Effects of Payment Mechanism on Spending Behavior: The Role of Rehearsal and Immediacy of Payments

Effects of Payment Mechanism on Spending Behavior: The Role of Rehearsal and Immediacy of Payments

7 July, 2020  •  

Past expenses have been shown to influence future spending behavior by depleting available budgets. However, a prerequisite for this relationship is the accurate recall of past payments and the experiencing of the full aversive impact associated with them. This article shows that the use of different payment mechanisms influences both these factors and hence moderates the effects of past payments on future spending. Specifically, past payments strongly reduce purchase intention when the payment mechanism requires the consumer to write down the amount paid (rehearsal) and when the consumer’s wealth is depleted immediately rather than with a delay (immediacy). Two experiments show support for the proposed theoretical framework.

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