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Seminario ISCI OM&A: Primacy and Recency in Consumer Reference Point Formation

Seminario ISCI OM&A: Primacy and Recency in Consumer Reference Point Formation
Presenta: Francisco Cisternas, Assistant Professor and Associate Director. MSc Programme in Marketing The Chinese University of Hong Kong Business School.
Fecha: 08 de octubre 2024
Horario: 13:30 – 14:30 horas
Lugar: Beauchef 851, Sala de Consejo. Piso 4
Inscripciones en: Seminario ISCI OM&A
Organiza: Instituto Sistemas Complejos de Ingeniería (ISCI)

Abstract: Reference-dependent models of choice have been incorporated throughout psychology and economics. However, they fail to generate clear predictions in many marketing contexts because consumer reference point formation is not yet well understood. Scanner panel data suggest that reference-points are primarily influenced by the most recently available products. We find evidence that this reverses at shorter time scales – such as within an individual shopping session. In three lab studies and one field study, we exploit random variation in the order of alternatives to estimate the effects of preceding product attribute levels on subsequent product choices. At these short time scales, primacy effects on reference point formation are substantial, while recency effects are negligible. Contrast against initially encountered options has stronger effects than contrast against more recently encountered options, while the most recently encountered options have no greater impact than the typical preceding option. We go on to show that this pattern can be explained by changes in attention, and we propose a model in which impact on the reference point is proportional to consideration time.