Question

Explore the relationship between objective value, immediacy and spontaneity in our digital society’s impulse-driven wants-based economy:

o How do relatively frictionless technologies instrument immediacy and spontaneity?

o How might trivial or illusory choices materially distort our perception of utility and value?

Answer 1

1. Answer :

Imagine a world where your morning alarm is synced to your Google Calendar and adjusted based on traffic projections and your local weather; a world where preferred headlines are delivered to your bathroom mirror when you go to brush your teeth, and you can start a podcast by asking your Echo to play it, then continue listening on your phone or office smart speaker as you go about your day. It's a world where every device you interact with automatically plays to its strengths and you can move frictionlessly from one experience to another in ways that genuinely improve your quality of life.

As daily life becomes increasingly saturated with connected technologies, brands that don’t embrace a personalized, cross-platform approach to marketing will find themselves seriously out of step with customer expectations. Right now it’s annoying to receive a generic blast email, but that message is going to feel genuinely bewildering in a landscape where every other part of the digital experience is customized and frictionless. To flourish in a world where ambient computing is part of the background of everyday life, brands will need to take a borderless approach to customer engagement.

2. Answer :

To explain seemingly “irrational” decisions linked to perceived discounts and mark-ups, Thaler (1985, 1999, 2008) proposed that consumers get two kinds of utility from a purchase: consumption utility, the value of the good obtained relative to its price, and transaction utility, the perceived value of the “deal.” Consistent with this theory, marketing research has shown that “comparative price advertising,” such as providing an original price, can distort consumers’ purchasing behaviors.

Understanding whether and how transaction utility distorts consumer choice has important economic implications for firm pricing strategy and for policymakers and regulators, who may worry about the prospect of transaction utility being used to exploit consumers. The purpose of this paper is to isolate transaction utility from product quality inference and to quantify the value of transaction utility in dollar terms

Results suggest that transaction utility is an important component of demand and therefore should influence firm pricing. Moreover, fictitious original prices can meaningfully distort consumer purchasing behavior, leading to material losses for consumers, which may be of interest to regulators, policymakers, and litigators.