Hedonism versus accuracy: the influence of motivation and affect on the evaluation of multiple gains and losses

Abstract

The perceived value of multiple gains and losses may be influenced by a perceiver’s goals or affective state. In this research, insights from prospect theory were combined with the heuristic-systematic model to shed light on the information-processing strategies that underlie motivated and affect-related preference formation in the context of valuating multiple gains and losses. Specifically, findings from two experiments examine the influence of motivation and affect on preferences for segregated versus integrated gains and losses. In the first experiment—consistent with hypotheses—accuracy motivation was found to induce systematic processing for gains. The mixed results in the loss condition are explained with the influence of negative affect. Overall, the evidence supports the notion that people’s value functions might be more flexible than predicted by prospect theory, depending on people’s current goals. The second experiment substantiates these findings, identifying the influence of negative versus positive affect on the valuation of gains and losses. The results suggest that mood-management determines information processing and preferences depending on the congruence of the valence of affect (e.g. negative such as sadness) and the valence event (e.g. a positive event such as a gain). From a managerial perspective these studies add to practical knowledge on price communication, bundling, surcharges, or sequences of payments. When setting prices, salaries or other compensation schemes managers should consider whether their target group tends to be more accuracy or more feeling motivated.