The token undermining effect: When and why adding a small reward to a dated outcome makes it less preferred.

Abstract

The mere token strategy, which adds a small reward (token) to an option to increase attractiveness, is widely used in the consumer field. However, we conducted six studies that seek to confirm the 'token undermining effect', where adding a small token to a sooner and smaller reward (SS) paired with a later and larger reward (LL) decreases the preference for the SS. The results showed that the effect persists across various choice sets, participant populations, reward amounts, delays, outcome properties and regardless of whether the scenarios are incentivized. However, an important boundary condition was that the token must share the same nature as the original option. Furthermore, we used mouse cursor tracking methods to examine the underlying process of attention allocation and demonstrated that adding a small token to the SS leads individuals to allocate more attention to the magnitude dimension than to the delay dimension, ultimately decreasing their preference for the SS. Therefore, managers and policymakers should use the mere token strategy with caution as it could backfire.