Abstracts Category : Other

Moving Past Option and Future Payment Closer to Now Affects Decision and Behavior: Newness Effect and Prepayment Effect

by Yun Jie

This dissertation documents two time-related effects: newness effect and prepayment effect. The newness effect occurs when we move a past option closer to now along the timeline, while the prepayment effect occurs when we move a future payment closer to now along the timeline. The two effects are more specifically elaborated as follows. (1) Newness effect: In philosophy, the logical fallacy argumentum ad novitatem refers to preferring an option just because it is newer; yet, people consistently fall prey to this fallacy. Across ten studies (N = 3435), the large majority of people prefer newer options to identically good but older options. This newness bias persists even though our study designs preclude rational reasons to choose the newer option including it being better, trendier, fresher, more socially relevant, or more informative. People even prefer to bet on newer die rolls or coin tosses and pay more for newer raffle tickets, contexts where newer transparently cannot be better. We propose an association-based heuristic process and provide convergent evidence for this mechanism: Those who choose newer options spend less time deciding and neither time pressure nor cognitive load affects the bias. On the other hand, newness bias attenuates after deliberation and in domains where the opposite association exists, such as classic artwork. As indicated by the effects name, both the easiness to access to the newness cue and the extent of newness perception can affect peoples newness bias. We also showed that newness per se can be translated to a monetary premium in a real book auction. We conclude by ruling out some alternative explanations and offering implications. (2) Prepayment effect: Extensive literature studied how to make task participants work harder and perform better. The question of what constitutes effective means to turn non-participants into participants is largely ignored. The current research has extended prepayments effect on peoples effort and performance to peoples task participation. In two quasi field experiments, we have successfully motivated more people to participate by decoupling task and payment temporally and moving payment ahead of the required task. The higher participation rate is mainly caused by a). temporal discounting to lure people to accept the prepayment b). loss aversion once people accept the prepayment.