Highbrow Films Gather Dust: A Study of Dynamic Inconsistency and Online DVD Rentals

Katherine Milkman, Todd Rogers () and Max H. Bazerman ()
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Todd Rogers: Harvard Business School
Max H. Bazerman: Harvard Business School, Negotiation, Organizations & Markets Unit

No 07-099, Harvard Business School Working Papers from Harvard Business School

Abstract: We report on a field study demonstrating systematic differences between the preferences people anticipate they will have over a series of options in the future and their subsequent revealed preferences over those options. Using a novel panel data set, we analyze the film rental and return patterns of a sample of online DVD rental customers over a period of four months. We predict and find that people are more likely to rent DVDs in one order and return them in the reverse order when should DVDs (e.g., documentaries) are rented before want DVDs (e.g., action films). This effect is sizeable in magnitude, with a 2% increase in the probability of a reversal in preferences (from a baseline rate of 12%) ensuing if the first of two sequentially rented movies has more should and fewer want characteristics than the second film. Similarly, we also predict and find that should DVDs are held significantly longer than want DVDs within-customer. Finally, we find that as the same customers gain more experience with online DVD rentals, their "dynamic inconsistency" is attenuated. We interpret our results as evidence that myopia has a meaningful impact on decisions in the field and that people learn about their myopia with experience, allowing them to curb its influence.

Keywords: want/should; intrapersonal conflict; dynamic inconsistency; myopia (search for similar items in EconPapers)
Pages: 34 pages
Date: 2007-06, Revised 2008-04
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Citations: View citations in EconPapers (1)

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http://www.hbs.edu/research/pdf/07-099.pdf Revised version, 2008 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:hbs:wpaper:07-099

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