Balancing giving-up vs. taking-in: Does the pattern of payments and benefits matter to customers in a financing decision context?

Seigyoung Auh, Chuan Fong Shih

Research output: Contribution to journalArticlepeer-review

Abstract

Despite the relevance of mental accounting as a framework in addressing consumer behavior decision making, very little has been documented about the applicability of mental accounting to financial marketing and behavioral financing. This paper attempts to build and extend the literature on financial decision making by drawing on mental accounting and prospect theory. Specifically, we take the current literature one step further by testing the alignment hypothesis which states that consumers prefer financing schemes that not only match the length of benefits with payments but also the corresponding patterns as well. Through three studies, our paper finds general support for the alignment hypothesis. Implications for financial decision making along with retailing strategies are discussed.

Original languageEnglish (US)
Pages (from-to)139-145
Number of pages7
JournalAdvances in Consumer Research
Volume33
StatePublished - Dec 1 2006
Externally publishedYes

ASJC Scopus subject areas

  • Applied Psychology
  • Economics and Econometrics
  • Marketing

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