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The Bottom Dollar Effect: The Influence of Spending to Zero on Pain of Payment and Satisfaction

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Spending that exhausts a budget is shown to decrease satisfaction with purchased products relative to spending when resources remain in the budget. Six studies, including those in which participants earn and spend real resources and evaluate real products, explore this bottom dollar effect. This research contributes to prior mental accounting research regarding how costs influence decision making (e. g., bundling, coupling, sunk costs) and to the satisfaction literature. Supporting the role of pain of payment in this process, we show that the bottom dollar effect increases as effort required to earn budgetary resources increases, decreases in the presence of windfall gains, and decreases when there is less time between budget exhaustion and replenishment. Mediation analyses further demonstrate the role of payment pain in the bottom dollar effect. Implications are discussed in the context of behavioral research, marketing promotions management, and public policy.
Journal of Consumer Research, Inc.
The Bottom Dollar Effect: The Influence of Spending to Zero on Pain of Payment and
Satisfaction
Author(s): Robin L. Soster, Andrew D. Gershoff, and William O. Bearden
Source:
Journal of Consumer Research,
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2014 by JOURNAL OF CONSUMER RESEARCH, Inc. Vol. 41 October 2014
All rights reserved. 0093-5301/2014/4103-0013$10.00. DOI: 10.1086/677223
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The Bottom Dollar Effect: The Influence of
Spending to Zero on Pain of Payment and
Satisfaction
ROBIN L. SOSTER
ANDREW D. GERSHOFF
WILLIAM O. BEARDEN
Spending that exhausts a budget is shown to decrease satisfactionwith purchased
products relative to spending when resources remain in the budget. Six studies,
including those in which participants earn and spend real resources and evaluate
real products, explore this bottom dollar effect. This research contributes to prior
mental accounting research regarding how costs influence decision making (e.g.,
bundling, coupling, sunk costs) and to the satisfaction literature. Supporting the
role of pain of payment in this process, we show that the bottom dollar effect
increases as effort required to earn budgetary resources increases, decreases in
the presence of windfall gains, and decreases when there is less time between
budget exhaustion and replenishment. Mediation analyses further demonstrate the
role of payment pain in the bottom dollar effect. Implications are discussed in the
context of behavioral research, marketing promotions management, and public
policy.
Consider a consumer who, once per month, allocates
$50 to her entertainment budget. After her first pur-
chase, say $10 spent on a movie ticket, there will be less
remaining in her budget, but she will still have access to
$40. As she makes additional purchases, resources in her
Robin L. Soster (rsoster@walton.uark.edu) is assistant professor of mar-
keting, Walton College of Business, University of Arkansas, Fayetteville, AR
72701. Andrew D. Gershoff (andrew.gershoff@mccombs.utexas.edu) is as-
sociate professor of marketing, McCombs School of Business, University of
Texas at Austin, Austin, TX 78712. William O. Bearden (bbearden@
moore.sc.edu) is Bank of America Professor in Business Emeritus, Moore
School of Business, University of South Carolina, Columbia, SC 29201.
This article is based on the first author’s dissertation. The authors thank
Scot Burton, Kurt Carlson, Meredith David, Satish Jayachandran, Cait
Lamberton, Ashwani Monga, Mario Pandelaere, Suresh Ramanathan, Re-
becca Reczek, Randy Rose, and Kathleen Whitcomb for their comments
on earlier versions of the manuscript. They also sincerely appreciate the
insights and support provided by the editor, associate editor, and four anon-
ymous reviewers. Finally, thanks are due to the Moore School of Business
(University of South Carolina) for a research grant, used for data collection,
as well as the Behavioral Business Research Lab and research assistants
at the Walton College of Business (University of Arkansas).
Mary Frances Luce served as editor and Page Moreau served as associate
editor for this article.
Electronically published July 2, 2014
budget continue to dwindle. Later in the month, she may
spend an additional $10 to purchase another movie ticket.
This $10 purchase further reduces her budget balance, which
may now be approaching complete exhaustion. While both
movie ticket purchases reduced her budget balance by the
same amount (i.e., $10), might differences in her budget
balance at the time of purchase affect her satisfaction with
the movies she sees? We propose and find that, with price
and product performance held constant, purchases from bud-
gets approaching exhaustion (vs. budgets not approaching
exhaustion) yield lower consumer satisfaction with the prod-
uct itself. We call this phenomenon the bottom dollar effect.
Recent research has shown a number of ways in which
resource depletion influences consumer behavior (Brady
2009; Huffman and Barenstein 2005; Kamakura and Du
2012; Mishra, Mishra, and Nayakankuppam 2010; Stilley,
Inman, and Wakefield 2010b). For example, consumers are
more likely to choose prevention-oriented products as the
time since receiving their last paycheck increases and are
more likely to choose scarce products when they feel as
though they are financially deprived (Mishra et al. 2010;
Sharma and Alter 2012). Findings also suggest that indi-
viduals spend fewer resources on nonessential products dur-
ing times of both macro- and personal economic contraction
(Brady 2009; Huffman and Barenstein 2005; Kamakura and
Du 2012). Consumers also tend to think about expenditures
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and opportunity costs differently, depending on resource
availability (Morewedge, Holtzman, and Epley 2007; Spiller
2011). Although these consumption patterns seem likely to
influence consumer financial and material well-being, re-
searchers have yet to examine whether they have implica-
tions for consumers’ satisfaction with the products that they
do end up purchasing.
We contribute to this body of work by considering how
consumers’ budgetary status at the moment of purchase
influences postpurchase satisfaction. We hypothesize that
consumers will be less satisfied with products and services
purchased as resource availability dwindles because, as re-
sources diminish, costs feel more painful. Consistent with
the mental accounting literature (Prelec and Loewenstein
1998), this difference in the pain of payment should influ-
ence satisfaction. In other words, we propose that spending
$10 to purchase a movie ticket becomes more painful as
one’s entertainment budget gets closer to zero. This increase
in the pain of paying diminishes satisfaction with the product
itself.
Below, we review research related to the influence of
resource availability (i.e., budgets) on consumer spending
and cost consideration (Heath and Soll 1996; Morewedge
et al. 2007; Spiller 2011; Stilley et al. 2010b). Next, we
consider the relevant judgment and decision-making liter-
ature (Kahneman and Tversky 1979; Thaler 1980, 1985,
1999), which suggests that the reference point used to con-
template costs (e.g., a budget’s available balance) may in-
fluence the pain associated with this spending. We then draw
on the pain of payment and satisfaction literatures (Johnson,
Anderson, and Fornell 1995; Prelec and Loewenstein 1998)
to support our argument that this difference in the pain
associated with bottom dollar spending influences satisfac-
tion with products purchased. Finally, we present a total of
six studies that support our predictions, demonstrate mod-
erators, and reveal boundary conditions.
THEORETICAL BACKGROUND
Budgets, Resource Availability, and the Use of
Reference Points in Decision Making
Mental Budgets. The mental accounting literature sug-
gests that consumers often code and categorize resource
inflows and outflows into “buckets” or “accounts” (Thaler
1980, 1985, 1999). Further, while all monetary inflows—
regardless of their source—increase the total amount of re-
sources available for spending, individuals often behave as
though resources are not fungible (O’Curry 1999; Shefrin
and Thaler 1992; Thaler 1985). For example, people treat
regular income (e.g., salary) differently than bonuses or
windfall gains, which influences saving and spending de-
cisions (Arkes et al. 1994; O’Curry and Strahilevitz 2001;
Thaler 1985).
In addition, consumers often use mental accounts as bud-
gets, allocating resources for specific costs, or categories of
costs, before they are incurred (Bakke 1940; Cheema and
Soman 2006; Heath and Soll 1996; Soman and Cheema
2011; Stilley, Inman, and Wakefield 2010a). These mental
budgets influence how individuals spend resources. Even
simple reminders of budget goals, such as money partitioned
into separate envelopes or children’s photos on savings en-
velopes, have been shown to reduce consumers’ propensity
to use that money for unplanned purchases, increasing sav-
ings (Cheema and Soman 2008; Soman and Cheema 2011).
Resource Availability. While the above findings suggest
that consumers budget to plan and control spending behav-
ior, additional research reveals that the amount of resources
available influences purchase behavior. For example, indi-
viduals’ consumption levels increase upon receipt of pay-
checks and decline between paychecks (Huffman and Bar-
enstein 2005), and over 40% of people stop spending on
nonbill (i.e., discretionary) items 1–2 days after being paid
(Brady 2009). Further, product preferences shift toward pre-
vention-oriented goods as the time since receiving a pay-
check increases (Mishra et al. 2010). Financially deprived
individuals seek out and consume scarce products (Sharma
and Alter 2012), and those with in-store grocery budget
slack respond differently to promotions than those with no
slack (Stilley et al. 2010b).
It seems possible that the above differences in consump-
tion behavior may be related to the influence of resource
availability on cost perceptions. For example, consumers
with large (vs. small) resource pools perceive economically
equivalent costs as smaller, are more likely to spend re-
sources, and are less likely to consider opportunity costs
(Morewedge et al. 2007; Spiller 2011). In other words, in-
dividuals may use budget balances (i.e., the availability of
resources) as a reference point against which they consider
expenditures.
Reference Points. The above findings suggest that in-
dividuals compare costs incurred to their budget balances
when making consumption decisions. These differences due
to resource availability are consistent with how reference
points influence, or frame, perceived changes in quantity
(Christensen 1989; Kahneman and Tversky 1979; Thaler
1980, 1985, 1999). According to prospect theory (Kahne-
man and Tversky 1979), changes from small-magnitude ref-
erence points are perceived to have more of an impact than
identical changes from larger-magnitude reference points.
For example, Tversky and Kahneman (1981) showed that
individuals perceive saving $5 on a $15 product as more
valuable than saving the same amount on a $125 product
(evidenced by willingness to travel 20 minutes for the deal).
Likewise, a $10 loss from $1,020 is perceived to be much
smaller than a $10 loss from $20 (Thaler 1985).
Given that individuals may use a budget’s balance as a
reference point when spending (Heath and Soll 1996; More-
wedge et al. 2007; Spiller 2011), these budget balances
likely influence perceptions of costs incurred. So as a budget
approaches zero, costs may be perceived as larger and there-
fore more painful (cf. Prelec and Loewenstein 1998). As
such, we next consider prior research regarding pain of pay-
ment and consumer satisfaction.
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SOSTER, GERSHOFF, AND BEARDEN 000
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Pain of Payment and Satisfaction
Prelec and Loewenstein (1998) propose that, when con-
sumers incur costs, they open a mental account, which links
costs to their associated benefits. The stronger this link, the
more consumers are driven to pursue the benefits associated
with these costs (Gourville and Soman 1998; Prelec and
Loewenstein 1998; Soman and Gourville 2001). This link
is thought to influence the utility individuals derive from
consumption, essentially creating a “double-entry mental ac-
counting system,” whereby the pain of spending attenuates
the pleasure from consumption and the pleasure of consum-
ing buffers the pain associated with costs. This premise is
consistent with research regarding the relationship between
perceived value and consumer satisfaction (Johnson et al.
1995), which proposes that, with product performance held
constant, increased costs reduce the perceived value of and,
in turn, satisfaction with products purchased.
In addition, Prelec and Loewenstein suggest that a con-
sumer’s “psychological burden of payment” (1998, 8) incor-
porates both actual costs and the individual’s personal mar-
ginal utility for resources spent. So any circumstance that
increases the perceived marginal utility of money (e.g., earn-
ing minimum wage, devastating economic losses) yields a
commensurate increase in pain of payment, or imputed cost.
Since budget balances may serve as reference points against
which consumers evaluate costs, we propose that variations
in payment pain may be driven by fluctuations in budget
balances. So a $10 expenditure when an individual’s budget
balance is relatively low (i.e., a “small-magnitude” reference
point) is likely perceived to be more painful than $10 spent
from a high balance (i.e., a “large-magnitude” reference
point). In this manner, cyclical increases and decreases in a
consumer’s budget due to income or regular outflows (e.g.,
expenses) may influence the pain associated with identical
purchases.
To summarize, we suggest that budget balances are used
as reference points against which individuals evaluate their
expenditures. We predict that resources spent when budgets
have relatively low balances feel more painful than eco-
nomically equivalent costs incurred when budget balances
are high. While increases in pain of payment likely occur
incrementally throughout the budgetary cycle (i.e., as bal-
ances decline), prior research suggests that this effect should
intensify as resources approach zero (Kahneman and Tver-
sky 1979; Thaler 1980, 1985, 1999; Tversky and Kahneman
1981). As such, the primary focus of this article is on pur-
chases that exhaust (vs. do not exhaust) available resources
and the resulting differences in payment pain, which in turn
influence satisfaction. Specifically, when a purchase ex-
hausts (vs. does not exhaust) a consumer’s budget, we pre-
dict that the pain associated with spending will be greater,
attenuating satisfaction with the product purchased. Our the-
ory suggests that two consumers engaged in otherwise iden-
tical transactions (i.e., purchasing the same product for the
same price) might experience differences in satisfaction with
the purchased product, based on their perceptions of pay-
ment pain, which is driven by their access to budgetary
resources at the time of purchase.
Below we present six studies to provide support for our
primary hypothesis that spending from budgets approaching
exhaustion (vs. those that are well funded) attenuates sat-
isfaction with products purchased because of higher pain of
paying. Across the studies we manipulate pain of payment
in three ways and provide evidence for the mediational in-
fluence of pain of payment. First, a pilot study considers
the role of budgets as reference points, revealing that con-
sumers are more averse to costs incurred as budgets ap-
proach exhaustion (i.e., bottom dollar spending) versus non-
exhausting costs or costs not associated with an explicit
budget. Then, in the main studies, participants provide sat-
isfaction ratings for actual products purchased from declin-
ing budgets consisting of resources that have been endowed
(studies 1 and 5) or earned (studies 2, 3, and 4). Study 1
shows that participants’ satisfaction with products is lower
when budgets are exhausted relative to when they are not.
Study 2 replicates this effect and, consistent with the pro-
posed influence of payment pain, finds that the effect is
moderated by participant-reported effort to earn budget re-
sources. Study 3 manipulates the effort required by partic-
ipants to fund budgets, again finding evidence that satis-
faction is diminished when budgets are exhausted and that
effort moderates the effect. Study 4 uses an alternative
method to manipulate pain of payment, revealing that a
windfall gain attenuates the bottom dollar effect for those
approaching budgetary exhaustion. Finally, study 5 offers a
third pain of payment manipulation: budget replenishment
timing. The bottom dollar effect is replicated; however,
consistent with the proposed role of payment pain, it is
attenuated when resource replenishment is imminent. Fur-
thermore, satisfaction with non–bottom dollar purchases is
reduced if this replenishment is distant.
PILOT STUDY: AVERSION TO SPENDING
FROM DECLINING BUDGETS
The purpose of the pilot study was to explore a necessary
condition of our primary hypothesis: whether consumers
perceive a greater “psychological burden” when spending
from exhausting budgets. In this manner, this study examines
whether consumers use budget balances as reference points,
against which they consider spending decisions.
Design and Procedure
One hundred sixty-nine nonstudent adults recruited from
Mechanical Turk (MTurk) participated in this Web-based
study. This study used a 2 (budget: present vs. absent) #
2 (spending to zero: yes vs. no) between-subjects design,
and participants were randomly assigned to conditions.
Participants in the budget present condition were told that
they had withdrawn $130 from the bank, which served as
their weekly budget. Next they were given a list of expen-
ditures to date from the budget. Each expense showed what
was purchased, how much was spent, and how much re-
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FIGURE 1
PILOT STUDY: AVERSION TO SPENDING $10
mained in the budget. For example, the first expense was a
$12 purchase of shampoo that left $118 in the budget; the
second expense was a $26 purchase of groceries that left
$96 in the budget. Depending on spending condition, these
expenses were manipulated to result in budget balances of
$10 or $88. In the budget absent condition, participants were
given no information about budgets or prior spending. They
were simply told to imagine they had either $10 or $88.
All participants then reported how they would feel about
purchasing a $10 movie ticket. That is, those in the spending
to zero condition considered a purchase that would reduce
a $10 balance to $0, while participants not spending to zero
evaluated a purchase that reduced an $88 balance to $78.
All participants indicated their agreement with three items,
designed to measure their aversion to spending: “I will think
carefully about whether I want to spend this $10.00,” “I
ought to save this $10.00 and not spend it,” and “Spending
this $10.00 right now is reasonable” (reverse coded). All
items used 5-point Likert scales (1 pdisagree, 5 pagree).
Results and Discussion
Spending Aversion. The three aversion to spending items
were averaged (ap.84) and analyzed in a 2 (budget:
present vs. absent) #2 (spending to zero: yes vs. no)
ANOVA. Main effects for both budget and spending factors
were significant (F(1, 165) p8.41, 3.99, both p!.05).
These main effects were qualified by a two-way interaction
(F(1, 165) p13.02, p!.01; fig. 1). Planned contrasts
revealed that, when an explicit budget was diminished,
spending aversion was higher for those spending to zero (M
p4.23) than for those with money remaining after the
purchase (Mp3.49; F(1, 165) p15.61, p!.01). However,
when no explicit budget was diminished, the effect atten-
uated. That is, no differences in aversion arose whether the
$10 cost exhausted resources (Mp3.36) or not (Mp3.58;
F(1, 165) p1.31, pp.26; fig. 1).
Discussion. The results of the pilot study suggest that
consumers’ aversion to spending resources is greater for
costs that exhaust budgetary resources and that this effect
diminishes if no explicit budget is present. This supports
the notion that budget balances are used as reference points
when considering expenditures, in turn influencing the psy-
chological burden of paying.
To build on this finding, in the main studies, participants
either are endowed with or earn resources, which fund bud-
gets. From these budgets they make multiple purchases,
reducing their available resources. As they do, they expe-
rience and evaluate satisfaction with purchased products.
Across these studies, we compare satisfaction ratings be-
tween conditions in which budgets are exhausted and con-
ditions in which resources remain after a purchase. Weshow
support for the role of pain of paying through moderation
(via three different factors) and measured payment pain,
revealing its role as a mediator in the relationship between
budget balances and satisfaction.
STUDY 1: THE BOTTOM DOLLAR
EFFECT
The pilot study suggests that aversion to spending is
greater when the costs incurred exhaust budgetary resources.
We argue that this aversion influences satisfaction. Specif-
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SOSTER, GERSHOFF, AND BEARDEN 000
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ically, a product purchased with a budget’s final dollars will
be evaluated as less satisfying than one purchased when
ample resources remain. Study 1 was designed to test this
prediction, using the context of an online film festival. In
this study, participants were endowed with budgets, used to
purchase films that they viewed. Film evaluations were com-
pared between budget conditions.
Design and Procedure
One hundred seven nonstudent adults were recruited
from MTurk to participate in study 1, which employed a
two-cell design. All participants were told to imagine they
had purchased credits (described as being worth $0.30
each) to spend on films that cost 10 credits each. Partic-
ipants then purchased and watched three films. In the bot-
tom dollar spending condition, participants’ budgets were
initially funded with 30 credits ($9) so that the purchase
of the third film resulted in exhausted budgets. In the
non–bottom dollar condition, participants’ budgets were
funded with 50 credits ($15) so that purchasing the third
film did not exhaust budgets.
Before participants purchased each film, they were re-
minded of their current budget balance, the cost to purchase
the film, and the balance that would remain after their pur-
chase. This information was also visually depicted using a
bar that incrementally changed from green to red (fig. A1).
For each film purchase, participants were given a unique
set of four titles from which to choose, allowing the task to
mirror an actual consumer choice. After a title was chosen,
participants were asked, “How much do you expect to like
[film chosen]?” (1 pnot at all, 9 pvery much). Participants
then watched the short (approximately 2-minute) film.
After seeing each film, participants were given an addi-
tional written and visual reminder of their 10-credit expen-
diture and the balance of credits now remaining in their
budget. Participants then evaluated the film, responding to
the following two measures: “Please rate your feelings about
the film you just watched,” assessed on a 9-point bipolar
scale (extremely dissatisfied or extremely satisfied); “I felt
as though this film was a good value, given the amount of
credits that it cost” (1 pstrongly disagree, 9 pstrongly
agree). In the analysis below, and throughout the remainder
of the article, we combine these two measures to reflect
overall satisfaction with products purchased. For all studies,
separate analyses using the single-item satisfaction measure
revealed the same pattern of effects as this combined mea-
sure; however, the use of this two-item index is consistent
with prior research, which suggests that overall satisfaction
is based on both product performance and perceptions of
value (Bolton and Lemon 1999; Fornell et al. 1996; Johnson
et al. 1995; Oliver and Swan 1989; Zeithaml 1988).
The films in the study were drawn from an initial set of
14 2–3-minute art films deemed appropriate for general au-
diences. In a pretest, 75 individuals from the same pool, but
who did not participate in the main study, provided liking
ratings for these films. Five films whose liking ratings did
not significantly differ from one another were used in the
main study.
For each film purchase in the main study, to enhance the
realism of the procedure, participants chose one film from
four film titles offered. The selection of any of the four titles
actually redirected participants to the same film. (Films were
edited to remove any actual titles.) For example, regardless
of whether a participant chose Paddington Station,Pence,
Keeping Score,orAlmost Brilliant, he was redirected to the
same short film (with the actual title Short Changed). In
this manner, each participant selected, purchased, viewed,
and evaluated three different films, randomly presented from
the pool of five films used in the study. Note that while we
randomized presentation order and included variables in our
analysis to control for the actual film viewed and the order
in which the three films were watched, subsequent studies
hold viewing sequence constant. That is, across studies, we
offer both approaches for robustness.
Results and Discussion
The analysis below is based on the 105 respondents (M
age
p28.2; 47 females) remaining after eliminating two par-
ticipants who indicated that English was not their primary
language.
Satisfaction. The two dependent measures (i.e., satisfac-
tion with and perceived value of the film) were averaged,
forming a satisfaction index (rp.87) for the third film
purchased and viewed (i.e., when half of the participants
had completely exhausted budgets). A one-way ANCOVA
was used to analyze satisfaction with the third film. Budget
condition (exhausted vs. not exhausted) was the between-
subjects factor. As noted above, participants responded to
the dependent measures for three of five films, presented in
random order. To control for the films viewed, 12 dummy
variables were included in our analysis as covariates: four
for the third film (our target film) plus, to control for the
possibility that films seen earlier in the study might have
influenced satisfaction with the third film, four for each of
the two films viewed before.
The ANCOVA revealed significant differences in satis-
faction with the third film depending on budget condition.
As expected, individuals who had spent their last 10 credits
to purchase the film were less satisfied (Mp4.44) than
those with 20 credits remaining after the purchase (Mp
5.61; F(1, 91) p4.83, p!.05; fig. 2).
To further test our hypothesis, we also examined satis-
faction for the second film. Here, neither condition faced a
depleted budget, so we expected less of a difference in sat-
isfaction for this purchase. Again, we analyzed the two-item
satisfaction index (rp.88) using a one-way ANCOVA,
including covariates to control for the films seen (four rep-
resenting the second film and four for the first). In contrast
to the third film, viewed when half of the participants had
an exhausted budget, no differences in satisfaction emerged
between participants whose purchase reduced their available
balance to 10 credits (i.e., the exhausting budget condition;
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FIGURE 2
STUDY 1: SATISFACTION WITH THE SECOND AND THIRD FILMS
Mp5.19) versus 30 credits (i.e., the nonexhausting budget
condition; Mp5.45; F(1, 95) p.27, p1.60; fig. 2).
Our primary hypothesis is that satisfaction is diminished
when budgets are depleted and that this occurs because pain
of paying increases. In this study, we observed the proposed
decrease in satisfaction. However, a possible alternative ex-
planation is that depleted budgets result in higher, yet ul-
timately unmet, expectations (Oliver 1980, 1997). To ex-
amine this, we again performed an ANCOVA analysis, using
expectations for film 3 as the dependent measure, budget
condition as the between-subjects factor, and eight dummy
variables as covariates to control for possible variations in
expectations due to the two films already viewed. This anal-
ysis revealed no difference in expectations for the third film
whether participants were close to budgetary exhaustion (M
p5.76) or not (Mp5.60; F(1, 95) p.21, p1.60).
Discussion. In this study, we manipulated participants’
available resources to examine how spending that fully ex-
hausts (vs. does not fully exhaust) one’s budget influences
satisfaction with the product purchased. Our findings re-
vealed that participants spending the last of their budget to
purchase the third film were less satisfied than those who
had resources remaining after the purchase. Follow-up anal-
yses revealed no differences in satisfaction when all partic-
ipants had resources remaining and no difference in expec-
tations based on budget status.
These findings offer preliminary evidence that bottom
dollar spending leads to decreased satisfaction. We note that
no differences in satisfaction with the second film emerged,
even though participants in the exhausting budget condition
had fewer total resources available after the purchase (10
credits) than those in the nonexhausting condition (30 cred-
its). In addition, while the purchase of the third film reduced
all participants’ balances by the same amount (10 credits),
satisfaction was attenuated only for participants whose pur-
chase reduced their available balance to zero (i.e., those in
the exhausting budget condition), not for participants whose
balances were reduced to 20 credits (i.e., those in the non-
exhausting condition). Our hypothesis is that these differ-
ences in satisfaction are driven by the pain associated with
bottom dollar spending. As such, studies 2–5 examine the
role of payment pain through both manipulation and mea-
surement.
STUDY 2: MEASURED EARNING
DIFFICULTY AND THE BOTTOM
DOLLAR EFFECT
Although study 1 provided preliminary support for the
notion that spending one’s bottom dollar decreases satis-
faction, study 2 was designed to offer a more direct ex-
amination of our assertion that the pain of paying is a key
driver in the effect. In study 1, participants were told to
imagine that they had spent money to purchase credits for
the film festival; however, prior research suggests that the
difficulty ascribed to earning resources can influence the
pain of spending (Bagchi and Block 2011). If, as hypoth-
esized, pain of paying is associated with the bottom dollar
effect, when a consumer finds it difficult to earn resources,
the bottom dollar effect should be more pronounced than
for those who perceive earning as easy. For study 2, par-
ticipants performed work to earn credits for the film festival
budgets and we measured earning difficulty.
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Design and Procedure
Two hundred twelve nonstudent adults recruited through
MTurk participated in study 2, a Web-based experiment em-
ploying a mixed design. Budget condition (exhausting vs.
not exhausting) was manipulated between subjects; per-
ceived earning difficulty was measured.
All participants were told that they would be able to pur-
chase and watch movies as part of an online film festival
and that they would first perform a number of tasks to earn
credits, funding their film-buying budget. The tasks were
designed and pretested to be moderately tedious. Each con-
sisted of 20 item lists of nouns or phrases belonging to one
of two different categories (e.g., animals or Simpsons epi-
sodes). Participants were required to click and drag each
item into a box labeled with the appropriate category head-
ing. Participants in the exhausting budget condition com-
pleted two of these sorting tasks (worth 10 credits each),
funding a 20-credit budget, while those in the not exhausting
condition completed three, funding a 30-credit budget. Prior
to each task, participants were given depictions of how com-
pleting the task would increase their budgets (fig. A2). After
each task, participants rated the task with three, 9-point,
bipolar items (difficult or easy, frustrating or enjoyable, an-
noying or fun).
Next, as in study 1, all participants were introduced to
the film festival in which they would spend their earned
credits. Before and after each film purchase, participants
were verbally and visually reminded of the credits remaining
in their budgets (fig. A1). Participants were told that, when
they had zero credits left, they would perform more tasks
to earn more credits.
As in study 1, for each film purchase, participants chose
from a set of four possible titles that were actually linked
to the same film. After watching each film, participants re-
sponded to the two measures of satisfaction used in study
1, both assessed on 9-point scales. In contrast to study 1,
film order was not randomized. That is, for each choice, all
participants saw the same film. Participants in both budget
conditions had credits remaining after purchasing the first
film; however, those in the exhausting budget condition
spent their last credits purchasing the second film, while
participants in the not exhausting budget condition had 10
credits remaining after the purchase. This allowed for a
direct comparison of satisfaction for the same film, but under
different budgetary conditions.
Immediately after watching the two primary films of in-
terest, participants whose budgets had not been exhausted
watched a third film, while those in the exhausting budget
condition performed one additional task and earned 10 more
credits, which allowed them to purchase the third film. While
we were not interested in ratings for this film, this allowed
us to ensure that all participants, regardless of condition,
spent about the same amount of time on the study. It also
allowed us to collect difficulty ratings for the third task from
those in the exhausting budget condition. Next, participants
answered additional questions (e.g., demographics) and were
paid.
Results and Discussion
The analysis below is based on the 208 respondents (M
age
p34.0; 125 females) remaining after the elimination of
three participants indicating that English was not their pri-
mary language and one reporting he had already completed
a variation of this study (i.e., study 1).
Pain of Payment and Satisfaction. First, the nine task
difficulty items (three for each task) were reverse coded,
averaged, and mean centered, creating a single measure of
perceived task difficulty (ap.91). Next, we examined the
role of budget condition and task difficulty on satisfaction
with the second film, when those in the exhausting budget
condition had just spent to zero and those in the not ex-
hausting condition had credits remaining. Indicator variables
for budget condition (exhausting p1, not exhausting p
1), perceived task difficulty (SD p1.55, min p2.08,
max p5.14), and the interaction of these two factors were
regressed on the two-item satisfaction index for the second
film (rp.86). Only the two-way interaction of budget and
difficulty was significant, supportive of our predictions (B
p.24, SE p.10; tp2.52, p!.05). Of note, these variables
were also regressed on satisfaction with the film preceding
film 2 (i.e., when no budgets were exhausted). Here, only
the main effect of task difficulty was significant (Bp.32,
SE p.10; tp3.10, p!.01); the interaction was not (B
p.09, SE p.10; tp.90, pp.37).
Given that our proposed moderator (task difficulty) was
continuous, arbitrary, and capable of producing a wide range
of values, we decomposed the interaction using Johnson-
Neyman points (1936), performing a floodlight analysis to
examine the influence of resource availability on satisfaction
across the entire range of difficulty perceptions, as recom-
mended by Spiller et al. (2013). Using PROCESS model 1
(Hayes 2013) and the raw scores for perceived task difficulty
(min p1.00, max p8.22), our analysis revealed that re-
source availability influenced satisfaction when task diffi-
culty was perceived to be very high (i.e., 6.76; Bp.76,
SE p.39). Consistent with our theorizing, for those who
ascribed this level of difficulty to tasks, the model predicted
significantly lower satisfaction for those with exhausting (M
p4.71) versus not exhausting budgets (Mp6.23; tp
1.97, pp.05; fig. 3).
In addition to preliminary support for the proposed mech-
anism by which the bottom dollar effect arises (i.e., higher
pain of payment), our findings revealed an unexpected in-
crease in satisfaction when perceived difficulty was low(i.e.,
2.28; Bp.33, SE p.17). When the earning task was
perceived as easy, those with exhausted budgets reported
greater satisfaction (Mp6.55) than those with credits re-
maining (Mp5.89; tp1.97, pp.05; fig. 3).
Discussion. The results of this study replicated and ex-
tended those of study 1. Satisfaction with an identical prod-
uct was influenced by whether or not purchasing the product
exhausted the budget. To explore the role of pain of payment
in this process, we measured the difficulty associated with
earning resources (Bagchi and Block 2011). As expected,
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FIGURE 3
STUDY 2: FLOODLIGHT ANALYSIS OF SATISFACTION WITH THE SECOND FILM BASED ON PERCEIVED TASK DIFFICULTY
(RAW SCORES)
for exhausting budgets, satisfaction was lower when earning
was perceived to be difficult, but earning difficulty did not
play a role in satisfaction for those with nonexhausting bud-
gets. While the measure of perceived task difficulty led to
results consistent with our hypotheses, using measured var-
iables to make causal inferences has drawbacks. A more
appropriate examination of the influence of pain of payment
would be to manipulate earning difficulty through random
assignment, directly measuring payment pain to assess its
influence as a mediating variable.
Our findings in study 2 also revealed that, when partic-
ipants perceived earning credits to be very easy, satisfaction
was greater in the exhausted budget condition than in the
nonexhausted condition. Although we did not predict this
reversal, it is consistent with the idea that consumers eval-
uate costs differently as budgets approach exhaustion. While
we pretested the tasks to be moderately tedious, we speculate
that some participants’ perceptions of the tasks as extremely
easy contributed to this reversal. Indeed, across conditions,
the average difficulty rating was significantly below the scale
midpoint of 5.00 (Mp3.08; F(1, 207) p17.92, p!
.001).
On the basis of the findings from study 1, where all par-
ticipants were endowed with credits, performing no earning
tasks, we may have expected the bottom dollar effect to also
arise for study 2 participants who perceived earning credits
to be easy (i.e., performing no earning tasks may be com-
parable to performing very easy tasks). However, study 1
participants were instructed to assume that they had pur-
chased the credits and were not given any information re-
garding the possibility of budgetary replenishment, while
study 2 participants had earned credits during the study and
were explicitly told they would be required to complete
additional tasks to replenish exhausted budgets. Although
these two differences increased external validity (i.e., people
do usually replenish their budgets through earning), the find-
ing that replenishment opportunities might influence the pain
of bottom dollar spending is not inconsistent with our theory.
That is, the pain associated with budgetary exhaustion and
the bottom dollar’s influence on satisfaction might be ex-
pected to attenuate if exhausted budgets are readily replen-
ished.
Study 3 addresses the above concerns, again using task
difficulty as a moderator, but by randomly assigning partic-
ipants to perform either easy or difficult tasks (all of which
were designed to be more difficult than the tasks used in
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study 2) and telling all participants that, once their budget
is exhausted, they will be unable to replenish it. Finally,
instead of using task difficulty as a proxy, we elicit a direct
measure of pain of payment to examine its mediating influ-
ence. Studies 4 and 5 examine other circumstances that
may affect perceived payment pain and, in turn, satisfaction
with products purchased using bottom dollars. Study 4 tests
whether a windfall reduces payment pain, while study 5
considers replenishment timing. Both influence perceived
pain of payment, moderating the bottom dollar effect.
STUDY 3: MANIPULATED EARNING
DIFFICULTY AND THE BOTTOM
DOLLAR EFFECT
Study 3 had three purposes. First, we wanted to explore
the role of pain of payment in the bottom dollar effect by
directly manipulating earning difficulty. Second, while prior
research has argued that earning difficulty influences pain
of payment (Bagchi and Block 2011), we wanted to include
a direct measure of payment pain rather than relying on
reported earning difficulty as a proxy for this variable. Fi-
nally, in contrast to study 2, participants were told that, once
their budgets were exhausted, there would be no more op-
portunities to earn and spend. This ensured that participants
evaluating a film would not be influenced by the perceived
ease of budget replenishment. Note that we explicitly ma-
nipulate replenishment in study 5.
Design and Procedure
Two hundred one nonstudent adults, recruited through
MTurk, completed this Web-based experiment. The study
used a 2 (budget: exhausting vs. not exhausting) #2 (earn-
ing task: easy vs. hard) between-subjects design. All par-
ticipants were told that they would be purchasing and view-
ing short films after first performing tasks to earn credits.
As in study 2, these tasks involved sorting lists of items
into categories to earn 10 credits; however, for this study,
all tasks used four categories (e.g., animals, Simpsons epi-
sodes, cities, or diseases). Those assigned to complete the
relatively easy tasks sorted only four items into the four
categories, while those assigned to the hard condition sorted
28 items. To reinforce the manipulation, prior to random
assignment, participants were told about both possibilities
(four- or 28-item tasks). Prior to completing each task, bud-
get information was relayed verbally and visually (fig. A2).
Participants in the exhausting budget condition completed
three tasks so that purchasing the third film would exhaust
their budget. Those in the not exhausting condition com-
pleted four tasks, so that the purchase of the third film would
not fully deplete their budgets.
As in study 2, participants were reminded of their budget
status before and after each film purchase (fig. A1) and chose
films by selecting from four titles, which were actually all
linked to the same film. In contrast to study 2, participants
were told, “When you run out of credits, you will not have
the opportunity to earn any more, and you will be unable
to watch any more films.”
Across conditions, participants saw the same three films,
in the same order, responding to two satisfaction measures
for each: a direct measure of satisfaction using a 9-point
bipolar scale (extremely dissatisfied or extremely satisfied)
and an evaluation of the film’s “overall value for what I
paid” (1 pextremely low, 9 pextremely high). As in prior
studies, the focal dependent variable was the two-item sat-
isfaction index for the third film (i.e., when half of the
participants had fully exhausted their budgets). Next, to di-
rectly measure pain of payment, we adopted a measure from
prior research (Thomas, Desai, and Seenivasan 2011). Par-
ticipants used a sliding bar positioned beneath an image of
a face (1 p;3p;5p) in response to “Some-
times, a payment policy can influence how consumers feel
about spending money. How did you feel about spending
10 credits to purchase this film?”
Those with credits remaining watched a fourth film, while
those with exhausted budgets completed an additional task
and watched the final film in order to maintain equal time
durations across conditions for compensation purposes. As
a manipulation check, at the end of the study, all participants
rated the sorting tasks they had performed. First, participants
responded to three 9-point bipolar scale items (difficult or
easy, frustrating or enjoyable, annoying or fun). Next, they
responded to an additional assessment of difficulty: “Com-
pared to other people that participated in this study, I feel
as though the jobs I completed were” (1 pmuch harder, 9
pmuch easier). Finally, demographic items were collected
and participants were compensated.
Results and Discussion
Prior to analysis, seven participants were removed be-
cause of prior participation (np2) or the indication that
English was not their primary language (np5). Thus, the
analysis that follows includes the remaining 194 participants
(M
age
p33.5; 93 females).
Manipulation Check. Responses to all task difficulty
items were reverse coded, and the first three were averaged
to form an index (ap.79). Participants who had performed
easy tasks (i.e., sorted four items) indicated that their tasks
were significantly less difficult (Mp2.09) than those sort-
ing 28 items (i.e., hard tasks; Mp3.42; F(1, 192) p35.16,
p!.001). When their tasks were compared to those of
others, similar differences emerged (M
easy
p2.44 vs. M
hard
p4.63; F(1, 192) p84.88, p!.001), suggesting that the
manipulation was effective. There was no significant dif-
ference based on budget condition, nor the budget by task
interaction for either measure (all p1.15).
Satisfaction. The two satisfaction items were averaged
to create an index (rp.85), which was analyzed in a 2
(budget: exhausting vs. not exhausting) #2 (earning task:
easy vs. hard) ANOVA. Only the two-way interaction was
significant (F(1, 190) p4.47, p!.05; fig. 4).
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FIGURE 4
STUDY 3: SATISFACTION WITH THE THIRD FILM
In support of our hypotheses, planned contrasts revealed
that, when earning was difficult, those who had exhausted
their budgets were less satisfied (Mp4.87) than those
who had not (Mp6.01; F(1, 190) p6.03, p!.05).
However, when earning was easy, no differences in satis-
faction emerged on the basis of budget status (M
exhausted
p
6.09 vs. M
not
p5.86; F(1, 190) p.26, pp.61). In addition,
when budgets were exhausted, those in the difficult earning
condition were less satisfied (Mp4.87) than those in the
easy condition (Mp6.09; F(1, 190) p7.05, p!.01).
When budgets were not exhausted, there was no difference
in satisfaction based on earning condition (M
hard
p6.01 vs.
M
easy
p5.86; F(1, 190) p.11, pp.74; fig. 4).
As in study 2, we performed the same analysis for the
film viewed just prior to film 3 (i.e., when no participants
had exhausting budgets). No differences in satisfaction
emerged for the second film based on task difficulty, budget
condition, or the interaction (all p1.12).
Conditional Process Analysis. We used PROCESS mod-
el 8 (Hayes 2013) to examine the relationships between
budget condition, earning difficulty, pain of payment, and
satisfaction with the third film. The model included budget
condition as the independent variable, earning difficulty as
the moderator, the budget #difficulty interaction, pain of
payment as the proposed mediator, and the two-item satis-
faction index as the dependent variable (fig. 5). The budget
#difficulty interaction had a significant effect on pain of
paying (a
3
p.19, SE p.09, CI [.36, .02]) and pain
of payment influenced satisfaction (bp1.33, SE p.10,
CI [1.52, 1.14]). Furthermore, the inclusion of pain of
payment in the model reduced the influence of budget #
difficulty to insignificance ( , SE p.12, CI [.14,
cp.09
3
.32]). A bias-corrected, 95% confidence interval based on
10,000 bootstrap samples revealed that the budget #dif-
ficulty interaction had an indirect effect on satisfaction
through the proposed mediator, pain of payment (a
3
bp.25,
SE p.12, CI [.03, .48]; fig. 5). This finding supports our
hypothesized process by which the bottom dollar effect
arises. That is, pain of payment mediated the relationship
between budgetary exhaustion and satisfaction.
Discussion. In study 3, we manipulated budget status
and earning difficulty. Our findings reveal that, when the
purchase of a product exhausts an individual’s budget, his
pain of paying increases, which decreases satisfaction with
the product purchased. This pattern did not arise when the
purchase did not exhaust participants’ budgets. This support
for the process by which the bottom dollar effect arises
would be further bolstered if manipulations reducing pay-
ment pain attenuated the effect. To explore this, studies 4
and 5 move beyond earning effort, considering alternative
influences on the pain of paying: windfall gains and re-
plenishment timing.
STUDY 4: WINDFALL GAINS AND THE
BOTTOM DOLLAR EFFECT
Study 4 explored a second factor expected to influence
the pain of payment. In this study, all participants performed
the same (moderately difficult) task to earn credits, funding
a budget with which they purchased films. Next, participants
either did or did not receive an unexpected windfall gain in
the form of “free” credits just prior to the target purchase.
We predicted that, for those in the exhausting budget con-
dition, this receipt of free credits at the point of purchase
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FIGURE 5
STUDY 3: CONDITIONAL PROCESS ANALYSIS
would decrease the pain of paying by temporarily delaying
budget exhaustion, attenuating decreases in satisfaction vis-
a`-vis those not receiving the windfall. However, for those
not facing budgetary exhaustion, this windfall was expected
to have less impact, yielding no differences in satisfaction
whether it was received or not.
Design and Procedure
One hundred seven undergraduate business students at
the University of Arkansas completed this Web-based ex-
periment for partial course credit and were randomly as-
signed to conditions in this 2 (budget: exhausting vs. not
exhausting) #2 (windfall: present vs. absent) between-
subjects design. The procedure was similar to studies 2 and
3: participants completed sorting tasks to earn credits, used
to purchase films. Those in the exhausting budget condition
performed two tasks, earning 20 credits, enough to purchase
two films; those in the not exhausting condition performed
three tasks, earning 30 credits, enough for three. All par-
ticipants were provided with visual depictions of their bud-
get balances prior to completing each task (fig. A2) and
before and after purchasing each film (fig. A1). As in studies
2 and 3, participants then chose, purchased, and viewed the
first film. They indicated satisfaction with the film using one
9-point bipolar item (extremely dissatisfied or extremely sat-
isfied).
Just before choosing the second film (i.e., when those
with exhausting budgets were about to spend their last cred-
its), all participants were told that the film festival organizers
had randomly chosen people to whom they would give more
credits. Next, those in the windfall present (absent) condition
were told that they had (had not) received 10 additional
credits and were again provided with an illustration repre-
senting their current and postpurchase budget balances. Af-
ter purchasing and viewing the second film, participants
responded to satisfaction, perceived value, and payment pain
items, provided demographic information, and were thanked
for their participation.
Results and Discussion
The analysis is based on the 106 participants (M
age
p
20.2; 53 females) remaining after the elimination of one
indicating prior participation in a similar study.
Satisfaction. The two satisfaction measures collected af-
ter participants viewed the second film were averaged to
create an index of satisfaction (rp.76). This index was
analyzed in a 2 (budget: exhausting vs. not exhausting) #
2 (windfall: present vs. absent) ANOVA. Only the two-way
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FIGURE 6
STUDY 4: SATISFACTION WITH THE SECOND FILM
interaction was significant (F(1, 102) p5.99, p!.05; fig.
6). As in prior studies, analysis revealed no differences in
measured satisfaction for the film viewed just prior to film
2, when all participants had nonexhausting budgets (i.e., film
1; all p1.15).
Planned contrasts supported our predictions. First, in a
replication of our earlier studies, when no windfall was re-
ceived, participants whose purchase of the film exhausted
their budgets were less satisfied (Mp5.68) than those with
nonexhausted budgets (Mp6.95; F(1, 102) p5.11, p!
.05). However, when a windfall was received just prior to
the purchase, no differences in satisfaction emerged between
those in the exhausting (Mp6.89) and not exhausting (M
p6.20; F(1, 102) p1.46, pp.23) conditions. Further-
more, for participants with exhausting budgets, the receipt
of a windfall attenuated the bottom dollar effect (Mp6.89)
compared to those who did not receive the windfall (Mp
5.68; F(1, 102) p4.49, p!.05). However, for those with
nonexhausting budgets, no satisfaction differences emerged
between those who received the windfall (Mp6.20) and
those who did not (Mp6.95; F(1, 102) p1.78, pp.19;
fig. 6).
Conditional Process Analysis. Again, we used PRO-
CESS model 8 (Hayes 2013) to consider the role of payment
pain. The model included budget condition as the indepen-
dent variable, windfall as a moderator, the budget #wind-
fall interaction, pain of payment as a mediator, and the two-
item satisfaction index as the dependent variable (fig. 7).
The budget #windfall interaction influenced pain of paying
(a
3
p.30, SE p.10, CI [.10, .51]), and pain of paying had
a significant effect on satisfaction (bp1.28, SE p.14,
CI [1.56, .99]). However, including payment pain in the
model rendered the interaction’s direct effect on satisfaction
insignificant ( , SE p.16, CI [.41, .21]). Con-
cp.10
3
sistent with our hypothesized process, bootstrap analysis (n
p10,000; bias-corrected 95% confidence intervals) re-
vealed that budget #difficulty had an indirect effect on
satisfaction through the mediator, payment pain (a
3
bp
.39, SE p.14, CI [.68, .13]; fig. 7).
Discussion. The manipulation of budgetary exhaustion
and the presence of a windfall gain provided additional sup-
port for our theory that budget-exhausting purchases result
in lower satisfaction with products purchased due to in-
creased payment pain. As expected, windfall receipt atten-
uated the bottom dollar effect’s influence on satisfaction for
those in the exhausting budget condition. Further, condi-
tional process analysis replicated our study 3 findings, show-
ing that this result was mediated by pain of payment.
Considering that consumers’ purchases follow cyclical
patterns, associated with the rise and fall of their available
resources (Brady 2009; Huffman and Barenstein 2005), it
is likely that individuals expecting imminent resource re-
plenishment might experience less pain when making bud-
get-exhausting purchases. For example, spending one’s last
dollar on a Sunday may feel less painful if a paycheck is
expected on Monday. Conversely, if replenishment is rel-
atively far into the future, spending resources may be
painful—even for those who have abundant resources. Note
that this premise is related to the study 2 protocol in which
the instructions may have led participants to believe there
would be opportunities to replenish their budgets. In that
study, participants who perceived budgetary replenishment
to be very easy were more satisfied with a budget-exhausting
(vs. not exhausting) purchase. We speculated that the per-
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FIGURE 7
STUDY 4: CONDITIONAL PROCESS ANALYSIS
ceived ease of replenishment may have substantially de-
creased pain of paying. We further explore this in study 5,
manipulating whether participants receive information about
resource replenishment and whether that information reveals
that replenishment will occur in the near or distant future.
STUDY 5: REPLENISHMENT TIMING AND
THE BOTTOM DOLLAR EFFECT
Study 5 was designed to test whether replenishment tim-
ing moderates the bottom dollar effect by influencing pay-
ment pain. In addition, for robustness, this study was de-
signed to be more realistic with respect to the resources in
the budget. So in contrast to studies 1–4, budgets were not
filled with credits, but dollars. Furthermore, in contrast to
studies 2–4, participants did not earn and then spend re-
sources as part of the experiment. Instead, similarly to the
pilot study, participants were endowed with resources, which
were diminished through a series of typical consumer pur-
chases. These factors, coupled with our manipulation of
budgetary replenishment (described below), led us to focus
on adults of working age (18–65 years old) to ensure that
both manipulations (i.e., spending dollars from a set budget
and budgetary replenishment analogous to paycheck receipt)
were perceived as realistic.
For this study, we made a series of predictions. First, for
participants not given explicit information about budget re-
plenishment timing, we predicted a replication of the bottom
dollar effect: satisfaction will be lower for a purchase that
exhausts (vs. does not exhaust) a budget. Second, for par-
ticipants told that their budget will be replenished soon, pain
of payment will be reduced for those facing budgetary ex-
haustion, attenuating the bottom dollar effect. That is, for
those expecting quick budget replenishment, we predicted
no differences in satisfaction whether the budget was ex-
hausting or not. Note that this finding would be consistent
with the attenuated bottom dollar effect for study 2 partic-
ipants who perceived earning to be easy. Third, for partic-
ipants told that their budget will not be replenished for a
long time, pain of payment will be high, regardless of budget
status. So, for these participants, satisfaction shouldbe lower
whether budgets are exhausting or not. Put another way,
compared to those with no information (i.e., the control
condition), participants with exhausting budgets should be
more satisfied if told that replenishment will occur soon;
those with nonexhausting budgets should be less satisfied if
informed that replenishment is far away.
Design and Method
From MTurk, 302 nonstudent adults participated in this
Web-based study, a 2 (budget: exhausting vs. not exhausting)
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FIGURE 8
STUDY 5: SATISFACTION WITH THE LEGO FILM
#3 (replenishment timing: unknown vs. near future vs. far
future) between-subjects design. Participants were randomly
assigned to conditions. In all conditions, participants pur-
chased and evaluated one identical film.
All participants were told that they had started the week
with an entertainment budget of $60 and then considered a
series of purchases, one by one, that required them to cal-
culate each decline. For example, they were asked “If you
spend $4 on music downloads, how much remains in your
budget?” The online survey progressed only after partici-
pants provided the correct remaining balance. For each pur-
chase, participants were given verbal reminders of their
original balance, prior purchases, and current balance. This
purchasing simulation was repeated for multiple purchases
until those in the exhausting budget condition had $2 left
and those in the not exhausting condition had $13. Partic-
ipants then considered the target purchase, a $2 online film,
and reported their postpurchase balance (i.e., $0 or $11).
Next, the replenishment timing manipulation was intro-
duced. Similarly to studies 3 and 4, participants in the un-
known condition were given no information about replen-
ishment, those in the near-future condition were told they
would receive $60 “tomorrow morning,” and those in the
far-future condition were told they would receive $60 “in 6
more days.” All participants then watched the purchased
film (a 50-second stop-motion animation featuring a Lego
train).
Participants then indicated their satisfaction with the film
using a 7-point, bipolar scale (extremely dissatisfied or ex-
tremely satisfied) and their agreement with describing the
film as a “good value” (1 pstrongly disagree, 7 pstrongly
agree). Consistent with studies 2–4, participants next indi-
cated how spending $2 made them feel (i.e., payment pain).
On a separate screen, those in the near- and far-future re-
plenishment conditions responded to a manipulation check:
“How long is it until you have more money added to your
entertainment budget?” (1 pnot a long time at all, 7 pa
very long time). Participants provided demographic infor-
mation and were thanked and compensated for completing
the study.
Results and Discussion
The analysis is based on the 291 participants (M
age
p
31.32; 117 females) remaining after the elimination of 11
participants who indicated either that English was not their
primary language or that they were not of working age.
Because of the differences in this study’s protocol (i.e.,
spending simulation, different film), participants were not
asked about prior participation.
Manipulation Check. We analyzed responses to the ma-
nipulation check for those assigned to the near (np95)
and far (np93) conditions. Those in the near-future con-
dition indicated that they would receive more money sig-
nificantly sooner (Mp1.56) than those in the far condition
(Mp4.82; F(1, 184) p279.26, p!.001), suggesting that
the replenishment timing manipulation worked as intended.
No significant differences emerged based on budget con-
dition or the budget by replenishment timing interaction
(both p1.15).
Satisfaction. As in prior studies, the responses to satis-
faction and value were averaged, creating a two-item sat-
isfaction index (rp.64), which was analyzed in a 2 (budget:
exhausting vs. not exhausting) #3 (replenishment timing:
unknown vs. near future vs. far future) ANOVA. Only the
two-way interaction emerged as significant (F(2, 285) p
3.17, p!.05; fig. 8).
Consistent with the predictions outlined above, we per-
formed a total of seven planned contrasts, revealing that
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FIGURE 9
STUDY 5: CONDITIONAL PROCESS MODEL
replenishment timing influenced satisfaction consistent with
our predictions. Specifically, for participants given no re-
plenishment information (i.e., the unknown condition), the
bottom dollar effect arose, replicating our prior findings.
Participants with exhausting budgets were less satisfied (M
p2.34) than those with nonexhausting budgets (Mp2.98;
F(1, 285) p5.77, p!.05). For those with exhausting bud-
gets, no differences in satisfaction arose whether replenish-
ment timing was unknown (Mp2.34) or 6 days away (i.e.,
far future; Mp2.54; F(1, 285) p.55, pp.46). However,
satisfaction was higher for those with exhausting budgets
when they were told they would receive replenishment in
the near future (i.e., tomorrow; Mp2.87) than for those
for whom replenishment timing was unknown (Mp2.34;
F(1, 285) p3.65, pp.057). Finally, for those expecting
near-future replenishment, the bottom dollar effect was at-
tenuated; no differences emerged whether budgets were ex-
hausting (Mp2.87) or not (Mp2.68; F(1, 285) p.43,
pp.51; fig. 8).
Additional contrasts revealed the opposite pattern for par-
ticipants with nonexhausting budgets. Satisfaction was the
same whether replenishment timing was unknown (Mp
2.98) or expected in the near future (Mp2.68; F(1, 285)
p1.23, pp.27). However, satisfaction was significantly
lower for participants told that replenishment was far (Mp
2.33) than for those given no replenishment information (M
p2.98; F(1, 285) p5.58, p!.05). Indeed, for participants
expecting replenishment in 6 days (i.e., far future), satis-
faction was similar whether budgets were exhausting (Mp
2.54) or not (Mp2.33; F(1, 285) p.55, pp.46; fig. 8).
Conditional Process Analysis. We next considered the
relationships between budget status, replenishment timing,
pain of payment, and satisfaction. Since our moderator, re-
plenishment timing, had three levels (unknown vs. near fu-
ture vs. far future), we used PROCESS model 10 (Hayes
2013), applying the steps recommended by Hayes and
Preacher (2013) for multicategorical variable analysis. Spe-
cifically, dummy codes were created, representing compar-
isons between replenishment timing conditions: unknown
versus near future (D1) and unknown versus far future (D2).
Thus, the model included budgetary status (independent var-
iable), two moderators representing replenishment timing
(D1, D2), the budget #D1 and budget #D2 interactions,
pain of payment (the proposed mediator), and the satisfac-
tion index (dependent variable; fig. 9).
Our findings revealed that the budget #D1 interaction
influenced payment pain (a
4
p.38, SE p.14, CI [.07,
.69]), while the budget #D2 interaction had a marginally
significant effect (a
5
p.26, SE p.14, CI [.05, .57]). In
addition, pain of payment influenced satisfaction (bp
1.03, SE p.06, CI [1.16, .91]). Furthermore, the
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TABLE 1
STUDY 5: CONDITIONAL PROCESS MODEL COEFFICIENTS
Effects
Pain of payment (M) Satisfaction (Y)
Variable Path BSE pPath BSE p
Budget (X)a
1
.2606 .0952 .0066
c
1
.0528 .0925 .5686
Pain of payment (M) ... ... ... b1.0345 .0568 .0000
Unknown vs. soon (W)a
2
.0720 .1373 .6003
c
2
.0391 .1318 .7670
Unknown vs. far (Z)a
3
.1249 .1381 .3664
c
3
.3508 .1327 .0087
Budget #“soon” (XW)a
4
.3774 .1373 .0064
c
4
.0239 .1335 .8583
Budget #“far” (XZ)a
5
.2620 .1381 .0589
c
5
.1555 .1334 .2445
TABLE 2
STUDY 5: THE INFLUENCE OF BUDGET #TIMING ON SATISFACTION
Indirect effect
a
Direct effect
Level of moderator(s) BSE CI BSE p
No information (Wp0; Zp0) .2696 .0928 .0693 to .4849 .0528 .0925 .5686
Replenishment soon (Wp1; Zp0) .1208 .0965 .3358 to .0966 .0290 .0952 .7612
Replenishment far (Wp0; Zp1) .0014 .1113 .2591 to .2503 .1027 .0962 .2857
a
Conditional on pain of payment mediator; 97.5% bias-corrected bootstrap estimates.
inclusion of pain of payment in the model reduced the sig-
nificance of the budget #D1 interaction (a
4
bp.02, SE
p.13, CI [.32, .28]) and the budget #D2 interaction
(a
5
bp.16, SE p.13, CI [.46, .15]), suggesting me-
diation (table 1).
Since our proposed moderator was a three-level categor-
ical variable, we followed the suggestion of Hayes and
Preacher (2013, 13), using bias-corrected 97.5% confidence
interval estimates (i.e., a Bonferroni adjustment for multiple
hypothesis tests). Bootstrapping (np10,000) revealed that
the indirect effect of budget #timing on satisfaction was
conditional on the mediator, payment pain, for those given
no information about replenishment (Bp.27, SE p.09,
CI [.07, .48]). However, the relationship was not conditional
on pain of payment for those told replenishment would occur
in the near (Bp.12, SE p.10, CI [.34, .10]) or far
future (Bp.001, SE p.11, CI [.26, .25]), consistent
with our predictions (table 2). As such, the influence of
budget #timing was conditional on our proposed mediator,
pain of payment.
Discussion. In study 5, we manipulated budgetary ex-
haustion and information about replenishment timing to pro-
vide additional support for the bottom dollar effect and the
process by which it arises. We extend our prior findings by
examining a third moderator influencing pain of payment
(beyond earning difficulty and windfall gains, considered in
studies 2–4). Here we show that, when replenishment is
revealed to be imminent, the bottom dollar effect is atten-
uated. That is, satisfaction evaluations are similar whether
budgets are exhausted or not. In addition, our findings sug-
gest that satisfaction may be lower for individuals with non-
exhausting budgets if they perceive that budget replenish-
ment will not occur until the distant future. More generally,
this shows that pain of payment increases as budgets near
exhaustion but that decreased satisfaction may also arise
prior to bottom dollar spending when other factors increase
payment pain. Conditional process analysis again supports
the hypothesized role of payment pain in the relationship
between bottom dollar spending and satisfaction with prod-
ucts purchased.
Finally, the findings from study 5 bolster our speculation
regarding the attenuation of the bottom dollar effect for
study 2 participants who perceived the earning tasks to be
particularly easy. Taken together, these findings suggest that,
when budgets are exhausting, perceptions of expedited re-
plenishment will reduce the pain associated with spending
one’s bottom dollar and increase satisfaction with the pur-
chase.
GENERAL DISCUSSION
A total of six studies show how satisfaction is influenced
by consumers’ budgetary status at the time of product pur-
chase. Our findings reveal that purchases made as budgets
are exhausted (vs. not exhausted) yield decreases in satis-
faction with the product purchased. First, the pilot study
showed that aversion to spending is greater for those facing
budgetary exhaustion, and, in support of the notion that
individuals use budgets as reference points, this difference
in aversion is predicated on the presence of an explicit bud-
get. Next, study 1 showed that spending from an exhausting
budget reduces satisfaction with the purchased product rel-
ative to spending from a nonexhausting budget. Study 2
provided preliminary support for the role of pain of payment
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SOSTER, GERSHOFF, AND BEARDEN 000
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by measuring earning difficulty. In studies 3–5 we deployed
multiple interventions, manipulating payment pain though
earning difficulty, windfall gains, and replenishment timing
and measuring participants’ perceived pain of payment. In
this manner, our studies offer both moderation and mediation
to support the hypotheses. These relationships between re-
source availability, payment pain, and satisfaction offer im-
portant extensions to mental accounting and satisfaction lit-
eratures, providing insights and opportunities for managers
and researchers alike.
Theoretical Contributions
The present research adds to the growing body of liter-
ature that considers how consumers react to limited or de-
clining resources. Prior work has focused on the relationship
between resource availability and judgment and decision-
making processes showing, for example, that resource avail-
ability influences consumer consideration of costs (More-
wedge et al. 2007; Spiller 2011) and product preferences
(Huffman and Barenstein 2005; Mishra et al. 2010; Sharma
and Alter 2012). Here, we broaden these findings by show-
ing that budgetary exhaustion can also influence product
evaluations after consumption.
Our findings offer four substantive extensions to the
mental accounting literature. First, while consumers create
mental budgets in an effort to track expenditures (Heath
and Soll 1996), we find that the pain associated with in-
curring economically equivalent costs may vary on the
basis of the budget balance consumers use as a reference
point. For example, while prior work has examined how
budget balances influence consumer choice of planned ver-
sus unplanned items (Stilley et al. 2010b), we offer a
glimpse of how exhausting balances influence individuals’
feelings about spending these remaining funds as well as
the product purchased.
Our second contribution to this stream extends the work
of Prelec and Loewenstein (1998), who described particular
circumstances that might increase the marginal utility of
money, in turn heightening the pain felt when costs are
incurred. To the extent that consumers’ budget balances are
cyclical, our findings suggest that increases in imputed costs
and payment pain may be as well. Third, we offer a new
perspective on “closing” mental accounts. We suggest that
the pain associated with closing a mental budget (i.e., via
bottom dollar spending) may result in lower satisfaction,
beyond whether transaction-specific mental accounts close
in the red or black (i.e., through the forfeiture or receipt of
benefits; Prelec and Loewenstein 1998).
Finally, this article offers a unique empirical examination
of the proposed relationships between mental accounting,
payment pain, and the utility derived from consumption
(Prelec and Loewenstein 1998; Thaler 1980, 1985, 1999).
While the mental accounting literature has examined its
propositions through the extensive use of judgment and
decision-making experiments, we believe that ours is the
first to empirically demonstrate these relationships in a set-
ting in which participants purchase, consume, and evaluate
actual products. These findings are both theoretically and
managerially meaningful, offering a fertile foundation for
future research.
Our findings also provide a contribution to the extant
consumer satisfaction research. Prior work has shown that
satisfaction may be influenced by multiple nonproduct char-
acteristics including choice set size, perceived exchange
fairness, ambiguity of expected reactions from others, and
individual differences such as belief in karma or a predis-
position to maximize outcomes (Heitmann, Lehmann, and
Herrmann 2007; Kopalle, Lehmann, and Farley 2010; Oliver
and Swan 1989). Our findings offer additional nonproduct
attributes influencing satisfaction: budgetary status and the
pain associated with spending. More pointedly, our research
also adds to work considering the influence of budgetary
expectations on satisfaction. In particular, Bolton and Lemon
(1999) found that consumers’ expectations of usage and
exchange equity can influence long-term satisfaction. If bot-
tom dollar spending increases the pain of a transaction, con-
sumers may perceive exchanges as less equitable, reducing
future purchases.
Finally, research suggests that an individual’s ability to
enjoy, or savor, positive outcomes influences overall well-
being even more than the ability to achieve positive out-
comes (Bryant 1989). Prior work in this area has focused
on factors that may moderate an individual’s ability to savor.
For example, Quoidbach et al. (2010) suggest that individ-
uals with limited resources are more likely to savor outcomes
than their wealthier counterparts, because they have access
to fewer similarly positive alternatives (cf. Gilbert 2006).
Additional findings suggest that individuals enjoy products
and experiences more if they are consumed at the very end
of a series or are tightly tied to a sense of finality (Kurtz
2008; O’Brien and Ellsworth 2012). In this manner, scarcity,
based on either purchase ability or opportunity, is predicted
to increase enjoyment. However, across multiple studies, we
find the opposite effect. That is, for individuals with ex-
hausting budgets, satisfaction with the final product in a
series is lower. As such, it seems possible that mental ac-
counting for costs might also moderate savoring ability. Spe-
cifically, if consumers do not consider the costs of obtaining
products while consuming (e.g., if products are prepur-
chased, bundled, or free), they may be more likely to savor
the product itself, which should enhance satisfaction. How-
ever, if costs are perceived as high (e.g., missed alternatives
for the wealthy, greater pain of paying), consumers may
savor their remaining resources more than the items pur-
chased, attenuating satisfaction.
Managerial Implications
Since the status of consumers’ budgets (i.e., exhausting
vs. not exhausting) may influence satisfaction, marketing
managers might consider the timing of specific types of
promotions to coincide with likely resource availability. For
example, if a marketer’s goal is to attract new customers or
generate word of mouth, initial satisfaction with trial is im-
portant. So, promotions of these types might be better timed
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at the beginning of the month, or immediately after con-
sumers receive tax refunds, in order to ensure that budgets
are not approaching exhaustion at the time of purchase.
Conversely, toward the end of the month, when budgets are
likely approaching exhaustion, or for consumers spending
the last dollars left on a gift card, surprise coupon promo-
tions might be more appropriate (Heilman, Nakamoto, and
Rao 2002).
Of course, it is likely that consumers may construct their
mental budgets differently on the basis of individual cir-
cumstances (e.g., college administrators may budget for the
academic year, assistant professors may budget for the se-
mester, college students may budget for the week). As such,
marketing managers may be able to use our findings to
differentially promote products on the basis of when their
target markets’ budgets are more likely to be approaching
exhaustion.
Future Research Opportunities
In the studies presented here, participants were exposed
to generally positive consumption outcomes; however, con-
sumers do experience both positive and negative outcomes
in the marketplace. The consideration of how bottom dollar
spending influences satisfaction with negative product per-
formance episodes (cf. Bitner 1990) could be an important
extension of the present research. It seems possible that
negative product performance outcomes might yield even
greater dissatisfaction for consumers who have spent their
bottom dollar than for those who have not (Kahneman and
Tversky 1979; Mittal, Ross, and Baldasare 1998). In line
with the consideration of negative product performance out-
comes, it is also possible that budgetary status influences a
consumer’s zone of tolerance or the range of product per-
formances that fall between “desired” and “adequate” per-
formance levels (Zeithaml, Berry, and Parasuraman 1993).
In other words, when a consumer’s product purchase ex-
hausts his budget, the resulting zone of tolerance for product
performance may shift and/or grow narrower. As such, he
may perceive fewer outcomes as desired or adequate than
a consumer whose purchase does not exhaust his budget.
Considerations related to negative product performance or
potential variations in zones of tolerance may be of particular
interest to managers.
While our findings reveal that the bottom dollar effect is
not necessarily due to wealth effects (i.e., satisfaction did
not vary for nonexhausting purchases, regardless of the
amount of resources participants started with or had re-
maining), it is certainly possible that income patterns could
influence how often consumers experience the bottom dollar
effect (Thaler 1999). For example, a laborer receiving wages
on a daily basis might experience bottom dollar spending
more often than someone receiving a set salary on a monthly
or bimonthly basis. In a related manner, consumers may
differ in the extent to which they use mental budgeting in
their daily lives, perceive mental budgets to be malleable,
or consider short- or long-term financial planning horizons
(Antonides, de Groot, and van Raajj 2011; Cheema and
Soman 2006; Lynch et al. 2010). It follows that those who
tend to use budgets, who treat budgets as rigid, or who
engage in short-term financial planning may experience bud-
getary exhaustion and commensurate fluctuations in satis-
faction more often. Furthermore, while our theory and main
studies focused on moments of complete budgetary ex-
haustion, it seems possible that payment pain gradually in-
creases throughout the budgetary cycle (i.e., as budget bal-
ances decline). Future research may be able to further refine
our understanding of this phenomenon by testing multiple
combinations of costs and budget balances to determine
whether the relationship between pain of paying and re-
maining budgetary resources is linear or nonlinear (e.g., on
the basis of exponential or step functions). As such, our
findings are relevant for researchers and policy makers ex-
amining impoverished or disadvantaged consumers as well
as financial planning or decision making.
In addition, although we link this examination of the bot-
tom dollar effect to financial costs, consumers also consider
budgetary balances for other resources, such as time, food,
and even cigarette smoking (Becker 1965; LeClerc, Schmitt,
and Dube´ 1995; Lynch et al. 2010; Morewedge et al. 2007;
Platkin 2009; Rozensky 1974; Zauberman and Lynch 2005).
Given that “spending” these resources will eventually lead
to budgetary exhaustion, it seems possible that a bottom
“hour,” “snack,” or “smoke” effect might emerge. What is
less clear is whether budgetary exhaustion for these re-
sources would influence satisfaction. For instance, much like
research revealing that different forms of payment may af-
fect spending aversion (Soman 2001a), the extant time-
money literature suggests that costs of time and money are
thought about differently (Monga and Saini 2009; Okada
and Hoch 2004; Saini and Monga 2008; Soman 2001b). As
such, it is possible that the exhaustion of time-based budgets
would not influence satisfaction. However, research has also
shown that, under some circumstances, consumers do con-
sider temporal budgets (Soster, Monga, and Bearden 2010)
and that individuals may prefer products in which they have
invested time (Norton, Mochon, and Ariely 2012). So for
time-based budgets, a bottom “hour” effect might actually
yield greater satisfaction with products.
Finally, as our studies focused on hedonic products with
relatively short life spans, it seems possible that the bottom
dollar effect might operate differently on the basis of what
is purchased. For example, prior findings suggest that con-
sumers may be more likely to experience dissatisfaction and/
or positive disconfirmation if it is relatively easy to evaluate
product quality (Anderson and Sullivan 1993). As such,
future research should consider whether the bottom dollar
effect is attenuated or exacerbated when consumers exhaust
their budgets to purchase search (vs. experience) goods (Nel-
son 1970). In addition, prior work has shown that consumers
prefer scarce or prevention-focused products if they are tem-
porally far from the receipt of their paycheck (Mishra et al.
2010; Sharma and Alter 2012). These preferences suggest
that the effect might be less likely to arise when particularly
unique or utilitarian goods are purchased (Chan and Mukho-
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SOSTER, GERSHOFF, AND BEARDEN 000
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padhyay 2010; Prelec and Loewenstein 1998). Finally, given
that prosocial spending has been shown to increase con-
sumer happiness (Aknin et al. 2013; Dunn, Aknin, and Nor-
ton 2008), it is possible that prosocial spending that exhausts
budgets may increase the pain of spending. However, in this
circumstance, a heightened sense of generosity could result,
yielding increased consumer happiness from donation be-
havior.
DATA COLLECTION INFORMATION
All studies in this article were conducted via Qualtrics.
The second author supervised data collection and analyzed
the results from the pilot study during the spring of 2013.
The pilot study was conducted with nonstudent adults re-
cruited via Amazon Mechanical Turk (MTurk). The first
author supervised data collection and performed the analysis
for the five main studies. Study 4 data were collected during
the spring of 2013 using the Behavioral Business Research
Lab at the Walton College of Business (University of Ar-
kansas); participants were undergraduate business students
from the Marketing Department subject pool. Studies 1–3
(spring 2013) and 5 (fall 2013) were conducted with non-
student adults recruited through MTurk. Results from all
studies were jointly authored by the first and second authors
and corroborated by the third. MTurk participants were com-
pensated using the first author’s research budget (study 5),
the second author’s research budget (pilot study), and a grant
received by the first and third authors from the Moore School
of Business (University of South Carolina; studies 1–3).
APPENDIX
FIGURE A1
EXAMPLE OF VISUAL REPRESENTATIONS OF BUDGETS IN STUDIES 1–4
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FIGURE A2
EXAMPLE OF VISUAL REPRESENTATIONS OF EARNING IN STUDIES 2–4
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