The Psychology of Constraints: The Time Scarcity and Money Scarcity Effect

Abstract

Consumers often experience feelings of scarcity. There is a growing interest in studying the effects of scarcity on consumers’ perceptions, behaviors, and decision-making. However, studying how the effects of scarcity differ depending on the type of resource scarcity has received less attention. This dissertation investigates how two types of scarcities, that of money and time, could have similar and differential effects on decision-making and how the interplay between the nature of these two resources leads to asymmetric effects on the ability of one resource to compensate for another. Essay 1 investigates when and why time and money scarcity can have similar or different effects. Nine experiments find that when consumers draw a self-as-lacking-a-resource inference from their scarcity, both money and time scarcity lead to greater preferences for self-improvement products (compared to those who are not feeling scarcity). However, time (vs. money) scarce consumers could also draw a self-as-resource inference from their scarcity allowing them to make more favorable assessments of their self-value and to prefer products that appeal to their current self as valuable. Essay 2 investigates the interplay between feeling abundant and feeling scarce. Seven experiments show that both time and money scarcity lead to lower advice-taking tendencies. I find that the money scarcity effect on advice-taking tendencies can be compensated by time abundance but the time scarcity effect on advice-taking tendencies is not compensated by money abundance. These results suggest an asymmetry between time and money compensation effects and are driven by differences in the perceived value and fungibility of time (vs. money).