Consumer Aversions Revisited: From Mechanisms to Solutions

This dissertation aims to understand and to overcome consumer aversions in multiple domains. Chapter 1 focuses on experiment aversion, and Chapter 2 and 3 focus on overhead aversion in charitable giving. First, field experiments have surged in recent years in marketing research and practice. Whether consumers approve of such experiments, however, is a contested topic. One stream of research maintains that consumers object to experiments but approve of the implementation of an experiment’s untested treatments. Another stream of research claims that consumers view experiments run by corporations as acceptable as their worst treatment, but never as less acceptable. In Chapter 1, we reconcile these contradictory findings and explain when consumers are averse to experiments and when they appreciate them. When consumers strongly believe in the existence of normative standards of best practice, conducting an experiment is perceived as a violation of the standard and the experiment is evaluated as worse than the implementation of either of its treatments. When an experiment is instead designed to discover a new standard of best practice, conducting an experiment is evaluated as better than the implementation of either of its treatments (i.e., experiment appreciation). Eight preregistered studies provide empirical support for our account of experiment aversion and appreciation, offering guidelines on how to communicate experiments to consumers. Second, decisions about how to manage financial resources include choices on charitable giving. Previous research has documented that, donors are averse to overhead, tending to donate less to charities that allocate a high percentage of donations to administrative and fundraising expenses (i.e., overhead aversion). Chapter 2 aims at understanding what drives overhead aversion in charitable giving and Chapter 3 aims at providing a strategy to mitigate it. Specifically, the prevailing explanation for overhead aversion is perceived personal impact, which suggests that donors care about the impact they make on a cause. An alternative explanation is based on perceived charity efficiency, according to which people base their donation decisions on how competent and likely the charity is in delivering on its promise. In three pre-registered studies, Chapter 2 disentangles these two competing mechanisms and demonstrates evidence for perceived efficiency. Our findings have implications for charities to boost donation decisions while also contributing to consumers’ perceived financial well-being. Finally, Chapter 3 explores how charities can mitigate overhead aversion and increase donations. Specifically, the donors’ tendency to donate less to charities that have a higher overhead especially works against charities that operate in high overhead industries (e.g., art museums), even if these charities are otherwise well run and curtail overhead expenses versus their peers. How can one help such charities increase donations? In this research, we reveal one strategy to mitigate such overhead aversion. We suggest that people judge charity overhead relative to that of peer charities, so that using benchmarks (i.e., providing the average overhead of similar charities) can impact donations. In four preregistered studies, we document that benchmarking mitigates overhead aversion, inducing higher donations to a charity that has lower overhead versus its peers, even if it has a high overhead per se. In understanding why this happens, we uncover the novel role of perceived charity efficiency – when relative overhead is lower, benchmarking increases perceived charity efficiency, which then mitigates the negative effect of absolute high overhead. Our findings add to prior work on the drivers of overhead aversion and provide guidelines for charities with high overheads to reduce overhead aversion and increase donations.