Booth Attractiveness: Scale Development and Model Testing from a Mental Budgeting Perspective

Given the importance of booth attractiveness at trade expositions, this study sets out to develop a scale measuring booth attractiveness (Study 1) and to examine its effectiveness in motivating attendees’ purchasing behavior (Study 2). Study 1 includes three steps: (1) item generation through a thorough review of the literature, focus group, and comments from experts, (2) item purification with exploratory factor analysis using 122 samples, and (3) reevaluating items with confirmatory factor analysis using 129 samples. A six-dimensional scale of booth attractiveness was developed in Study 1. Based on the theory of mental budgeting, Study 2 was conducted to examine the effects of booth attractiveness on the mechanism of attendees’ purchasing behavior using 323 samples. Results of Study 2 suggest that booth attractiveness could directly motivate impulse buying or indirectly through mental budgeting. Impulse buying, then, results in post-purchase guilt and anticipated satisfaction. Meanwhile, postpurchase guilt reduces anticipated satisfaction.

Mental Budgeting dan Motivasi Terhadap Pengelolaan Keuangan Individu

Budgeting cannot be separated from personality and by itself arises from the human individual—people who will make and run the budget. With the budget, financial management will be better. This research was conducted to find out the influence of mental budgeting and motivation on the financial management of individuals. This research was conducted through a questionnaire survey distributed to polytechnic students in 2021 who had taken budget and financial management courses. The sample from this study was 108 samples using Slovin and random sampling techniques. It was then continued with hypothesis testing using multiple linear regressions. The results of this study state that mental budgeting has a positive effect on individuals' financial management, and motivations positively affect personal financial management.

The effects of mental budgeting on the intentions to switch to low-toxicity pesticides: evidence from vegetable farmers in Sichuan, China

PurposeMental budgeting, as a part of mental accounting theory, is expected to impact a household's budgetary management in terms of expenses. The purpose of this paper is to study whether and how mental budgeting can explain differences in farmers' reactions to different incentives of low-toxicity pesticide use.Design/methodology/approachBased on data from a survey of 393 vegetable farmers in the Sichuan Province, this analysis, using a Likert Scale approach, first explores whether farmers utilize mental budgeting. Secondly, using a Probit model, this paper analyzes how mental budgeting affects farmers' intentions to switch to low-toxicity pesticide use when faced with different incentives.FindingsThe results show that the majority of farmers categorize agricultural inputs into different groups and that 26.46% of the investigated farmers utilize mental budgeting for pest control practices. In addition, farmers who utilizing mental budgeting report a higher willingness to switch to low-toxicity pesticides when they're presented with a specific subsidy. Furthermore, if offered a price premium for quality, the willingness to switch to low-toxicity pesticides for farmers utilizing mentally budget is lower compared to other farmers.Originality/valueThis paper examines the existence of mental budgeting among farmers. It provides a better understanding of how farmers categorize agricultural inputs and their mental mechanisms with respect to agricultural expenses. Finally, this paper is the first to study the effects of mental budgeting on farmers' reactions to different incentives aimed at stimulating the adoption of low-toxicity pesticides.

The effects of mental budgeting and pain of payment on the financial decision making of socially excluded people

PurposeConsumers who experience social exclusion often prefer high-risk financial products over low-risk financial products. The aim of this study is to examine how this effect can be attenuated by applying the theories of mental budgeting and pain of payment. The authors’ aim in pursuing this research is to improve the effectiveness of financial professionals and others in educating consumers on healthy financial practices. Understanding how social exclusion experiences influence financial decision-making is essential for continued progress in consumer financial education.Design/methodology/approachThe authors examine the effect of consumers experiencing social exclusion on preference for high-risk financial products using an experimental design involving the manipulation of social exclusion/inclusion experiences. Data were collected from 148 consumers of mutual fund investment services via Amazon Mechanical Turk.FindingsThe study found that consumers experiencing social exclusion are more likely to make high risk investments. It also found that this effect is moderated by consumers' level of mental budgeting such that at high levels of mental budgeting the effect of social exclusion on investment choice is attenuated. The study further finds that the moderating effect of mental budgeting is mediated by pain of payment.Social implicationsThe findings of this study suggest that policymakers can reduce unduly risky personal investment behavior by triggering mental budgeting thoughts using methods such as advertising and explicit mention of transaction fees.Originality/valueThe present study builds on existing research demonstrating the adverse behavioral consequences of social exclusion but refines our understanding by demonstrating the attenuating effect of mental budgeting and the mediating effect of pain of payment on high risk financial purchases.

Healthy food exposition attendees’ purchasing strategies: a mental budgeting perspective

Purpose Grounded in the theory of mental budgeting, this paper aims to investigate how the regret and perfectionism of exposition attendees influences their purchasing strategy. Design/methodology/approach This research collected on-site data at a well-established specialty food exposition in China. Confirmatory factor analysis and structural equation modeling were applied to test the proposed model. Findings The findings confirm the effect of psychological mechanism (regret and perfectionism) on exposition attendees’ purchasing strategy as one that boosts/impairs their confidence in purchasing healthy food at the exposition. Specifically, regret and perfectionism show differential contributions to purchasing strategy dimensions. Variety seeking has a positive effect, whereas price consciousness has a negative effect, on purchase confidence. Practical implications Event organizers and exhibitors should understand attendees’ consumption-related psychological mechanism and devise effective management and marketing strategies for optimal consumption experiences at expositions. They can create an informative and worry-free experience that facilitates a pleasant thought process to reduce uncertainty in attendees’ on-site decision-making. Originality/value The current research pioneered a unique model conceptualizing the important, yet underexplored, phenomenon of purchasing mechanism in the exposition setting. Addressing the emerging interest in food expositions, to the best of the authors’ knowledge, this study is the first for examining purchasing mechanism from the perspective of mental budgeting, providing insightful knowledge about how the psychological mechanism affects exposition attendees’ pre-purchase evaluation and confidence toward purchasing healthy food at expositions.

Mental budgeting and the malleability of decision-making

Financial difficulties commonly occur in college students' lives. Problems might be caused by a lack of understanding about managing money, such as falling into the temptation of buying unnecessary discounted goods or choice justification. The research aims to understand how mental budgeting influences purchasing discounted items and choice justification. In the study, two experiments were undertaken to explain the reaction of discount, and two others to describe choice justification (N=169 in Indonesia, N=168 in China). Mann-Whitney U and ANOVA tests were used to analyze the experiments. Mental budgeting scales were also employed in experiments 3 and 4. The results show that when individuals receive a discounted offer for luxury goods, they will fall into the temptation of buying them. This takes place because they do not want to lose the opportunity to obtain such goods at a cheap price. In addition, when individuals receive offers related to physiological needs (i.e., food), they will practice choice justification. This means that all people need to understand the concept of mental budgeting and make realistic budgets.

Budget Depreciation: When Budgeting Early Increases Spending

While budgeting in advance is seen as a good practice to control spending, this research shows that budgeting too early for a specific purchase may increase spending. We argue that as the temporal separation between budget setting and actual purchase increases, consumers become more willing to overspend because of what we term “budget depreciation.” Consumers adapt to the reference point set by the budget such that, over time, the budgeted level becomes the status-quo spending. Thus, as more time passes, pain of payment from the budgeted amount decreases, and the willingness-to-spend increases. Across a secondary dataset of real estate purchases, one field study, and three experiments, we find evidence that consumers who set a budget in the distant (vs. near) past are more likely to overspend relative to their budget. The effect emerges for single purchase occasions rather than a category of purchases over multiple occasions. It emerges because of the hypothesized pain-of-payment process (e.g., effect is stronger among tightwads, who feel greater pain from spending; effect is mitigated under budget reassessment, which prevents pain adaptation). Our work contributes to the mental budgeting literature by invoking a role for temporal separation and draws a novel connection to prior work on payment depreciation.

Modeling Cross Category Purchase Decision Making with Consumers’ Mental Budgeting Control Habit

Cross-category decision making is an ongoing research in decision science. Cross-category modeling is a powerful tool for big data and business analytics. Cross-category decision making involves evaluating multiple categories for complementary/substitutional utilities. This paper examines consumers’ mental budgeting control habit for its impact on cross purchase decisions. This factor has not been examined in existing cross modeling literature. This paper fits a base cross category model and a budgeting control habit cross model using a consumer grocery shopping dataset. The results show that by incorporating this variable in the cross model, model fit score and prediction accuracy are significantly improved. The budgeting control habit factor has significant moderating effects on price effects and cross price effects. In addition to providing the modeling technique, this paper also finds that consumers classify basket items into root and add-on categories. The common sense that price drop boosts sales is only true for the root category items. Price drop of add-on items may trigger consumers reconfiguring their basket items but not necessarily increase sales of the add-on items themselves.

Choice Simplification: A Theory of Mental Budgeting and Naive Diversification*

We develop a theory of how an agent makes basic multiproduct consumption decisions in the presence of taste, consumption opportunity, and price shocks that are costly to attend to. We establish that the agent often simplifies her choices by restricting attention to a few important considerations, which depend on the decision at hand and affect her consumption patterns in specific ways. If the agent’s problem is to choose the consumption levels of many goods with different degrees of substitutability, then she may create mental budgets for more substitutable products (e.g., entertainment). In some situations, it is optimal to specify budgets in terms of consumption quantities, but when most products have an abundance of substitutes, specifying budgets in terms of nominal spending tends to be optimal. If the goods are complements, in contrast, then the agent may—consistent with naive diversification—choose a fixed, unconsidered mix of products. And if the agent’s problem is to choose one of multiple products to fulfill a given consumption need (e.g., for gasoline or a bed), then it is often optimal for her to allocate a fixed sum for the need.

Building a Model on Influence of Behavioural and Cognitive Factors on Personal Financial Planning: A Study Among Indian Households

Personal financial planning is an emerging area of interest, given the complexities and risks involved in investments and financial markets. As an extension to studies in the field of cognitive and behavioural decision theories, the role of financial cognition (FC) and mental accounting (MA) is examined as antecedents to personal financial planning (PFP) of Indian households and established as a model to represent the same. The study considers factors, that is, financial attitude (FA), risk attitude (RA) and financial knowledge (FK), to measure FC and uses the components of mental budgeting (MB), current income (CI), current assets (CAs) and future income (FI) to study MA as per the behavioural life cycle hypothesis. The study used a structured questionnaire to explore PFP in all the areas of financial interest, that is, cash flow management (CM), investment (INV), insurance (INSU), retirement (RP), tax (TAX) and estate planning (EP). The salaried individuals from different sectors are considered as samples for the study. The data have been collected from all-India representative samples. The analysis has been done with 359 responses from Indian households. The confirmatory factor analysis (CFA) has been used to establish and validates the measurement model.