Effects of Unpacking in Spending Predictions: The Role of Typicality (An Extended Abstract)

Abstract

Although there is a wealth of psychological research on how people predict the probability of outcomes and the duration of tasks, there is little on how they predict spending (see Peetz and Buehler 2009). This is unfortunate because spending predictions underlie many decisions, from whether to have kids to where to go for lunch. Our objective is to understand spending predictions by extending theory and research from other domains of judgment. In particular, we focus on unpacking effects. We ask whether unpacking a complex or multifaceted spending category (e.g., “monthly spending on groceries”) by listing one of its elements and a residual category (e.g., “monthly spending on meat and other groceries”) influences predictions. On normative grounds it should not (the referent of judgment remains fixed), but psychological research on other judgment domains suggests that it will.