When a consumer consumes a good or service, they receive utility (satisfaction, or happiness) from that consumption. That is part of the standard theory underlying consumer behaviour in neoclassical economics. Behavioural economists like the Nobel Prize winner Richard Thaler, in contrast, may distinguish between two types of utility that a consumer receives when they buy a good or service. First, there is acquisition utility, which is the net benefit from acquiring the good or service relative to what the consumer gives up to get it. This is essentially the neoclassical utility from the good or service, after allowing for the cost of purchasing it. Second, there is transaction utility, which is the utility received from how good or bad the deal itself feels to the consumer, compared to what they expected to pay for the good or service.
Transaction utility arises when consumers feel like they are 'getting a good deal'. The better the deal, the greater the transaction utility. One problem is that transaction utility is largely temporary. While acquisition utility essentially lasts as long as the good or service that is purchased, transaction utility may last only as long as the transaction. For that reason, transaction utility may explain the phenomenon of 'buyer's remorse'. The purchase seems like a great idea at the time of purchase, but later, once the transaction utility has dissipated, the purchase doesn't seem like such a great idea at all.
Ordinarily, acquisition utility and transaction utility come as a bundle. When you buy a good or service, you get both. That is, until now. An article in Rest of World reported last month:
This week, I placed orders for a $44,860 Patek Philippe hand-engraved watch, a $12,500 Hermès handbag, a $9,800 Tiffany diamond ring, and a $7,350 Cartier Love bracelet in yellow gold.
I don’t need any of them. I certainly can’t afford them. Thankfully, they’ll never arrive.
Instead of Amazon, I spent the past week browsing a new breed of websites known as “dopamine sites,” a trend that emerged in South Korea. These websites — like Dopamine Shop and FoodNeverComes — recreate the entire ritual of online shopping: You search for products, compare reviews, add items to your cart, enter a shipping address, place an order, and even track your delivery.
Then … nothing happens. No money changes hands. No package arrives...
Purchasing and shopping are not necessarily the same act. The former is about acquiring and the latter is more of a ritual. The pleasure from dopamine websites comes from the ritual.
In some ways, this is just a high-tech version of window shopping. People have always been able to get some enjoyment from browsing goods that they have no intention of buying. But these websites go a step further by recreating the transaction itself, right through to placing the order and tracking its delivery, while removing the actual receipt of the good or service that was 'purchased'.
The article argues that the pleasure comes from ritual. However, at least some of the pleasure may be transaction utility. There is no acquisition utility here. The consumer knows from the outset that they will never receive the watch or handbag. But the 'consumer' still receives some value from the 'transaction'. These websites may come about as close as possible to offering transaction utility on its own. And since consumers are never charged for their purchase, this is a low-cost way for consumers to receive that transaction utility. All it costs is the opportunity cost of their time spent browsing the website.
It is interesting to consider what the business model of Dopamine Shop or FoodNeverComes might be. The Rest of World article is silent on this point. One possibility is advertising or affiliate links to real products and retailers. After all, retailers might value the attention of people who are shopping without buying, in the hope that some of that activity eventually spills over into 'real' purchasing behaviour.
Whatever the business model, these websites provide an interesting example that demonstrates just how much utility consumers may get from the process of buying, even if they don't actually buy anything.
[HT: Marginal Revolution]
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