That's What I Thought I Wanted? Miswanting and Regret for a Standard Good in a Mass-Customized World

Abstract

How can a standardized product survive in a mass-customized world? This requires understanding that consumers often experience problems predicting their future hedonic reactions to new experiences (such as custom products), leading to feelings of regret. This form of regret occurs not because the custom product differs from specifications, but because consumers miswanted the design they ordered. Our analytic model shows that regret aversion induces consumers to design custom products to reflect the attributes of the available standard products. Consequently, regret-averse consumers may choose the standard product rather than place a custom order. The number of available standard products, however, moderates both these effects. Two experiments empirically substantiate the key predictions of the analytical model: (a) the custom product's resemblance to the standard product grows with regret aversion associated with miswanting, (b) there exists a segment of “regretfully loyal consumers” for the standard product in a mass-customized world and it expands with regret aversion, (c) both the above effects are weakened by the presence of a second standard product, and (d) the custom product can increase its market share when the number of standard products increases.