Do Exclusivity Rebates Cause Psychological Switching Costs in Consumers?

Alexander Morell
Profile Picture of - Alexander Morell

Alexander Morell

Abstract information

Firms, be it coffee shops or airlines, often try to bind customers with exclusivity rebates rewarding loyalty. The lab experiment presented in this video reveals that these programs are “sticky”: customers stay in those programs longer than would be “rational”. As ALEXANDER MORELL explains, customers often don’t switch to alternatives even if reaching the rebate becomes improbable. Contrary to common behavioral assumptions, the duration of rebate programs or the size of rebates did not affect the stickiness of the rebate.

DOI:

https://doi.org/10.21036/LTPUB10018

Researcher

Alexander Morell is Senior Research Fellow at the Max Planck Institute for Research on Collective Good in Bonn (Germany). He is a doctor of laws and holds a PhD in economics. In his research he focuses on civil law, antitrust law and experimental economics. Morell was awarded the Otto-Hahn-Medal of the Max Planck Society for his doctoral thesis on target rebates.

Institution information

Goethe Universität Frankfurt

Goethe University Frankfurt is a public research university founded in 1914 as a citizens’ university, with significant support from Frankfurt’s civic and business community. With around 48,000 students across 16 faculties, it covers a broad range of disciplines from the natural sciences and medicine to law, economics, and the humanities. The university is historically associated with the Frankfurt School and its Institute for Social Research, and today maintains particular strengths in finance and economics, benefiting from its proximity to one of Europe’s major financial centres. It is a member of the German Excellence Strategy and collaborates closely with several Max Planck Institutes and other non-university research institutions.
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Original Publication

Sticky Rebates: Target Rebates Induce Non-Rational Loyalty in Consumers

Alexander Morell,

Andreas Glöckner,

Emanuel V. Towfigh

Published in

Citation

Alexander Morell, 

Latest Thinking, 

Do Exclusivity Rebates Cause Psychological Switching Costs in Consumers?, 

https://doi.org/10.21036/LTPUB10018, 

Credits:

© Alexander Morell 

and Latest Thinking

This work is licensed under CC-BY 4.0