No One Wants to Look Cheap: Trade‐Offs Between Social Disincentives and the Economic and Psychological Incentives to Redeem Coupons

Abstract

Existing research on price deals has largely demonstrated positive financial and nonfinancial consequences of obtaining a deal. In contrast, the research reported here suggests that certain price deals—in this case, coupons—can also produce negative social consequences, such as creating an impression of cheapness or stinginess. Decisions to redeem coupons are shown to involve a trade‐off between the social incentives to avoid coupons and competing economic and psychological incentives to redeem coupons. Consumers strategically adjusted their decision in response to factors that changed the relative strength of these incentives; specifically, they avoided coupons when they were concerned that coupon use would lead to negative social consequences but redeemed coupons when the circumstances reduced these concerns. Although decisions to refuse a coupon might violate principles of economic rationality, it is argued that such decisions are nevertheless functional as they serve important social goals. In this sense, it can be smarter for consumers to forgo a deal rather than obtain one.