Chengyao Sun

Co-branded credit cards that are backed by a payment-processing network such as Visa can be used anywhere the payment network is accepted. In this research, however, we find that consumers often use co-branded credit cards in a restricted manner. Using data from credit card statements and scenario experiments, we show that consumers are less willing to use a reward-maximizing credit card if it is co-branded with a merchant brand that does not fit with the purchase brand. We identify two mechanisms. First, the featured brand on a co-branded credit card produces assumptions about the card’s reward structure, and those assumptions limit consumers’ attention to the actual reward structure. Second, the featured brand on a co-branded credit card leads some purchases outside of the featured brand to feel like a bad “fit.” Co-branded credit cards represent a significant share of credit card companies’ product offerings. This research sheds light on when and why consumers are reluctant to use co-branded credit cards broadly, offering managerial insights that could help credit card companies refine their strategies for co-branded products as well as help consumers maximize their credit card rewards.

How do people predict the outcome of an event from a set of possible outcomes? One might expect people to predict whichever outcome they believe to be most likely to arise. However, we document a robust disconnect between what people predict and what they believe to be most likely. This disconnect arises because people consider not only relative likelihood but also absolute likelihood when predicting. If people think that an outcome is both the most likely to arise and has a high absolute likelihood of arising, they regularly predict it to arise. However, if people believe that an outcome is the most likely to arise but has a low absolute likelihood (e.g., it has a 20% chance, and other outcomes have smaller chances), they less often choose it as their prediction, even though they know it is most likely. We find that, when the most likely outcome has a low absolute likelihood, the final outcome feels hard to foresee, which leads people to use arbitrary prediction strategies, such as following a gut feeling or choosing randomly, instead of predicting more logically. We further find that predictions are less likely to depart from the most likely outcome when manipulations encourage people to focus more on relative likelihood and less on the low absolute likelihood. People also exhibit a smaller disconnect when advising others than when predicting for themselves. Thus, contrary to common assumptions, predictions may often systematically depart from likelihood judgments. We discuss implications for research on judgments, predictions, and uncertainty.

Defaults influence decisions, but recent research argues that people are unaware of those influences and are unlikely to learn them, a phenomenon termed “default neglect.” In this article, we re-examine this claim and find that the appearance of default neglect may instead reflect the selection and presentation of stimuli. First, we show that the failure “to understand or use defaults to influence others” documented in recent research depends on the particular default nudge. When we asked participants to set defaults for three different examples from the literature, their choice architectures were excellent. Second, by presenting the original results in a different, and more relevant, way, we show that participants were capable of learning about default effects from sufficient evidence.

Beliefs and attitudes about products and brands are presumed to be influenced by experiences with relevant products. In this research, we examine whether and under which circumstances this presumption is correct. In a series of laboratory and field experiments, we show that when belief and experience diverge, experience induces belief updating only when people are nudged to appraise the experience at the time of consumption. Contrary to lay beliefs, surprisingly good and surprisingly bad product experiences have no reliable effect on beliefs and choices when there is no prompt to appraise the experience while it is happening. When there is such a prompt, beliefs and choices shift in the direction consistent with the surprising experience both immediately and several days later. We suggest these results arise because effortful propositional thinking is required to change explicit beliefs (Associative–Propositional Evaluation Model, Gawronski and Bodenhausen, 2006). Our studies suggest that in many experiences, consumers do not expend the effort to articulate their momentary evaluations and therefore, do not update their prior beliefs.

Why do people persist in sports gambling? This article offers a novel explanation from the perspective of losing. Previous research discusses gambling losses and wins as the outcome per se and thus admits that losing a gamble must be painful. However, gamblers in the real world do not just receive an instant outcome. They usually resolve their bets through an engaging process, especially in sporting events. Such processes of resolving the uncertainty can trigger positive arousal, making the overall losing experience less negative. Thus, we find that losing a bet can be less painful than winning is pleasurable, reversing the loss aversion that focuses only on the outcomes. Although people who lack gambling experience may not anticipate the positive hedonic impact of the gambling process, we find that more experienced gamblers might better recollect their positive feelings during the gamble and thus better incorporate such positive impact when anticipating their feelings about losing. As a result, gambling may lack the negative hedonic impact necessary for people to learn to avoid it if that process blunts the negative feelings that would otherwise be associated with losing.