Killing Hope with Good Intentions: The Effects of Consolation Prizes on Preference for Lottery Promotions

Abstract

The present research examines how the inclusion of consolation or token prizes influences consumers’ valuation of a promotional lottery. Results from four experiments show that consolation prizes lower consumers’ expectations of winning the big prize, their valuations of the lottery, and their intentions to participate in the lottery. Because of the high likelihood of attaining the consolation prizes, consumers shift their focus from the value of a big prize to the probability of attaining it. This shift increases the weight given to the probability dimension and results in lowered valuations of the lottery. The first two experiments demonstrate the effect in hypothetical and real choices. In Experiment 3, the authors propose and show a boundary condition for the effect. In Experiment 4, they conduct an exploratory test of the process. They conclude with a discussion of the theoretical and managerial implications.