Transaction Decoupling: How Price Bundling Affects the Decision to Consume

Abstract

In today's marketplace, price bundling is widespread: Manufacturers and retailers routinely offer multiple products for a single, bundled price. Although the effects of price bundling on purchase behavior have been well researched, the effects of price bundling on postpurchase consumption behavior have received almost no attention. In this article, the authors build on the sunk cost literature (e.g., Thaler 1980 , 1985 ) and predict that price bundling leads to a disassociation or “decoupling” of transaction costs and benefits, thereby reducing attention to sunk costs and decreasing a consumer's likelihood of consuming a paid-for service (e.g., a theater performance). Four studies show this to be the case. In two lab studies, the authors show that having a bundled four-day ski pass as opposed to four one-day ski tickets decreases a person's likelihood of skiing on the final day of a four-day ski vacation. They replicate this result in a field study, showing that multiperformance ticket holders are more likely to forgo a given theatrical performance than are single-performance ticket holders, all else held constant. In a final study, the authors show that the decreased attention to sunk costs brought about by price bundling can be either cognitively driven (i.e., it is difficult to allocate a single payment across multiple benefits) or motivationally driven (i.e., there is an underlying desire to avoid consumption). Their findings have practical implications for managers interested in predicting or influencing actual product consumption.