The Role of Explanations and Need for Uniqueness in Consumer Decision Making: Unconventional Choices Based on Reasons

Simonson, Itamar; Nowlis, Stephen M.

doi:10.1086/314308

Cited by 433 publications

(412 citation statements)

References 38 publications

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“…An important difference, however, is that for status products, we may expect more than a single threshold. Because of the need for uniqueness (Simonson & Nowlis, 2000), if the number of other adopters surpasses an upper threshold (i.e., the number of other adopters is too large), it will reduce the utility for some potential adopters. The difference between the processes that include one as opposed to two thresholds is an intriguing topic for research, yet it is beyond the scope of this paper.…”

Section: An Agent-based Model (Abm) Of Network Good Growthmentioning

confidence: 99%

The chilling effects of network externalities

Goldenberg

Libai

Muller

2010

International Journal of Research in Marketing

193

132

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Conventional wisdom suggests that network effects should drive faster market growth due to the bandwagon effect. However, as we show, network externalities may also create an initial slowdown effect on growth because potential customers wait for early adopters, who provide them with more utility, before they adopt. In this study, we explore the financial implications of network externalities by taking the entire network process into account. Using an agent-based as well as an aggregate-level model, and separating network effects from word of mouth, we find that network externalities have a substantial chilling effect on the net present value associated with new products. This effect may occur not only in a competitive framework, such as a competing standards scenario, but also in the absence of competition. Drawing on the collective action literature in order to relate network effects to individual consumer threshold levels, we find that the chilling effect is stronger with a small variability in the threshold distribution, and is especially affected by the process early on in the product life cycle. We also find a "hockey stick" growth pattern by empirically examining the growth of fax machines, CB radios, CD players, DVD players, and cellular services.

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Section: An Agent-based Model (Abm) Of Network Good Growthmentioning

confidence: 99%

The chilling effects of network externalities

Goldenberg

Libai

Muller

2010

International Journal of Research in Marketing

193

132

View full text Add to dashboard Cite

show abstract

“…Decision-makers sometimes base their choices on rules for 'good behavior' rather than predicted experience [47][48][49][50]. Examples of such decision rules include 'seek variety' [51][52][53][54], 'don't waste' [55,56], and 'don't pay for delays' (Amir and Ariely, unpublished).…”

Section: Rule-based Decisionsmentioning

confidence: 99%

“…Decision-makers strive to be rational [48,50,57] but, paradoxically, the desire for rationality can lead to less rational decisions. When decision-makers try to 'do the rational thing', it can prevent them from choosing what they predict to be experientially optimal.…”

Section: Lay Rationalismmentioning

confidence: 99%

Decision and experience: why don't we choose what makes us happy?

Hsee

Hastie

2006

Trends in Cognitive Sciences

195

128

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“…This implication is shared by research on rule-based decisions (e.g., Amir & Ariely, 2003;Prelec & Herrnstein, 1993;Simonson, chapter 18 18 1989; Simonson & Nowlis, 2000). Examples of decision rules (broadly defined) include "don't waste" (Arkes & Ayton, 1999;Arkes & Blumer, 1985), "seek variety" (e.g., Simonson, 1990), "don't choose the same dish as your friends" (Ariely & Levav, 2000), "don't pay for delays" (Amir & Ariely, 2003), to name just a few.…”

Section: Decisions Based On Rulesmentioning

confidence: 91%