EconPapers    
Economics at your fingertips  
 

The Psychology of Marginal Utility

Xilin Li, Christopher K Hsee, J Jeffrey Inman and Hilke Plassmann

Journal of Consumer Research, 2021, vol. 48, issue 1, 169-188

Abstract: That wealth has diminishing marginal utility is a fact of life, and that people be sensitive to their current level of wealth when deciding whether to pursue additional wealth is a requirement of rational choice. A series of experiments, spanning diverse contexts, reveal marginal-utility neglect—that people are rather insensitive to their current wealth when deciding how much effort to expend to acquire a monetary reward (e.g., how long to walk to claim a voucher). Moreover, the experiments demonstrate that a marginal-utility-prompting manipulation, which prompts people to consider their current wealth and their need for the reward given their current wealth, produces a significant sensitization effect—making financially richer (vs. less rich) individuals less (vs. more) willing to seek the reward. This manipulation is more effective than either prompting people to consider their current wealth alone or consider their need for the reward alone, suggesting that marginal-utility prompting does not merely draw people’s attention to their current wealth or merely draw their attention to their need for the reward, but links the two elements. This research elucidates the psychology of marginal utility and yields implications beyond the pursuit of monetary rewards.

Keywords: diminishing marginal utility; narrow bracketing; scope insensitivity; decision bias; nudge (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1093/jcr/ucaa064 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:jconrs:v:48:y:2021:i:1:p:169-188.

Access Statistics for this article

More articles in Journal of Consumer Research from Oxford University Press
Bibliographic data for series maintained by Oxford University Press ().

 
Page updated 2021-08-20
Handle: RePEc:oup:jconrs:v:48:y:2021:i:1:p:169-188.