 Disproportionate redemption discounting: Mental accounting of discounted creditAndong Cheng and Ernest Baskin Journal of Business Research, 2021, vol. 128, issue C, 156-163 Abstract: Redeeming purchases using discounted credit (i.e., store credit bought at a lower price than its face value) is widespread, but its mental accounting implications remain unclear. This work finds that consumers making multiple redemptions on separate occasions with the same discounted credit do not perceive all redemptions as equally discounted. Redemptions made earlier in that discounted credit’s spending life cycle (upstream redemptions) are perceived as less discounted than redemptions made later (downstream redemptions). This “disproportionate redemption discounting” effect occurs because users feel more certain that they can deplete their credit when they make downstream redemptions and feel like they have the freedom to mentally assign the discounted credit savings unevenly among multiple redemptions. Relatedly, individuals have higher willingness to pay when making downstream redemptions than upstream redemptions. Disproportionate redemption discounting and its’ behavioral consequences are unique to discounted credit and do not generalize to all store credit. Keywords: Discounted credit; Mental accounting; Cost perceptions; Price promotions (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:128:y:2021:i:c:p:156-163 DOI: 10.1016/j.jbusres.2021.02.010 Access Statistics for this article Journal of Business Research is currently edited by A. G. Woodside More articles in Journal of Business Research from Elsevier |
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