Three Essays on the Social Aspect of Consumer Decision Making: Social Presence, Social Power, and Social Prediction\ud

Previous research suggests that social influence and social prediction (i.e., how would others behave in a similar situation?) can have a profound impact on individuals’ consumption patterns. Despite the popularity of the social aspect of decision making in consumer research, there are certain topics that received very little attention to date. In my dissertation, I explore three such underresearched topics, namely (1) the effect of the presence of an accompanying friend on consumer spending, (2) the impact of social power on financial risk taking, and (3) the accuracy of social predictions in the context of endowment. Each essay addresses an issue that either stems from the difference in individuals’ focus on the self versus others (Essays 1 and 2) or is a manifestation of the self-other difference (Essay 3). \ud \ud My first essay documents that agentic consumers spend more when they shop with a friend as compared to when they shop alone, whereas the amount spent by communal consumer is about the same regardless of whether they shop with a friend. I attribute this to the notion that agentic consumers are self-focused and strive for status and thus, engage in self-promotion through increased spending while shopping with friends. On the other hand, spending more to impress a friend is not consistent with the modest nature of communal consumers, leading them to keep their spending under control in the presence of a friend.\ud \ud My second essay demonstrates that having power versus lacking power over others increases financial risk taking among agentic, but not communal, individuals. I explain this finding with the notion that self-oriented individuals associate power with self-interest goals, whereas other-oriented individuals associate power with responsibility goals. That is, since increased wealth can fortify agentic individuals’ powerful position and help them maintain their status, they tend to make risky financial decisions when they experience a state of power. However, taking risks with the goals of enhancing financial position and maintaining the status associated with power is inconsistent with communal goals. Mediation analysis provides support for the proposed underlying mechanism. \ud \ud Finally, my third essay examines whether consumers accurately predict how valuable an object would be to other consumers. Building on research in several domains including affective psychology of value, empathy gaps, and social prediction, I propose and find that owners underestimate the average selling price stated by other owners, whereas buyers overestimate the average buying price stated by other buyers. I attribute this to a self-other difference in the value function arising from empathy gaps. Accordingly, I find that the documented effects are attenuated when either an external influence (e.g., similarity priming) or one’s high cognitive and emotional ability to connect with others helps reduce empathy gaps.\ud \ud Taken together, my dissertation examines the social aspect of consumer decision making from three different perspectives that are closely related to consumers’ welfare and well-being: (1) the costly influence of friends’ presence in the market place, (2) the propensity to take higher financial risk due to the possession of social power, and (3) the biased predictions of the valuations of other consumers. I discuss in depth the theoretical and practical implications of my dissertation. \u