The Rationality of Consumer Decisions to Adopt and Utilize Product-Attribute Enhancements: Why Are We Lured by Product Features We Never Use?

The ability of consumers to optimally anticipate the value they will draw from new product features that are introduced to enhance the performance of existing technologies is explored. The work tests a hypothesis that when consumers are given the opportunity to buy a new generation of a products that offers enhanced features consumer will overvalue them, a bias the accrues to a tendency to overestimate both the extent that they will utilize these new features and the impact they will have on utility. This general hypothesis is tested in the context of a computer simulation in which subjects are trained to play one three different forms of an arcade game where icons are moved over a screen by different forms of tactile controls. Respondents are then given the option to play a series of games for money with either with their incumbent game platform or pay to play with an alternative version that offered an expanded set of controls. As hypothesized, subjects displayed an upwardly-biased valuation for the new sets of controls; adopters underutilized them and displayed a level of game performance that was not better than those who never upgraded. A follow-up study designed to resolve the process underlying the bias indicated that while adopters indeed over-forecast the degree to which they would make use of the new control, they did not over-forecast performance gains. Hence, the key driver of adoption decisions appeared to be an exaggerated belief of the hedonic pleasure that would be derived from owning and utilizing the new control as opposed to any objective value it might provide.