Ran Kivetz

Functional Alibi

Coauthor(s): Anat Keinan, Oded Netzer.

Abstract:

In the present research, we demonstrate how righteous consumers rationalize their frivolous behavior by inflating the perceived value of minor functional features or aspects of the luxury product. We argue that small utilitarian aspects of a seemingly wasteful product or service can serve as "functional alibis." For example, consumers whose cars never touch a dirt road often justify the purchase of an extravagant SUV by its performance in extreme driving conditions. Similarly, consumers often mention a protective cell phone pocket to justify the purchase of the multi-hundred dollars Coach or Louis Vuitton purses.

We demonstrate that consumers tend to overvalue features (or products) that serve as a functional alibi. Such small utilitarian additions to a hedonic luxury are often valued more than their standalone value since they provide additional utility from serving as a functional alibi and justifying the purchase.

Source: Working Paper
Exact Citation:
Keinan, Anat, Ran Kivetz, and Oded Netzer. "Functional Alibi." Working Paper, Columbia Business School, February 2011.
Date: 2 2011