An Endowment, Commodity, and Prospect Theory Perspective on Consumer Hoarding Behavior

Diana King, Raj Devasagayam

Abstract


This study investigated the preconditions that drive hoarding behaviors when consumers perceive a shortage in supply and are faced with other marketing stimuli indicating product scarcity. Pat research shows that hoarding behaviors exists due to the acknowledgement of the scarcity of products that
previously had been in excess, and consumer response to such scarcity. Endowment Effect, Commodity Theory, and the Prospect Theory were used as the basis for our conceptual framework. Data was obtained from a random sample of 297 individuals and subjected to statistical analyses. Our findings indicated that perceived perishability and scarcity of items that are valued, elicit a reaction in
consumers who have an aversion to risk due to the prospect of losing an item of value. Losses were intensified when perceived perishability and scarcity were established through urgency in advertising resulting in higher buying rates. Our findings can help marketing managers acquire more knowledge of purchase motives, satisfaction, and feelings of uniqueness gained through hoarding. Furthermore, once an understanding of what motivates consumers to accelerate their purchase behavior under perceived perishability and scarcity conditions is obtained, pricing and inventory strategies (indeed the entire marketing mix) can be strategically designed to meet the needs of the customer.

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DOI: http://dx.doi.org/10.22158/jbtp.v5n2p77

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