Tag Archives: technology

EVER WONDERED WHY YOU KEEP ALL THOSE APPS ON YOUR SMARTPHONE?

Posted on by

BY MARTIN P. FRITZE, ANDREAS B. EISINGERICH AND MARTIN BENKENSTEIN

Consumers acquire material possessions as tangible expressions of their identity, extend themselves through products, and use material possessions as symbolic markers of group membership. Given the profound power of material possessions and individuals’ attachment to them, significant research has been conducted in an effort to understand the positive and negative consequences of such possession attachment for consumers. However, more recently, there has been a call for reconceptualizing consumerism for digital markets. Today, digital services such as Spotify, Tidal, or Apple Music for music streaming, Tinder, Grindr, or eHarmony for online dating solutions, and PayPal, Alipay, or WeChat Pay for online payment offerings, extensively permeate consumers’ lives. Digital services are ubiquitous, especially in digitized economies and often lead to time-consuming activities and habits, which can dramatically affect individuals’ well-being, either positively or negatively. Importantly, digital service consumption compared to other services often comes with very low entry barriers. For example, obtaining a membership at a gym demands that customers make an effort (i.e., making an appointment, driving to the location, talking to sales staff) even before the consumption process has begun. The “let’s give it a try” barrier is much higher in terms of personal resource investment than for digital service consumption. Simply downloading a new app, trying out a streaming service, or registering on a social media platform takes only seconds and requires little resource investment. Therefore, we wanted to explore when and how consumers, if at all, form attachments to digital services technologies and examine the extent to which and why people immediately stick to a digital service after using it for the first time (i.e., they become instantaneously attached).

One of the most important and robust empirical findings noted in the context of ownership research is the endowment effect. In the series of previous experiments on the endowment effect, people assigned approximately twice the value to commonly desired material items such as pens or mugs when they were endowed with the item and asked to state prices to sell the item compared with people who were asked to make offers to buy these items. A novel and important contribution of our research is to examine the endowment effect’s instantaneous nature of the reference point shift and consequent value change for digital service technologies.

As a preliminary test of our theoretical perspective, we conducted a field study to examine the real-world relevance of the endowment effect for digital services. We followed the recommended standard procedures employed in most previous studies. According to the established experimental standard approach of the endowment effect, the participants are randomly designated owners (nonowners) of a target object (e.g., pens, mugs). They are then told that they are (not) allowed to keep the object. Owners (vs. nonowners) are asked about the amount of money for which they would be willing to sell (buy) the object, indicating their willingness to accept, “WTA” (willingness to pay for the object, “WTP”). The endowment effect is quantified by the resulting WTA‒WTP disparity (WTA>WTP). Accordingly, and simply put, in the prestudy we expected that actual users of a digital service technology will state higher prices to give up using the service (WTAU–S) than nonusers will be willing to pay (WTPNU–B) to start using it (WTAU–S > WTPNU–B). The study followed a quasi-experimental design and included one manipulated between-subjects factor (group: nonuser-seller, user-buyer) and one measured variable (price). The real-world digital service referred to is a complimentary mobile app offered at some universities. It provides students with information about canteen menus, available jobs, events, and accommodation offers, all customized to their particular university. An online survey was conducted at a university that provides the app to its students. Those participants who stated they did not know the app or did not currently use it were automatically assigned to the nonuser-buyer group. The participants who stated they currently used it were assigned to the user-seller group. We found that user-sellers stated significantly higher prices than nonuser-buyers. As such, the prestudy confirmed the endowment effect for digital services as it replicated prior results in the context of material products in the context of digital service technologies.

However, more recently the endowment effect’s main explanatory accounts (i.e. the underlying psychological processes that drive the effect) have been subject to academic debate. On the one hand, since the initial studies on the endowment effect, the effect has long been ascribed to loss aversion, i.e. fact that losses loom larger than gains. That is, owners state higher prices to sell an object than buyers are willing to pay for it because, for owners, giving away the object is a loss. This loss for the owners is more severe than the gain buyers derive from obtaining the object. Therefore, higher price evaluations for the object by owners are mainly driven by a perceived parting disutility. The main reason for this is that the accumulation of possessions provides existential security for individuals. It is noteworthy that this human behavior with its evolutionary heritage may even be independent of the object-related evaluation. On the other hand, a growing stream of research directly challenges the “loss aversion account” and instead highlights the “ownership account” to explain the endowment effect. According to the “ownership account”, the higher valuation of the target object relates to a special bond with the object, which in turn induces ownership utility. This is ascribed to a resulting possession‒self link, as the object is incorporated into the extended self, becoming a self-referential part of the person’s identity. Referring to the “ownership account”, the reluctance of giving up an object is related to a special meaning of the object for the owner.

In order to explain how consumers become instantaneously attached to digital service technologies, we conducted an online experiment where we employed an extended experimental design for separately testing the ownership and loss aversion account and putting both accounts into direct competition. Moreover, we expected that the differences in prevailing service characteristics (hedonic vs. utilitarian) are likely to influence the endowment effect for digital services because the instantaneous formation of proprietary feelings for external objects is driven by people’s foresight or expectations of the object’s future use. That is, people instantaneously develop proprietary feelings for an object after evaluating their future usage intentions. Specifically, people retain psychological possessions because of two underlying saving patterns: instrumental saving and sentimental saving. Instrumental saving refers to the perceived future need for an object. The object fulfills the purpose of solving a task, and the person acknowledges the possibility of being able to use the object in the future. Simply put, people hold onto such an object simply because they might need it in the future, even if they currently have no immediate need for using it (e.g., insurance policy, antivirus software). In contrast, sentimental saving occurs when an individual consciously acknowledges that the object is relevant to maintain the individual self-concept. Sentimental saving is determined by the person’s self-related feelings for the object (e.g., family video, lifestyle app).

Considering the different explanations of the endowment effect, we expected the endowment effect to hold for both hedonic and utilitarian digital services. However, we argue that the difference in the occurrence of the endowment effect for both types of digital services lies in the psychological processes driving the effect.

People should be more likely to hold onto utilitarian digital services based on instrumental saving because the usage of utilitarian services does not tie-in with consumers’ identities but rather their practicability triggers future usage considerations (i.e., “I might need it in the future”). This is related to the endowment effect because loss aversion occurs due to a reluctance to give away external objects even when such objects currently have no special meaning for the owner. In contrast, a hedonic digital service should serve as an extension of the person’s self and is thus a reminder of a relevant part of the self-concept. Hence, people should be likely to hold onto hedonic digital services based on sentimental saving because the usage of it ties in with consumers’ identities. This conscious acknowledgment of an object’s self-related importance relates the endowment effect’s “ownership account” because the reluctance to switch from a hedonic service should occur due to the self-related importance of the service for the user.

Taken together, in the experimental study we found that psychological processes underlying the endowment effect differ between utilitarian and hedonic digital services. Indeed, proprietary feelings towards utilitarian digital services occurred due to loss aversion, whereas proprietary feelings towards hedonic digital services reflect the consumer’s conscious self-relatedness to the digital service. Individuals consciously or unconsciously hold onto digital utilitarian services simply because they are reluctant to feel a loss when with regard to giving them up. In turn, digital hedonic services hold a special self-referred meaning to individuals.

Given the ongoing progress in artificial intelligence and the potential for virtual reality to act as the next “super drug”, further research on human attachment to digital service offerings is rich in potential. We invite additional research on what we believe is a promising and important field of work not only for business to better maneuver an environment with an increased offering of digital services but also to help humankind in the pursuit of self-understanding and autonomy.

This research was recently published in Electronic Commerce Research and can be accessed at: https://link.springer.com/article/10.1007/s10660-018-9309-8

 

May we introduce: Graham Brown

Posted on by

“[What surprises me about psychological ownership is] that these feelings can overpower rationality. People overvalue their possessions despite objective information. People will confront others who they feel have infringed on their “territory” even if those people were trying to help.”

After quite a long break, we are back with a new interview for our Featured section. In this feature we would like to introduce Graham Brown from the Peter B. Gustavson School of Busines at the University of Victoria. In his interview, he talks about how he got into psychological ownership research and what as well as who influenced him the most in his own pursuit of the topic.

uvic-graham

Generally, Graham’s research focuses on territoriality and psychological ownership. He applies these two threads to a variety of research topics including negotiation, creativity, and workplace conflict. His recent research focuses on the impact that feelings of ownership have on innovation and new venture success with the thesis that feelings of ownership are both positive in that they propel efforts but simultaneously negative in that they create resistance to help and feedback from others. He hopes to achieve a better understanding of the factors that lead to entrepreneurial success. His work has been published in the Academy of Management Review, Organization Science, and Organizational Behavior and Human Decision Processes and featured in Harvard Business Review online. His teaching focus is in the areas of human resource management, leadership and negotiation and he applies these concepts to help others discover and use their passion to lead and create.

As an active entrepreneur Graham has been involved in several ventures in the travel and education industry including one company that he started while a student at the University of Victoria. His most recent project involves developing a training program to help high school students become social entrepreneurs. Graham also lives on and operates an active berry farm in Metchosin with his wife and four children.

For the full interview simply follow us this way.

 

Personal Data and (Psychological) Ownership: A Book Chapter by Bernadette Kamleitner & Vince Mitchell

Posted on by

We are writing the year 2017, an era with a higher population of mobile gadgets than people (GSMA Intelligence 2017), where we easily create a 10 million Blu-ray discs amount of data each day (Walker 2015). A substantial fraction of these data represents virtual copies of our very selves. From digitally tracking our personal health over religiously using our loyalty cards for better deals to simply surfing the Internet for information – where we go, what we do and consume, how we behave and feel is not a private matter anymore (Haddadi & Brown 2014). Despite heightened public concern about how personal data is collected and used (Pew Research Center 2014), we rarely think about oversharing when we download apps, sign up for mailing lists, or give away our personal details in exchange for a boost in convenience and temporary well-being. What is more, the question of who holds legitimate claim over these data – legally as well as psychologically – is still fuelling an undisputed yet to date unsatisfactory debate.

In a new book chapter to appear in a book on ownership that Joann Peck and Suzanne Shu are editing for Springer, Bernadette Kamleitner from WU Vienna and Vince Mitchell who is just about to move from London to The University of Sydney are exploring these and related questions in detail and come to surprising conclusions about the logic of ownership in the context of personal data. Read for yourself what they discovered in the abstract below. The matching first-draft of the chapter in its entirety can be downloaded [HERE]:

In the age of information everything becomes mined for the nuggets giving rise to it: data. Yet, who these new treasures do and should belong to is still being hotly debated. With individuals often acting as the source of the ore and businesses acting as the miners, both appear to hold a claim. This chapter contributes to this debate by analyzing whether and when personal data may evoke a sense of ownership in those they are about. Juxtaposing insights on the experience and functions of ownership with the essence of data and practices in data markets, we conclude that a very large fraction of personal data defies the logic and mechanisms of psychological possessions. In the canon of reasons for this defeat, issues of data characteristics, obscuring market practices, and data’s mere scope are center stage. In response, we propose to condense the boundless collection of data points into the singularized and graspable metaphor of a digital blueprint of the self. This metaphor is suggested to grasp the notion of personal data. To also enable consumers to effectively manage their data, we advocate adopting a practice commonly used with plentiful assets: the establishment of personal data agents and managers.

References

GSMA Intelligence. (2017), available at https://www.gsmaintelligence.com/

Haddadi & Brown (2014), Quantified Self and the Privacy Challenge, Technology Law Futures.

Kamleitner & Mitchell (2017). Can consumers experience ownership for all their personal data? From issues of scope and invisibility agents handling our digital footpring. In press

Pew Research Center (2014). Public Perceptions of Privacy and Security in the Post-Snowden Era. November 12. http://www.pewresearch.org.

Walker (2015). Every Day Big Data Statistics – 2.5 Quintillion Bytes of Data Created Daily. Available at http://www.vcloudnews.com/every-day-big-data-statistics-2-5-quintillion-bytes-of-data-created-daily/

 

The Voice of Practice: How Technology is Challenging the Conventional Wisdom of Ownership

Posted on by

A GUEST COMMENTARY BY ERIK CHAN, TECH ENTREPRENEUR & CO-FOUNDER OF ROCKETCLUB.CO

So here it comes, the first The Voice of Practice contribution. What follows is a guest commentary by tech entrepreneur Erik Chan. Erik is the co-founder of RocketClub (www.rocketclub.co), an online platform that empowers people to earn shares of new business ideas by promoting and adopting them from the start. In his commentary he talks about how technology has changed the way ownership is viewed and what this means for the tech industry. Before we let Erik speak, however, let us from The Science of Ownership give you a small scientific bracket to the topic:

Sophisticated online social technologies have substantially altered the way consumers and companies interact and create value (Bernoff & Li 2008; Prahalad & Ramaswamy 2004). Traditionally, the former were simply listening to what the latter had to say and offer. Now, consumers are invited to actively participate in a variety of business-related decisions on social media and the likes (Berthon et al. 2008, Hautz et al. 2014). This power shift from the firm to the consumer has paved the way for novel concepts and business models like crowdfunding (Ordanini et al. 2011, Thürridl & Kamleitner 2016).

It has changed how new ideas, products and even firms are created. This, in turn, is challenging our conventional understanding of ownership – the line between what (is perceived to) belongs to the company and what to the consumers is becoming increasingly blurred. From literature we know that there are three major routes to ownership: control, intimate knowledge, and investment of the self (Pierce et al. 2001, 2003). When individuals co-create with companies or contribute their personal resources, all three routes may actually be activated. Consumers are able to a) control the outcome of the final product, service, or venture, b) acquire knowledge over time, and c) invest their own resources, ideas, values and identity into the process. In turn, they may start to feel that the respective product, idea, or venture is also “theirs”.

So much for the theory, let’s hear what Erik has to say about it:

In the technology startup industry, the idea of ownership holds much significance. We have seen controversies over who owned the idea behind successful companies of today; who owned the trademarks, who owned the code, and of course, who owned the equity. Each and every input in a company can have contributed to its success. While many controversies focus on the legal (and financial) components of successful companies, there is also a factor of pride. For cofounders, early employees, investors, it’s the opportunity to proclaim “I did this. I saw the potential in it. I made it happen. I was part of it.” Often, founders end up suing the company they founded for more than a share in the financial rewards, it’s also because they want to be recognized as an ‘owner’ or ‘contributor’.  

Recently, we have seen a lot of emphasis on a startup company’s initial users or customers. Ycombinator, the prominent startup accelerator who incubated successful companies including Reddit, Airbnb, and Dropbox, evangelizes the idea of acquiring 100 customers who love what your company offers than 10,000 who just care (see http://blogs.wsj.com/accelerators/2014/06/03/jessica-livingston-why-startups-need-to-focus-on-sales-not-marketing/). The idea is to acquire 100 customers who love your product so much they are willing to use it even when no one else is using it, bare through multiple product iterations, and deal with product bugs because they see and believe in the potential. These early customers believe that one day, just like the founder, they will be able to say “I was part of it.” Not surprisingly, the involvement of these customers also make them feel as if they ‘own’ the idea as well.

Although largely unscientific, tech startups do many things to try increase their users’ feeling of ownership’. Traditionally, these include awarding users with digital points and badges, offering physical articles like t-shirts and stickers, early access to new features, throwing events, and other exclusive priorities. Success examples include early Reddit users receiving t-shirts and handwritten christmas cards, the first AirBnb hosts welcoming the founders to sleep at their apartments, Facebook users staking their personal profile URLs and many more. 

Due to high startup company valuations today (cash rich startups offering an assortment of perks and freebies to their customers), many companies starting out face the challenge of whether a t-shirt is enough for its early users to feel a sense of ownership. Having struggled with rewarding early adopters for their involvement at my previous companies, I decided to build a platform called RocketClub to help companies distribute a real stake in the company to these early customers and supporters. The idea is that it is only a matter of time until early customers, critical to a company’s success, will transition from ‘psychological owners’ to also become real, legal owners. Consequently, we learned through numerous discussions with both company founders and our community of users that the feeling of ownership in a startup is not determined solely by equity ownership. And since, RocketClub has expanded to offering other means of facilitating this ownership through examples such as access to the founders, a say in the development of the product and features, as well as access to ongoing developments at the company, and many others.

Given the dizzying array of products new and old in the market today, entrepreneurs and managers are turning to incentivizing early users and customers to become part of the process/experience. The majority of startup companies fail today because they lack adoption from early stakeholder customers. Imparting ownership onto your early customers is one of few ways to help companies build a bridge between them. No company succeeds without a following behind it and early adoption goes hand in hand with imparting the psychological feeling of ownership.

What is your take? Do you agree with Erik or do you have contrary beliefs? Please use the comment section to share your thoughts with us and our readers.

About Erik:

A serial entrepreneur and technologist, Erik Chan is founder CEO of RocketClub. Previously, he cofounded MicroPay Technology, a game payments company, and social and online game companies 28wins and Bottomless Pit Games. Prior to Erik becoming an entrepreneur, he spent time at Activision Blizzard and Midway Games first as a system engineer and then as a producer. 

Erik holds a MSc in Management from Massachusetts Institute of Technology, a MBA from Tsinghua University, and a BSc in Biomedical engineering with computer science from Johns Hopkins University. Erik Chan also spent time doing research at the Center of Bits and Atoms and the Software Agents group at the MIT Media lab.

Editor’s note:

  • For references to the articles mentioned in this post, please visit our Links & Resources Section