How Product Unavailability Leads to Choice of Lesser Alternatives—The Role of Hedonic Aggregation

Customers often face the disappointment of learning that a product they anticipated having is no longer available. In this paper, we analyze the unavailability of a sought-after product or experience as an illusory loss; while the customer has never had the product or experience to lose, they previously updated their reference point such that the stockout feels like a loss. Marketers and researchers are interested in how encountering a stockout affects subsequent customer behavior. We document a systematic, counterintuitive response to a product or service unavailability whereby customers select an alternative they would not have otherwise selected instead of abandoning the search. We implicate the hedonic editing of outcomes as a major driver of our findings. Across five studies, involving both hypothetical and real choices, we demonstrate that an illusory loss increases the subsequent choice of alternatives that might even be negative on their own because doing so still minimizes negative hedonic impact. This effect only holds when the illusory loss and subsequent choice are bracketed together, and the initial loss is not too large. The mechanism uncovered advances our knowledge of customer hedonic editing, and could help marketers increase the share of undiscovered, lower-demand alternatives