Sunday, October 1, 2017

If we spend a longer time waiting in a line, we buy more -- a form of mental accounting to offset the cost of the wait

Ulku, Sezer and Hydock, Christopher and Cui, Shiliang, Making the Wait Worthwhile: Experiments on the Effect of Queueing on Consumption (July 24, 2017). Available at SSRN:

Abstract: The queueing literature to date has implicitly assumed that customers’ consumption decisions are independent from the time they spent waiting in a line prior to making the decisions. Through a series of studies, we investigate this relationship, and find that when people spend a longer time waiting in a line, they tend to increase their consumption. Next, we identify mental accounting as the underlying mechanism that drives this behavior; a larger purchase allows people to offset the fixed cost of the long wait. Finally, we explore the effect of managerial practices commonly employed by firms to improve customers’ waiting experience. We find that while these practices result in improved customer experience, they actually lead to lower consumption

Keywords: Mental Accounting, Sunk Cost Fallacy, Consumer Behavior in Queues, Behavioral Operations