HOW AND WHEN SIGNALING IMPACTS CONSUMPTION

Abstract

This dissertation includes three essays that investigate the impact of signals that certain consumption choices can send to other consumers. In particular, each essay focuses on how consumers’ consumption-related decisions (e.g., choice of hedonic items, selecting low variety, and communicating that one has no preference) impact an observing audience’s perceptions of the consumer and the subsequent impacts on the observer. The first essay demonstrates that consumers strive to position themselves as attractive friends by making hedonic consumption decisions. While consumers shift to hedonic consumption, anchoring on their belief that others would heavily value fun when it comes to friendship, this essay demonstrates that consumers themselves actually value other aspects of friendship more, such as meaningfulness. As a result of this discrepancy in the belief of friendship, hedonic choice does not effectively help consumers cultivate friendship with another person. The second essay investigates the signals that selecting a low (vs. high) variety of items sends to observers. Choosing low variety signals to observers that the consumer has accumulated consumption experiences in the past, and thus has greater expertise, compared to choosing high variety. This signal of expertise endows the consumer with influence to impact observers to make consumption choices that mimic the consumer and be more willing to take the consumer’s recommendations. The third essay examines the impact of expressing no preference in a joint decision making context. While consumers expect to make the decision easier for the recipient, recipients of no preference communication (vs. explicit preference communication), experience greater decision difficulty. This unexpected negative impact occurs because recipients of no preference communication perceive that the communicator actually has preferences that they are hiding. Further, because recipients infer that these hidden preferences are dissimilar to one’s own preferences, they end up making a choice for the joint consumption that they personally less prefer.