Ultimatum Game 43% 36%

Counteroffer Game 39% 28%

Dictator Game 73% 56%

Stephen & Pham (2008, Psych.Sc.)

47.9 48.1

42.6 42.0

20

25

30

35

40

45

50

55

60

Offer Size for $5 Pie Offer Size for $15 Pie

Pro

po

rtio

n o

f P

ie O

ffe

red

(%

)

Low trust

High trust

High trust

Low trust

Low Trust

High Trust

The Emotional Oracle

Annual Meeting of the Society for Judgment and Decision MakingBoston, November 21-23, 2009


Leonard Lee Columbia University

Andrew T. Stephen Insead

Overview of Studies

Prediction Context

Studies

Manipulation

Measure

Prediction Horizon

Movies: Box office success

12

✓✓

3-4 days

Elections: 2008 Democratic nominee

3 ✓ 6 months

TV contest: 2009 American Idol winner

4 ✓ 20 hours

Finance: Dow Jones Index

5 ✓ 1 week

Weather 67

✓✓

2 days

Study 1: Movie Box Office (N = 66)

Study conducted on October 1 & 2, 2008 Movies in national release on Oct 3, 2008 Participants complete TFM Then ranked movies in order of predicted first-

weekend box office revenues

Rank-Order Correlation (actual vs. predicted box office success)Most

accurate

Leastaccurate

Tobit regression; LS means

** p = .05

Lowtrust

-0.79

Hightrust

0.61

-1

-0.8

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

0.8

1

Study 2: Movie Box Office (N = 42)

Replication of Study 1 Ran on December 10-11, 2008; movies in

national release on December 12, 2008 Same procedure as Study 1

Rank-Order Correlation (actual vs. predicted box office success)

Mostaccurate

Leastaccurate

Tobit regression; LS means

** p < .01

Lowtrust

0.21

Hightrust

0.52

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Discussion

Higher trust in feelings increases ability to predict future relative success (popularity) of movies Two separate studies with two sets of movies

Does it extend to more consequential targets and longer prediction horizon?

Study 3: Democratic Nomination

Representative national sample of registered voters (N = 229)

Conducted during Feb 15-17, 2008 Polls were very close; 52% of delegates already

pledged Clinton conceded on June 7, 2008; Obama officially

nominated at DNC in August 2008 TFM, then predicted who would be the nominee

Percent Correct (Obama will be the nominee)

* p < .10** p < .05

Full sample

63.967.5

59.1

14.3

*71.9

*80

**74.6

**50

0

10

20

30

40

50

60

70

80

90Low TF High TF

Discussion

High trust in feelings also improves predictions about more consequential targets with a longer time horizon

Could effect be due to some peculiarity of TFM?

Study 4: American Idol

Sample of regular American Idol viewers, N = 104 Ran over 20 hrs between final performance episode (May

19, 2009) and winner announcement (May 20, 2009) Predict who will win filler task measures (1-5)

“I trust my feelings when making predictions” “I rely on logic and reasoning when predicting the

future”

Percent Correct(Kris Allen will win)

Logistic Regression

Correct (1) vs. incorrect (0) Measures (1-5)

“I trust my feelings when making predictions” “I rely on logic and reasoning when predicting the

future”

Positive effect of trusting feelings (χ2 = 3.96, p < .05)

No effect of logic/reason (χ2 = 1.61, p = .20)

Discussion

Effect holds even when trust of feelings is measured, rather than manipulated Not driven by peculiarity of TFM

Effects also holds for predictions of outcomes that are surprising

Is this limited to outcomes driven by popularity?

Study 5: Dow Jones Index

N = 119 business undergrads Procedure

TFM Background info on DJI (e.g., historical levels) Predict the closing level of the DJI one week

from today

DV = | actual value – predicted value |

Absolute Prediction Error(points away from actual value) Less

accurate

Moreaccurate

Main effect TF p = .04; main effect major p = .05; interaction n.s.

569

Lowtrust

796

Lowtrust

574

Hightrust

458

Hightrust

0

100

200

300

400

500

600

700

800

900

Econ majors Non-econ majors

Recap…

Trust in feelings improves ability to predict future outcomes Wide range of domains Including consequential domains Including outcomes that are not popularity-based

Whether trust in feelings is manipulated or simply measured

Why? Is it empathy / social attunement? Does effect hold for predictions of outcomes

that are totally beyond human control?

Study 6: The Weather

Online panel of people who said they had not looked at weather forecast recently, N = 52

Did the TFM, then predicted weather conditions “two days from today” for their home zip code

One of six possible weather conditions: Sunny/fine/clear Partially sunny with some clouds Cloudy/overcast Rain Thunderstorms Windy

Lowtrust

27.8Hightrust

47.1

Percent Correct

** p = .02

Randomguess

“Same as today”guess

0

5

10

15

20

25

30

35

40

45

50

Study 7: The Weather…again!

Online panel of people who said they had not looked at weather forecast recently (N = 116)

Predicted weather conditions as in Study 6

Study 7: The Weather…again!

Online panel of people who said they had not looked at weather forecast recently, N = 116

Predicted weather conditions as in Study 6

Prediction filler task measures (1-5) “I trust my feelings when making predictions” “I rely on logic and reasoning when predicting the

future”

Percent Correct

“Same as today”guess

Randomguess

Completely false Completely true

Conclusions

Trust in feelings improves ability to predict future outcomes

Variety of outcomes: movie successes, election results, singing competition winners, stock market movements, and weather

Regardless of whether trust in feelings is manipulated of simply measured

Why? Social attunement explanation possible but not sufficient Feelings help summarize large amounts of rich tacit

knowledge about situations

Architecture of Affective System

More ordinal (less interval) in computation of value (Pham, Toubia, & Lin, in prog.)

More literal: More dependent on target identification and categorization Ultimatum game (Stephen & Pham, 2008, Psych. Sc.) Compromise effect (Pham & Parker, in prog.)

More present-oriented (Chang & Pham, in prog.)

Flexibly engaged (“On-off switch”) Experiential vs. instrumental motives (Pham 1998) Present vs. future or past (Chang & Pham) Promotion vs. prevention (Pham & Avnet, 2004, 2008)

Weighs environment cues in more ecological fashion

Documents

The Relaxed Consumer & The Emotional Oracle Michel Tuan Pham Columbia University K U Leuven 2009 Marketing Camp