Social Interaction Effects
in the Framing
of Buying Decisions
Arch G. Woodside
Tulane University
Alan E. Singer
University of Canterbury
ABSTRACT
The reported study is a response to the Kahneman and Tversky (1984;
1988) proposal that systematic examination of alternative framings of
decisions offers a useful reflective device that can help decision
makers assess the values that should be attached to the primary and
secondary consequences of their choices. We investigate the effect of
social interaction as a mediator of responses to the theater ticket
problems of Tversky and Kahneman (1981). The hypothesis is
supported that attending the theater with a friend (social interaction)
versus alone reduced the effect of the lost ticket versus the loss of a
$10 bill on willingness to spend a second $10 to see the play. A
further hypothesis, that social interaction results in a positive main
effect on attending the theater after the ticket ($10 bill) loss receives
limited support. The results support the views of Payne (1982),
Schoemaker (1982), and Bettman, Johnson, and Payne (1991) that
context effects influence a decision maker's judgment and, hence, the
outcome of the decision process. © 1994 John Wiley & Sons, Inc.
Of particular interest to buying decision processes is the fact that several recent reviews in behavioral decision theory have concluded that
individual choice varies with the nature of the decision environment
Psychology & Marketing
© 1994 John Wiley & Sons, Inc.
Vol. 11(1): 27-34 (January/February 1994)
CCC 0742-6046/94/010027-08
27
(Bettman et al., 1991; Einhorn & Hogarth, 1981; Payne, 1982; Puto,
1987; Pitz & Sachs, 1984; Slovic, Fischoff, & Lichtenstein, 1977). Decision problems can be described or framed in multiple ways that give
rise to different preferences, contrary to the invariance criterion of
rational choice. The process of mental accounting, in which people organize the outcomes of transactions, explains some anomalies of consumer behavior (Kahneman & Tversky, 1984).
The Tversky and Kahneman (1981) theater ticket problem often has
been used to illustrate mental accounting in which the posting of a cost
to an account is controlled by topical organization. In the first theater
ticket problem (Problem 8, Tversky & Kahneman, 1981), subjects are
asked to
Imagine that you have decided to see a play and paid the admission
price of $10 per ticket. As you enter the theater, you discover that you
have lost the ticket. The seat was not marked, and the ticket cannot
be recovered. Would you pay $10 for another ticket?
Using a sample of 200 undergraduate college students as subjects, 46
percent would and 54 would not buy a second ticket.
In the second theater ticket problem (Problem 9, Tversky & Kahneman, 1981), subjects were asked to
Imagine that you have decided to see a play where admission is $10
per ticket. As you enter the theater, you discover that you have lost a
$10 bill. Would you still pay $10 for a ticket for the play?
Among the 183 subjects responding to Problem 9, 88% would and 12%
would not buy a ticket for the play.
Why are so many people unwilling to spend $10 after having lost a
ticket, if they would readily spend that sum after losing an equivalent
amount of cash? Kahneman and Tversky (1984) attribute the difference
to the topical organization of mental accounts. Going to the theater is
normally viewed as a transaction in which the cost of the ticket is
exchanged for the experience of seeing the play. Buying a second ticket
increases the cost of seeing the play to a level that many respondents
apparently find unacceptable. In contrast, the loss of the cash is not
posted to the account of the play, and it affects the purchase of a ticket
only by making the individual feel slightly less affluent.
Kahneman and Tversky (1984, p. 348) acknowledge that the normative status of the effects of mental accounting is questionable. The
argument has merit that the two ticket problems differ in substance as
well as form. It may be more annoying to pay twice for the same ticket
than to lose $10 in cash. Regret, frustration, and self-satisfaction can
also be affected by framing (Kahneman & Tversky, 1984). If such secondary consequences are considered legitimate, then the observed preferences do not violate the criterion of invariance and cannot be readily
28
WOODSIDE AND SINGER
ruled out as inconsistent or erroneous. However, secondary consequences may change upon reflection.
We do not wish to recommend that any two decision prohlems that have
the same primary consequences should he resolved in the same way.
We propose, however, that systematic examination of alternative framings offers a useful reflective device that can help decision makers
assess the values that should he attached to the primary and secondary
consequences of their choices. (Kahneman & Tversky, 1984, p. 348)
In economics, Schoemaker (1982) has noted that a major deficiency
of the expected utility model is its inability to account for context effects,
that is, secondary consequences. Such context effects include the verbal
labels, modes of information presentation, response modes, social dimensions, and other circumstances associated with the nature of the
decision problem (Schoemaker, 1982).
In consumer behavior, Puto (1987) provides the most extensive test
of context effects on the outcomes of buying decisions. Puto (1987)
grounded his research in the Kahneman and Tversky (1979,1984) prospect theory. (Prospect theory is a modification of expected utility theory;
prospect theory includes the postulation that most individuals value
losses differently from gains and that the value of a loss or gain depends
on the reference point. How the reference point is framed influences
the value placed on gains and losses.)
Using industrial buyers as subjects, Puto's (1987) findings include
support for the hypothesis that verbal labels are influential in changing
the topical organization of a mental account. In Puto's study (1987)
using only the key words gain or loss was sufficient to produce shifts
in some buyers' final reference points. The mention of the word gain
tended to raise the final reference point toward an easier-to-obtain level,
and the mention of loss tended to shift the reference point toward a
more difficult-to-obtain level. This only occurred when the buyer had
a low degree of commitment to the initial reference point, but nonetheless the shifts are consistent with the gain versus loss relationship
suggested by prospect theory.
The present research is a test of the context effects of social interaction on the acceptability of a consumer purchase transaction. The
hypothesis tested is that including the presence versus absence of social
interaction among friends in a consumer purchase shifts the preferences
in purchase outcomes. Such a shift in preferences can be attributed to
the topical organization of mental accounts. In terms of the Tversky
and Kahneman (1981) theater ticket problem, with the presence of
social interaction both problems are likely posted to a high-involvement
buying problem where commitment to the purchase is substantial. Only
the lack of such a social context, or other high-involving situational
context, in the buying problem, permits the posting of the lost ticket
to the primary mental account of the cost of seeing the play. Thus, a
SOCIAL INTERACTION EFFECTS
29
positive interaction effect of type of loss by social interaction on purchasing the theater ticket is hypothesized.
In testing contextual effects on buyer preferences, other researchers
provide independent evidence that supports the Tversky and Kahneman
(1981) framing-induced decision bias under risk (in business contexts,
cf. Mowen & Mowen, 1986) and in transactions not incorporating risk
(in consumer buying contexts, cf. Singer, Singer, & Ritchie, 1986). These
prior studies do not address the situational effects of framing buying
decisions within a social context among friends, nor the prediction that
secondary consequences may overrule the posting of a negative event
to a primary mental account—the purchase of a second ticket is a relatively small price to pay to save the outcome of having an enjoyable
evening attending the play with a friend but too much to pay when
alone.
The effect of social interaction in framing buying decisions was selected for study because of the extensive research evidence on personal
influence on consumer preferences (Assael, 1987, Chapter 16; Stafford,
1968; Witt & Bruce, 1970), and yet, Bettman et al. (1991, pp. 63-64)
have noted a paucity of available research on social context factors
affecting contingent consumer decision making. Given that "decisions
are not made in a social vacuum; rather, many social factors can influence decision making" (Bettman et al. 1991, p. 63), the introduction of
even a minimal level of social interaction into the framing of a buying
decision, such as the theater ticket problems, may likely result in a
substantial secondary consequence. An additional hypothesis tested in
the present study is that the introduction of social interaction results
in a positive main effect on purchase preference.
Simonson (1989) has demonstrated empirically that the need to justify decisions to others leads consumers to choose options that provide
easy rationales or justifications. Even if an individual is making a
decision, he or she may feel accountable to others, such as family members or friends, who may be affected by the outcome of the decision.
Such feelings of accountability may lead to heuristics and choices that
are easy to justify to these important others (see Bettman et al., 1991,
p. 63). Consequently, the likely greater difficulty in justifying the revised decision to a friend of not seeing the play because of the losing
the ticket, and the felt accountability to fulfill the prior commitment
made to the friend, serve as rationales for buying a replacement ticket.
METHOD
Two additional theater ticket framing problems were created by impeding "with a friend" in the first sentences of the Tversky and Kahneman
(1981) original problems: "Imagine that you have decided to see a play
with a friend and paid the admission price of $10 per ticket," and "Imag30
WOODSIDE AND SINGER
ine that you have decided to see a play with a friend where the admission
is $10 per ticket." The remainder of the original theater ticket problems
were left unchanged in the two new problems.
Subjects
A total of 120 undergraduate students were randomly assigned to one
of the four buying problems: the two original and two additional theater
ticket problems. The subjects were unfamiliar with prospect theory or
research on framing decisions prior to the study. The four buying problems were distributed in written form at one group setting. The completed questionnaires were collected. The subjects were then debriefed.
The data were collected at a large university located in the United
States.
Limitations
The study is limited to one laboratory experiment that tests one set of
alternative framings of the Tversky and Kahneman (1981) theater
ticket problems. The use of additional laboratory and unobtrusive field
experiments to test additional framings of buying decisions is necessary
before concluding that the results reported in the next section are generalizable.
In this initial test of possible social context influence affecting contingent consumer decision making, protocol data of subjects' thoughts
and choice heuristics were not collected. Asking subjects to think aloud
while making their decisions, as well as requests for post hoc written
explanations, are means to empirically verify the high involvement,
felt accountability to others, and perceived difficulty rationales offered
for the hypotheses. Without such protocol data, the rationales described
are speculative interpretations. The collection of such protocol data is
recommended for inclusion in future research to replicate and extend
the findings reported in the next section.
RESULTS
The findings are summarized in Table 1. The hypothesis is supported
that the loss of the ticket (versus the $10 bill) has a dampening influence
on buying a ticket only in the absence of social interaction. With the
presence of social interaction the preference for buying a second theater
ticket (70%) following the loss of the first ticket is not significantly
lower than the preference for buying a ticket (87%) following the loss
of $10. For the original theater problems the substantial framing effects
reported by Tversky and Kahneman (1981) were observed in the present
study: 83% would buy a ticket following the loss of a $10 bill, and 50%
would buy a ticket following the loss of the ticket.
SOCIAL INTERACTION EFFECTS
31
Table 1. Purchase Preference by Type of Loss and Social Interaction
Social Interaction
Alone
With Friends
No Purchase
Type of Loss
Purchase
$10 bill
Ticket
25
5
15
15
X' = 7.50, df= I, p< .01
Purchase
No Purchase
26
4
21
9
(' = 2.45, df= I, n.s.
X' = 7.84, df= 3, p< .05
Main effect of
type of loss:
85% purchase when $10 bill lost
60% purchase when ticket lost
x' = 9.40, df = I, p< .01
Main effect of
Social Interaction: 67% purchase when alone
78% purchase when with friend
x' = 2.05, df = 1, n.s.
The hypothesized positive interaction effect of social interaction by
type of loss was supported by direction. The model that includes the
main effect of type of loss and the interaction effect of type of loss by
social interaction indicates that the parameter estimates for both are
statistically significant (p < .05). The model was tested using both
ordinary least-squares multiple regression analysis, as well as maximum-likelihood estimation logistic regression analysis utilizing the logistic cumulative distribution; the results of the model tests were similar and the OLS multiple regression results are reported here.
Testing the model with both main effects and the interaction effect
reduced the interaction coefficient. Without the coefficient for the main
effect of social interaction in the model, the trimmed model supports
the positive interaction effect hypothesis. These results are summarized
in Table 2.
The main effect for social interaction was found not to be statistically
significant; the secondary hypothesis was supported only by direction.
Table 2. Models of Purchase Performance
Standard
b
Error
Coefficient
Constant
Ticket
Ticket X Friend
Adj R2 = 0.09,
32
F
0.850
-0.350
0.200
0.096
0.111
t
Statistic
beta
-3.66
1.81
-0.392
0.194
= 6.75, d/"= 2, 117, p < .01.
WOODSIDE AND SINGER
DISCUSSION
The present study is a response to Kahneman and Tversky's (1984)
proposal that systematic examination of alternative framings offers a
useful reflective device that can help decision makers assess the values
that should be attached to the primary and secondary consequences of
their choices. The results imply that a substantially greater proportion
of decision makers may be willing to attach greater value to secondary
versus primary consequences when buying problems are framed in social interaction contexts.
Research on the influences of situational contexts (in the form of
measured but not treatment variables) has resulted in a substantial
body of literature in consumer behavior (cf. Belk, 1974, 1975). As advocated by Puto (1987) and supported by the present research findings,
additional testing of situational contexts by experimentally manipulating decision frames will be useful for increasing our understanding
of buying decision processes.
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Send correspondence to Arch G. Woodside, Freeman School of Business, Tulane
University, New Orleans, LA 70118.
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