When online shopping emerged as a global phenomenon in the early 2000s, I remember reading prophecies that consumers would now cruise far and wide across the internet for the best ever bargains, because search had become completely effortless. A decade on, it appears that people can get click-weary more easily than the pundits might have presumed.
Academic studies have long pictured consumers as somewhat lethargic when it comes to search. Studies have shown, for example, that people are not very likely to click beyond the top few links on a results page so if a company’s website is to have high visibility on the internet, it must rank high on search engines’ results pages. So in practice, consumers might look at only a couple of popular online vendors before making a purchase – even though they could have checked out a few more without much extra effort but with some chance of nailing a better deal.
However, these observations have largely come from the West. I grew up in the shopping mecca that is Hong Kong, and my impression of consumers there is that they can go to great lengths to net the cheapest offer – online or offline. They might even take weekend shopping expeditions to another country just because of some hearsay bargain hunting opportunities. It doesn’t matter to them that at the time, effort and other expenses along the way would make the endeavour a Pyrrhic victory.
Our bargain hunt experiment
As it turns out, my PhD student Jake Pattaratanakun, who is from Thailand, shared similar thoughts. We decided to investigate how Asian consumers may be different from Westerners when it comes to bargain hunting. We put together a study to be published in Psychological Science and which involved hundreds of students in the UK and Thailand. The results showed that Asians are more inclined than Westerners to spend longer searching online for the best deals because they are more sensitive to the “sunk cost” – the previous unrecoverable time and effort spent trawling the internet for deals.
The game we had the students play was very simple. Their objective was to purchase a virtual good. They could visit any number of virtual shops to buy this good, but different shops charged different prices for it. They only saw the price offered at a shop once they had visited it; but visiting a new shop cost them game tokens – a “search cost”. This meant they could discover better deals (lower prices) by visiting new shops, but at the expense of a higher search cost. At the end of the game (once they’d purchased the good) their eventual earnings were calculated as 700 tokens (the value of the good) minus the price offered at the shop they bought the good from and the total search costs they incurred.
The ‘sunk cost effect’
In one experiment, we directly compared how UK and Thai participants fared in this game. We found that UK participants often did not search enough, even when it was in their interest – they gave up pretty quickly. Thai participants, however, loved to search. Even when the search was costly they would visit new virtual shops – they seemed to enjoy the Pyrrhic victory.
We surmised that our Thai participants were driven by the “sunk cost effect”. This is a psychological phenomenon where a person becomes especially motivated to continue doing a task after having committed a lot of investment in it (the investment could be financial, physical, or just time). So a manager could become bent on pursuing a pet project to the bitter end, even when the project looks doomed half way through because they had already sunk so much effort into it that they cannot let go.
Our experiment hints at a sunk cost effect in consumer search, but only for the Asian participants. This corroborates with previous cross-cultural studies which has found that, in some other types of decision making, Asians also tend to be more easily hooked on sunk costs than Westerners.
Switching between Asian and Western
In two further experiments, we had participants who were Asian but were similarly at ease in both Thai and Western cultures. In one experiment, half of the participants played the game via a Thai interface and the other half via an English interface. We then had them switch interfaces after a three month gap.
The results from both experiments were clear: participants’ search behaviour could be switched to either the Asian or Western way, depending on the interface they were using – they searched more when searching in Thai, but searched less when searching in English.
In a final experiment, we modified the interface slightly so that the search costs were mentioned much less often than before. Accordingly, the Thai participants searched less when they were rarely prompted about their sunk search costs – showing it was a concern for their sunk costs that caused them to search more.
Although our experiments were conducted with Thai and UK participants, the results fit well with previous cross-cultural studies that suggest that while Westerners lack the drive to bargain hunt, Asian consumers enjoy tearing through product and price information in a quest for the holy grail of the best buy – or at least because they have already committed to the task and want to redeem their sunk costs.