Digital Goods Are Valued Less Than Physical Goods

Abstract

Digital goods are, in many cases, substantive innovations relative to their physical counterparts. Yet, in five experiments, people ascribed less value to digital than to physical versions of the same good. Research participants paid more for, were willing to pay more for, and were more likely to purchase physical goods than equivalent digital goods, including souvenir photographs, books (fiction and nonfiction), and films. Participants valued physical goods more than digital goods whether their value was elicited in an incentive compatible pay-what-you-want paradigm, with willingness to pay, or purchase intention. Greater capacity for physical than digital goods to garner an association with the self (i.e., psychological ownership), underlies the greater value ascribed to physical goods. Differences in psychological ownership for physical and digital goods mediated the difference in their value. Experimentally manipulating antecedents and consequents of psychological ownership (i.e., expected ownership, identity-relevance, perceived control) bounded this effect, and moderated the mediating role of psychological ownership. The findings show how features of objects influence their capacity to garner psychological ownership before they are acquired, and provide theoretical and practical insights for the marketing, psychology, and economics of digital and physical goods.

Full text

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Digital Goods Are Valued Less Than Physical Goods
Ozgun Atasoy1 and Carey K. Morewedge2
1Department of Marketing, Faculty of Business and Economics, University of Basel
2Department of Marketing, Questrom School of Business, Boston University

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AUTHOR NOTE
Ozgun Atasoy is a postdoctoral research associate in the department of marketing of the
Faculty of Business and Economics at the University of Basel; ozgun.atasoy@unibas.ch.
Carey K. Morewedge is a professor of marketing in the Questrom School of Business at
Boston University; morewedg@bu.edu. This research is based on the first author’s
dissertation. Please direct correspondence concerning this manuscript to Ozgun Atasoy,
University of Basel, Faculty of Business and Economics, Peter Merian-Weg 6, CH-4052
Basel, Switzerland.

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ABSTRACT
Digital goods are, in many cases, substantive innovations relative to their physical
counterparts. Yet, in five experiments, people ascribed less value to digital than to
physical versions of the same good. Research participants paid more for, were willing to
pay more for, and were more likely to purchase physical goods than equivalent digital
goods, including souvenir photographs, books (fiction and nonfiction), and films.
Participants valued physical goods more than digital goods whether their value was
elicited in an incentive compatible pay-what-you-want paradigm, with willingness to pay,
or purchase intention. Greater capacity for physical than digital goods to garner an
association with the self (i.e., psychological ownership), underlies the greater value
ascribed to physical goods. Differences in psychological ownership for physical and
digital goods mediated the difference in their value. Experimentally manipulating
antecedents and consequents of psychological ownership (i.e., expected ownership,
identity-relevance, perceived control) bounded this effect, and moderated the mediating
role of psychological ownership. The findings show how features of objects influence
their capacity to garner psychological ownership before they are acquired, and provide
theoretical and practical insights for the marketing, psychology, and economics of digital
and physical goods.
Keywords: digital goods, value, psychological ownership, perceived control

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The digitization of goods—their transformation into files that can be transmitted
without a physical object (Belk 2013; Molesworth and Denegri-Knott 2013; Odom,
Zimmerman, and Forlizzi 2011), has created exciting improvements in the lives of
consumers and their welfare (e.g., Cohen et al. 2017; Goldfarb, Greenstein, and Tucker
2015). Digital goods can be bought online, consumed immediately, and used without
worry for their degradation or loss. All of a person’s digital books, documents, music,
photographs, and videos can be stored in one pocket-sized device, providing them access
to a library of content anywhere at any time. Digital goods have proliferated widely.
Digital photographs, for instance, were first commercialized in 1990 and now are taken
more often than print photographs (Mintel 2009; Said 1990). Similar advances in
technology have given rise to the widespread digitization of many other consumer goods
including books, magazines, newspapers, music, movies, and even academic journals.
Digital goods play a critical role in our modern, increasingly liquid and experiential
world (Bardhi, Eckhardt and Arnould 2012; Gilovich, Kumar, and Jampol, 2015).
Despite the many advantageous features of digital goods, physical goods appear
to retain greater allure. Print books are still the dominant format, and there is no upward
trend in the market share of ebooks (Pew Research Center 2016). With regard to home
entertainment spending, physical sales (e.g., Blu-ray) are continuing to grow alongside
sales of video on demand (Digital Entertainment Group 2016). Demand is growing for
physical copies of photographs people already own in a digital format (Amazon 2016;
Perez 2016).

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We suggest that despite the many advantages conferred by digital goods,
comparable versions of physical goods are valued more. We report five experiments
demonstrating that lower value is ascribed to digital goods than physical goods even
before they are acquired. We find that the greater capacity for physical than digital goods
to garner psychological ownership underlies this difference in their value. In line with our
process account, manipulating antecedents and consequents of psychological ownership
(i.e., expected ownership, identity-relevance, and psychological control) moderates this
difference in value. Furthermore, our findings show that features of a good or object, as
opposed to factors latent in the mind of the consumer, can influence whether
psychological ownership is established for a good before it is acquired.
THEORETICAL BACKGROUND
In interviews and qualitative observational research, people appear to prefer
physical goods to digital goods, and a variety of theories have been proposed to explain
this preference. Drawing from interviews of music collectors, Giles, Pietrzykowski, and
Clark (2007) suggest that the greater social identity-signal and legacy potential found in
physical recording formats (e.g., LP’s and CD’s) might increase their value relative to
digital recording formats (e.g., MP3’s). Others have posited that physical goods may be
valued more due to their permanence and greater ability to serve as a reminder of the
past. People report perceiving digital objects as unstable, transient, quick, spontaneous,
and ephemeral, and physical goods to be more permanent and stable (Petrelli and
Whittaker 2010). In addition, digital objects are perceived to be less intimate and

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incapable of expressing personal memories. Other qualitative research suggests that the
greater ease of establishing an emotional connection, association with the self, or
attachment to physical goods imbues them with greater value due to their greater
permanence, tangibility, and ability to touch physical goods (e.g., Belk 2013; Siddiqui
and Turley 2006). Not all such theorists are in agreement with regard to the direction of
this effect. Some have argued that this preference is spurious; that people form
attachments to digital products in a way similar to the way they form attachments to
physical products (Lehdonvirta 2012). Digital goods arguably may even have greater
value to particular consumer segments due to their liquid form (e.g., global nomads;
Bardhi et al. 2012).
Each of these theories has its merits, but we propose that this preference is largely
driven by the greater capacity of physical than digital goods to garner psychological
ownership. The materiality of physical goods makes them easier for people to touch,
manipulate, and move compared to digital goods, and these actions critically advantage
physical goods in the capacity to garner psychological ownership (Furby 1980; Peck and
Shu 2009; Pierce, Kostova, and Dirks 2003). Consequently, physical goods should
benefit more from the value-enhancing effects of psychological ownership than similar
digital goods. We unpack our theory in more detail below.
First, manipulating and touching objects establishes perceived control, a key
antecedent to psychological ownership, in a variety of contexts. People touch an object in
a public space to establish that it is in their possession or to establish it as their territory
and deter others from using it (Werner, Brown, and Damron 1981). High status people

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touch low status people to establish their control over them (Henley 1973). Even
imagined touch can increase the perception that one has claim to a good (Peck, Barger,
and Webb 2013). Holding a good establishes both a feeling of ownership and sense of
possession over it (Reb and Connolly 2007). Because physical goods are by definition
material goods, they are easier to directly hold, touch, manipulate, and thus establish
control over (Peck and Shu 2009; Pierce et al. 2003; Reb and Connolly 2007) than
immaterial digital goods. Because perceived control is a key antecedent to psychological
ownership, physical goods may thus have a greater capacity to garner psychological
ownership than digital goods.
Once psychological ownership is established for a good, an attachment to that
good is formed (i.e., a possession-self link), whereby the good is associated with and
incorporated into the self-concept (Beggan 1992; Belk 1988; Chatterjee, Irmak, and Rose
2013; Morewedge and Giblin 2015; Weiss and Johar 2013). Because people tend to
entertain unrealistically positive perceptions of themselves, a consequence of this
association of a good with the self is an increase in its perceived value (e.g., Beggan
1992; Dommer and Swaminathan 2013; Morewedge et al. 2009; Perkins and Forehand
2012; Shu and Peck 2011). Because of their greater capacity to garner psychological
ownership, physical goods should benefit more from the value-enhancing effects of this
possession-self link––this mere ownership effect—and should be valued more than
equivalent digital goods.
Differences in the capacity of digital and physical goods to garner psychological
ownership should influence their perceived value even at the point of acquisition. In

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many cases, people extend psychological ownership to goods even before they are owned
(e.g., Kim and Johnson 2014; Peck et al. 2013; Reb and Connolly 2007; Sen and Johnson
1997). Actions common to the acquisition process, such as imagining that one owns a
good, touching a good, or holding a good in one’s physical possession are sufficient to
increase perceived psychological ownership for a good before its acquisition (Kim and
Johnson 2014; Peck et al. 2013; Reb and Connolly 2007; Sen and Johnson 1997).
Moreover, whether one expects to own a good in the future trumps actual ownership in
the establishment of psychological ownership for the good (e.g., Ericson and Fuster 2011;
List 2003).
HYPOTHESES AND EXPERIMENTS
We propose that digital goods are valued less than equivalent physical goods, and
that this difference is due to the greater capacity of physical goods to garner
psychological ownership than digital goods. We base our hypothesis on the assumption
that the materiality of physical goods imbues consumers with a greater sense of perceived
control over physical goods than equivalent digital goods, which should induce a greater
perception of psychological ownership for physical than digital goods (Henley 1973;
Peck et al. 2013; Peck and Shu 2009; Pierce et al. 2003; Werner et al. 1981). As a
consequence of the greater psychological ownership with which they are imbued, a
stronger possession-self link is formed. The value-enhancing effects of this association
(i.e., mere ownership effect) should then induce a higher valuation for physical goods
than for equivalent digital goods. As psychological ownership can be established before

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goods are acquired (Kim and Johnson 2014; Peck et al. 2013; Reb and Connolly 2007;
Sen and Johnson 1997), this difference in value between physical and digital goods
should be observed even at the stage of acquisition, when consumers are considering
whether to acquire goods (e.g., buy or rent them).
An overview of our general theoretical model is illustrated in Figure 1. Solid lines
indicate explicit assumptions that we test directly. Dashed lines indicate implicit
assumptions that we test indirectly.
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Insert figure 1 about here
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Of course, digital goods are not always valued less than similar physical goods.
The antecedents and consequents of psychological ownership that are implicit in our
model (indicated by dashed lines in Figure 1), suggest at least three boundary conditions
under which this difference in value should be mitigated. First, as expected ownership is
an antecedent of psychological ownership (e.g., Ericson and Fuster 2011), the greater
value ascribed to physical than digital goods should be smaller when people do not
expect to own or keep a good (e.g., rented goods; tested in Experiment 3). Second, as the
value enhancing effects of psychological ownership are predicated on the association it
creates between the good and the self (Morewedge and Giblin, 2015), the greater value of
physical than digital goods should be greater for goods easily incorporated into the self-

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concept and smaller for goods that are difficult to incorporate into the self concept (e.g.,
identity-relevant and identity-irrelevant goods, respectively; tested in Experiment 4).
Third, because perceived control is an antecedent of psychological ownership (e.g., Furby
1980; Peck and Shu 2009; Pierce et al. 2003), the greater value of physical than digital
goods should be diminished for people who deem having control over their external
world to be relatively unimportant (i.e., people low in need for control); the difference in
the materiality and perceived controllability of the goods should be weaker determinants
of the degree to which they feel psychological ownership for a good (tested in
Experiment 5).
All five experiments we report directly test our proposed basic effect: that people
value physical goods more than digital goods (e.g., books, movies, photographs). Our
research complements earlier observational research by empirically testing this difference
in valuation. We propose that people ascribe greater value to physical goods than to
analogous digital goods. More formally,
H1: All else equal, people value physical goods more than digital goods.
We test our first hypothesis in five experiments using three value-elicitation mechanisms:
whether people will pay more for physical than digital goods in a Pay-What-You-Want
paradigm (PWYW; Experiment 1), are willing to pay more for physical than for digital
goods (WTP; Experiments 2, 3, and 5), and report higher purchase intention for physical
than for digital goods (PI; Experiment 4).

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Second, we hypothesize that consumers value physical goods more than digital
goods because the materiality of physical goods imbues them with a greater capacity to
garner psychological ownership (i.e., M1 in Figure 1). Formally,
H2: A greater capacity to garner psychological ownership underlies the greater
value ascribed to physical than digital goods.
We test our proposed psychological ownership mechanism in three ways. First, we
directly measured whether differences in psychological ownership for physical and
digital goods mediates the difference in value they are ascribed in Experiments 2 and 5.
Second, we indirectly tested our psychological ownership mechanism by examining
whether manipulating one of its antecedents and one of its consequents (i.e., expected
ownership and the identity-relevance of a good, respectively) would moderate the greater
value ascribed to physical than digital goods in Experiments 3 and 4. Third, we tested
whether individual differences in the importance of perceived control – an antecedent to
psychological ownership - would moderate the mediating effects of psychological
ownership on the greater value ascribed to physical than digital goods in Experiment 5.
The moderated mediation paradigm in Experiment 5 also allowed us to test
whether perceived control indeed plays a pivotal role in the greater capacity of physical
than digital goods to garner psychological ownership. Formally,

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H3: The perception that greater control can be exerted over physical than digital
goods underlies the greater capacity for physical than digital goods to garner
psychological ownership.
In a moderated mediation design, we predicted that people lower in need-for-control
(NFC), who do not place a premium on having control over their environment relative to
people higher in NFC, would be less likely to exhibit greater psychological ownership for
physical than digital goods, and would consequently be less likely to ascribe them
different value.
We also test alternative plausible mechanisms for the difference in the value
ascribed to physical and digital goods including differences in their perceived production
cost (Experiments 1 and 5), resale value (Experiments 1 and 3), consumption utility
(Experiment 2), permanence (Experiment 2), and retail price (Experiment 5). We
acknowledge that several of these factors are likely to orthogonally contribute to existing
differences in the value ascribed to physical and digital goods, however, we suggest that
none can account for the unique and important role of psychological ownership.
Our research also elucidates two related phenomena: First, whether an internal
feature of an object (e.g., its materiality) influences its capacity to garner psychological
ownership. The determinants of psychological ownership identified, to date, have all been
intrapersonal psychological phenomena. Second, our research tests a novel moderator
determining whether psychological ownership for a good is established before the good is
acquired.

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We report all measures, stimuli, and participants collected, as well as all
participant exclusions for every experiment in this paper.
EXPERIMENT 1: PWYW FOR DIGITAL AND PHYSICAL SOUVENIRS
We first tested whether people would ascribe greater value to a physical good
than its digital counterpart in an incentive-compatible field experiment using a “pay-
what-you-want” design (PWYW; Gneezy et al. 2012). Tourists visiting Old North
Church in Boston, MA, which has a symbolic association with the American Revolution
(Fischer 1994), were given a physical or digital souvenir photograph of themselves with a
research assistant dressed as Paul Revere. Physical photographs were taken with an
instant camera (akin to a Polaroid). Digital photographs were taken with a 13-megapixel
camera. Participants were then solicited for a donation equivalent in value to their
photograph (≥ $0) to the historical society maintaining the church. After making their
donation, participants estimated the production cost of their photograph. We predicted
that participants would pay more for the physical than digital souvenir photograph, a
difference that would not be explained by any difference in their production costs
estimates.
An additional benefit of this design was that it controlled for differences in resale
value. None of our participants were famous, so both physical and digital photographs
had no secondary market value (i.e., $0 resale value).

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Method
Participants
Eighty-six tourists visiting the Old North Church in Boston, Massachusetts (53
women; Mage = 39.40, SDage = 13.50), saw a sign “Take a picture with Paul Revere” and
volunteered to participate in exchange for a photograph with a costumed historical figure
(i.e., a research assistant dressed in period attire as Paul Revere).
Procedure
A research assistant, dressed as Paul Revere, approached tourists one at a time at
the entrance of the church courtyard. He asked, “Would you like a picture with Paul
Revere? You can pay whatever you want for it, including $0. The proceeds will go to the
Old North Foundation, the historical association maintaining this site.” (Upon request,
participants were offered an information sheet explaining its activities.) Each new
participant was recruited after the previous participant completed the study. During
recruitment, the research assistant did not mention the format of the photograph.
Tourists who volunteered were (unknowingly) randomly assigned to receive a
physical or digital souvenir photograph with “Paul Revere.” At this point, participants
were shown a camera by a second experimenter, and learned the format of the
photograph - physical or digital - as it was taken. This photographer stood at a table about
5 meters from the entrance of the church courtyard during recruitment. He took physical
photographs with a Fujifilm Instax Mini 90 instant camera, and took digital photographs
with an LG G2 smartphone 13MP digital camera. The focal subjects in each photograph

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were the participant and “Paul Revere.” Participants in the physical photograph condition
were given the instant printed photograph immediately, as it began to develop.
Participants in the digital photograph condition were immediately emailed the digital
photograph.
Participants then made their donations before they could examine the photograph.
The instant photograph took a few minutes to develop, and the email containing the
digital photograph took a few minutes to arrive. In the interim, all participants then
indicated their email address, their donation amount, gender, and age in a paper and
pencil survey. Finally, participants were asked to flip the page and estimate “the
approximate cost of all study materials, per photograph, to the researchers (wages,
materials, and costume).”
Results
Due to the high frequency of $0 donations, donation amounts were highly skewed
(skewness = 2.72 > 1.96 in the physical condition; skewness = 3.06 > 1.96 in the digital
condition), suggesting that non-parametric or transformed analyses were the most
appropriate methods (Wilcox 2010) to analyze the PWYW responses. For non-parametric
tests, we used the raw responses for donations. For parametric tests, we first transformed
donations with a square-root transformation. We illustrate the distribution of donations by
condition in Figure 2.
As predicted, tourists in the physical condition (Median = $3.00; M of the SQRT
of payments = $1.57, SD of the SQRT of payments = 0.98) paid more than did tourists in
the digital condition (Median = $1.00; M of the SQRT of payments = $1.02, SD of the

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SQRT of payments = 1.13; Mann-Whitney U = 1,182, z = 2.32, p = .02, r = .25). Cost
estimates were not skewed (skewness = .22 < 1.96 in the physical condition; skewness = |-
0.007| < 1.96 in the digital condition) and did not differ across conditions (Mphysical =
$2.90, SDphysical = 1.49; Mdigital = $2.89, SDdigital = 1.37; t < 1). Estimated cost was not a
significant predictor of the square root of payment when included as a covariate in an
ANCOVA (F(1, 82) = 0.008, p = .93, ηp2 < .001), nor did its inclusion influence the main
effect of condition (i.e., digital versus physical) on how much participants paid for the
photographs (F(1,82) = 5.89, p = .02, ηp2 = .07).
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Insert figure 2 about here
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Discussion
Tourists in this field experiment paid more for a physical than digital souvenir
photograph. The non-resalable nature of the photographs and the equivalent estimates of
their production costs suggest that this difference cannot be attributed to differences in
their resale value or production costs. The results thus provide strong evidence for our
hypothesis that consumers value physical goods more than analogous digital goods in an
incentive-compatible setting (H1). It is possible, however, that these effects are
idiosyncratic to photographs. People may consider it unusual to pay for smartphone
pictures. We directly addressed this alternative explanation and the generalizability of our

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finding in Experiment 2, by testing the value ascribed to two other digital and physical
goods that consumers regularly purchase (i.e., books and films) with a different value
elicitation procedure, WTP.
EXPERIMENT 2:
PSYCHOLOGICAL OWNERSHIP AS UNDERLYING MECHANISM
We directly tested whether the greater capacity for physical than for digital goods
to garner psychological ownership (H2) underlies their greater perceived value in
Experiment 2. We measured psychological ownership directly to test whether it might
mediate the relationship between product format and value as elicited with WTP. We also
examined whether two alternative potential mechanisms might drive the higher valuation
of physical than digital goods: the perceived permanence of those goods (McCourt 2005;
Petrelli and Whittaker 2010) and their anticipated consumption utility. People may
believe that a physical book is more valuable because they are more likely to be able to
use it in 20 years, for instance, or that it is more enjoyable to read from the printed page
than from an e-reader.
Method
Participants
Four hundred one Amazon Mechanical Turk workers (168 women, Mage = 32.68,
SDage = 10.08) completed the experiment for $0.50.
Procedure

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Each participant first reported how much he or she would be willing to pay for a
physical or digital copy of either a book (i.e., Harry Potter and the Sorcerer’s Stone;
printed or Kindle) or a movie (i.e., Dark Knight; DVD or iTunes). WTP was elicited with
an open-ended response box. Participants simply entered the maximum amount of money
that they were willing to pay for the good.
As measures of psychological ownership for the good (Peck and Shu 2009; Shu
and Peck 2011) all participants indicated the extent to which they would “feel a very high
degree of personal ownership of it”, “feel like I own it,” and “feel like it is mine” if they
purchased that good on three 7-point scales with endpoints, strongly disagree (1) and
strongly agree (7) (α = .94). Participants then completed measures of permanence
(adapted from Pena-Marin and Bhargave 2016) by indicating the extent to which they
agreed with four statements indicating that the particular format of the book or movie was
permanent, stable, durable, and lasting on 7-point scales with endpoints, strongly
disagree (1) and strongly agree (7) (α = .93). Participants then completed an anticipated
consumption enjoyment measure by indicating the extent to which they would enjoy
watching the movie or reading the book in the format they were assigned to on a 7-point
scale with endpoints, strongly disagree (1) and strongly agree (7). These scales were
completed in the same order for all participants (i.e., ownership, then permanence, then
anticipated consumption enjoyment); scale items were presented in random order.
Results and Discussion
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Willingness to Pay

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WTP was not skewed, except for values ascribed to digital books (skewmovie, digital
= 1.27 < 1.96, skewbook, digital = 5.63 > 1.96, skewmovie, physical = 0.68 < 1.96, skewbook, physical
= 1.15 < 1.96); therefore it was not transformed. The transformed data yield results
similar to those reported below.
Valuation was examined in a 2(product type: movie, book) × 2(product format:
physical, digital) between-subjects ANOVA, which revealed a significant main effect of
product format (F(1, 397) = 21.41, p < .001; ηp2 = .05) on WTP such that participants
were WTP more for physical (M = $9.30, SD = 6.55) than digital goods (M = $5.96, SD =
7.60). It did not reveal a significant main effect of product type (Mbook = $8.32, SDbook =
8.82; Mmovie = $6.93, SDmovie = 5.28; F(1, 397) = 3.05, p = .08; ηp2 = .008) or a significant
product format by product type interaction (F(1, 397) = 0.80, p = .37; ηp2 = .002). As
illustrated by Figure 3, simple contrasts revealed that participants were WTP more for the
physical format of the book (M = $9.59, SD = 7.25) than the digital format (M = $6.94,
SD = 10.13; F(1, 397) = 6.91, p = .009; ηp2 = .02), and more for the physical format of the
movie (M = $8.98, SD = 5.72) than the digital format (M = $5.07, SD = 4.06; F(1, 397) =
15.35, p < .001, ηp2 = .04).
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Insert figure 3 about here
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Process Measures

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Psychological ownership was examined in a 2(product type: movie, book) ×
2(product format: physical, digital) between-subjects ANOVA, which revealed main
effects of product format (Mphysical = 6.04, SDphysical = 1.03; Mdigital = 4.69, SDdigital = 1.57;
F(1, 397) = 102.72, p < .001; ηp2 = .21) and product type (Mbook = 5.53, SDbook = 1.35;
Mmovie = 5.20, SDmovie = 1.60; F(1, 397) = 4.02, p = .046; ηp2 = .01) but no significant
product format by type interaction (F(1, 397) = 0.60, p = .44; ηp2 = .001). Simple
contrasts revealed that for both products, participants reported higher psychological
ownership for physical than digital goods. They felt greater psychological ownership for
the physical format of the book (M = 6.12, SD = 0.88) than the digital format (M = 4.88,
SD = 1.48; F(1, 397) = 43.52, p < .001; ηp2 = .10), and greater psychological ownership
for the physical format of the movie (M = 5.96, SD = 1.17) than the digital format (M =
4.51, SD = 1.64; F(1, 397) = 59.92, p < .001, ηp2 = .13).
Permanence was examined in a 2(product type: movie, book) × 2(product format:
physical, digital) between-subjects ANOVA, which revealed main effects of product
format (Mphysical = 5.72, SDphysical = 1.11; Mdigital = 4.76, SDdigital = 1.50; F(1, 397) = 51.98,
p < .001; ηp2 = .12) and product type (Mbook = 5.43, SDbook = 1.25; Mmovie = 5.05, SDmovie =
1.52; F(1, 397) = 6.84, p = .009; ηp2 = .02) but no product format by product type
interaction (F(1, 397) = 0.11, p = .75; ηp2 < .001). Simple contrasts revealed that
participants rated the physical format of the book (M = 5.87, SD = 0.92) to be more
permanent than the digital format (M = 4.96, SD = 1.39; F(1, 397) = 23.53, p < .001; ηp2
= .06), and the physical format of the movie (M = 5.57, SD = 1.26) to be more permanent
than the digital format (M = 4.58, SD = 1.58; F(1, 397) = 28.59, p < .001, ηp2 = .07).

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Enjoyment was examined in a 2(product type: movie, book) × 2(product format:
physical, digital) between-subjects ANOVA, which revealed no main effect of product
format (Mphysical = 5.79, SDphysical = 1.20; Mdigital = 5.84, SDdigital = 0.97; F(1, 397) = 0.19,
p = .67; ηp2 < .001), product type (Mbook = 5.77, SDbook = 1.16; Mmovie = 5.85, SDmovie =
1.02; F(1, 397) = 0.54, p = .46; ηp2 = .001), or product format by product type interaction
(F(1, 397) = 0.01, p = .91; ηp2 < .001). Simple contrasts revealed that participants rated
the physical (M = 5.83, SD = 1.12) and the digital format of the book (M = 5.80, SD =
1.03) as producing similar consumption utility (F(1, 397) = 0.15, p = .70; ηp2 < .001).
They also rated the physical (M = 5.74, SD = 1.28) and the digital format of the movie (M
= 5.87, SD = 0.92) as producing similar consumption utility (F(1, 397) = 0.05, p = .82,
ηp2 < .001).
As product format had no effect on enjoyment, enjoyment was dropped from the
list of potential mediators. Since the effect of format did not depend on product type (the
product format by product type interaction was not significant for all of the dependent
measures), we collapsed across product type in our mediation.
Mediation Analysis
We conducted a mediation analysis, simultaneously testing whether the
differences observed in psychological ownership or permanence would mediate the
observed differences in value for physical and digital goods. As recommended by Hayes
(2013), we examined confidence intervals (CI) using 5,000 bootstrap iterations. The
analysis included both product types. Product format was coded as 0 when the participant

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was randomly assigned to consider a digital product, 1 when the participant was
randomly assigned to consider a physical product.
As predicted, the indirect effect through ownership (0.96, 95% CI [0.21, 2.08])
was significant, but the indirect effect through permanence (0.20, 95% CI [-0.32, 0.68])
was not significant. The direct effect of product format was significant (2.18, 95% CI
[0.62, 3.74]), indicating partial mediation by ownership. The direction of the effects in
the mediation analysis (Figure 4) indicate that the physical format led to stronger
establishment of psychological ownership, which in turn contributed to higher WTP.
––––––––––––––––––––––––
Insert figure 4 about here
––––––––––––––––––––––––
EXPERIMENTS 3 AND 4:
BOUNDARIES PREDICTED BY PSYCHOLOGICAL OWNERSHIP
In Experiments 3 and 4, we tested our psychological ownership account (H2) of
the greater value ascribed to physical than digital goods by testing if the effect is bounded
by moderating well-established antecedents (Experiment 3) and consequents (Experiment
4) of psychological ownership. While both experiments indirectly examined our
psychological ownership hypotheses, their experimental designs could have provided
unique evidence for or against our process account, beyond the test of multiple mediators
conducted in Experiment 2 (Zhao, Lynch, and Chen 2010).

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Our first test of moderation examined expected ownership, as perceived
ownership of a good in the present is contingent on whether one expects to own that good
in the future (Ericson and Fuster 2011; List 2003). We manipulated expected future
ownership in Experiment 3 by asking business students how much they were WTP to rent
or buy either a digital or physical textbook for a course in which they were enrolled.
Because rented textbooks are returned at the end of the semester, students randomly
assigned to consider a rented textbook should not expect to own it. While we did not
measure psychological ownership directly in Experiment 3, renting should thus impair
the establishment of psychological ownership for a textbook relative to purchasing it. As
we posit that psychological ownership is not readily established with digital products
regardless of whether they are purchased or rented, our theory suggests the difference
between psychological ownership for digital and physical books should thus be smaller if
they are rented than purchased. Consequently, the difference in WTP for digital and
physical books should be smaller if they are rented than purchased.
To address differences in the potential resale value of physical and digital
textbooks, we told all students that the textbook was in the last year of its current edition
and would have $0 resale value after they finished the course. These instructions
mitigated the possibility that students would be WTP more for the physical version
because they could later sell it as a used book and recoup its price. Note that this
addresses the potential for resale in a different manner than Experiment 1, which used
products with no resale value (i.e., personal souvenir photographs).

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Our second test of moderation examined the boundary effect of a consequent of
psychological ownership by manipulating the strength of the value-enhancing association
between a good and the self (for a review, see Morewedge & Giblin 2015). In
Experiment 4, we tested whether the difference in value ascribed to physical and digital
goods would be moderated by the identity-relevance of goods, which influences the ease
of establishing such an association between a good and the self (e.g., Dommer and
Swaminathan 2013). Participants indicated the identity-relevance of several film series
(e.g., Star Wars, The Fast and the Furious), and then indicated their purchase intention
for either a DVD or a digital copy of The Empire Strikes Back, a film from the Star Wars
series. Because an association between a good and the self –– a “possession-self link” ––
is less likely to develop when a good is irrelevant to the identity of the consumer (e.g., a
plain undershirt) than when the good is highly relevant to the identity of the consumer
(e.g., a university t-shirt; Dommer and Swaminathan 2013; Morewedge and Giblin 2015;
Weiss and Johar 2013, 2016), we predicted that the difference between purchase
intentions for a DVD and digital copy of The Empire Strikes Back would be higher for
participants who more strongly identified with the Star Wars series relative to other
movie series. The use of purchase intention in this experiment had the added benefit of
empirically testing whether consumers also prefer physical to digital goods that are
similarly priced, which is implied by the relatively limited market share of digital goods
(Digital Entertainment Group 2016; Pew Research Center 2016).
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EXPERIMENT 3: MODERATION BY EXPECTED OWNERSHIP
Method
Participants
Two hundred seventy five undergraduate business majors at Boston University
(168 women; Mage = 19.56, SDage = 3.15) participated in the experiment for course credit.
Procedure
Students considered a vignette in which they had to acquire a textbook for a
course in which they were currently enrolled. It specified that the textbook was, “in the
last year of its current edition, so it will have no resale value when the course is over.”
In a between-subjects design, students reported the maximum price they would
pay to either purchase the textbook or to rent the textbook for 180 days, in either a
physical or digital format (i.e., a new printed copy or a digital Kindle copy of the
textbook). Students indicated their WTP in an open-ended format as in Experiment 2.
Results
WTP was not skewed, except for values ascribed to digital textbook purchases
(skewrent, digital = 1.87 < 1.96, skewbuy, digital = 2.91 > 1.96, skewrent, physical = 1.52 < 1.96,
skewbuy, physical = 1.75 < 1.96); therefore it was not transformed. The transformed data
yield results similar to those reported below.
We examined reported WTP for a textbook with no resale value in a 2(product
format: digital, physical) × 2 (ownership status: rental, purchase), which revealed
significant main effects of product format (Mdigital = $46.05, SDdigital = 40.15; Mphysical =

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$73.50, SDphysical = 52.92; F(1, 271) = 24.33, p < .001, ηp2 = .08), and ownership status
(Mrental = $52.99, SDrental = 32.32; Mpurchase = $66.51, SDpurchase = 60.51; F(1, 271) = 5.74,
p = .02, ηp2 = .02). More important, the analysis revealed the predicted significant product
format by ownership status interaction, (F(1, 271) = 7.87, p = .005, ηp2 = .03). As
illustrated by Figure 5, simple contrasts revealed that students were WTP more to
purchase a physical copy of the textbook (M = $87.81, SD = 65.02) than to rent a
physical copy of the textbook (M = $58.97, SD = 31.13, F(1, 271) = 13.47, p < .001, ηp2 =
.05). By contrast, participants were not WTP more to purchase a digital copy of the
textbook (M = $44.90, SD = 46.89) than to rent a digital copy of the textbook (M =
$47.17, SD = 32.61; F(1, 271) = 0.08, p = .77, ηp2 < .001). Comparing the cells across
product format, participants were WTP similar amounts to rent a physical or digital
textbook (F(1, 271) = 2.27, p = .13, ηp2 = .008), whereas they were WTP more to buy a
physical than digital textbook (F(1, 271) = 29.82, p < .001, ηp2 = .10).
––––––––––––––––––––––––
Insert figure 5 about here
––––––––––––––––––––––––
Discussion
Participants were willing to pay more to own a physical copy of a textbook than a
digital copy of that textbook—even though it would have no future resale value, whereas
participants were not willing to pay more to rent a physical copy of that textbook than a

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digital copy of that textbook. As ownership increases value only for goods one expects to
possess in the future (Ericson and Fuster 2011; List 2003), the results illustrate
moderation of the greater value ascribed to physical than digital goods by expected
ownership. Because the WTP difference disappeared when ownership was not expected,
ownership appears to be a critical factor explaining the difference in the value ascribed to
physical and digital goods.
Practically, these results illustrate an important boundary condition for the pricing
of physical and digital goods. They suggest that consumers may not be willing to pay
more for physical than digital services providing them access to consumer goods on a
rental or subscription basis (e.g., movies, music, books).
EXPERIMENT 4: MODERATION BY IDENTITY-RELEVANCE
Method
Participants
Four hundred one Amazon Mechanical Turk workers (177 women, 2 unspecified
gender; Mage = 34.95, SDage = 11.20) completed the experiment for $0.30.
Procedure
All participants first read, “People vary on the extent to which they see different
things as part of their personal self identity. For this study, please indicate the extent to
which each series of movies below is part of your self.” Then they indicated the extent to
which they would describe ten popular movie series as part of their selves on a 7-point

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scale with endpoints, not at all part of my self (1) and very much part of my self (7). The
movie series were labeled: Star Wars (the science fiction movie series), Die Hard (the
action movie series), Halloween (the horror movie series), James Bond (the spy movie
series), Pirates of the Caribbean (the pirate movie series), Rocky (the boxing movie
series), Sex and the City (the romantic comedy movie series), Step Up (the modern dance
movie series), The Fast and the Furious (the automotive movie series), and The
Godfather (the gangster movie series). The information in parentheses was included with
the series titles as a description. Participants rated the movie series in random order.
Next, participants read a short description of the movie The Empire Strikes Back
from the Star Wars series, quoted from the review aggregator website
www.rottentomatoes.com. After reading the description, participants were randomly
assigned to one of two conditions. Participants assigned to the physical format condition
read, “Imagine that you are offered to receive today a DVD of the movie The Empire
Strikes Back for $15.99. How likely would you be to purchase the DVD?” Participants
assigned to the digital condition read “Imagine that you are offered to receive today a
digital copy of the movie The Empire Strikes Back from iTunes for $15.99. How likely
would you be to purchase the iTunes movie? (An iTunes movie is downloaded online.)”
All of the participants indicated their purchase likelihood on a 7-point scale with
endpoints, very unlikely (1) and very likely (7). Immediate delivery was included in these
descriptions to mitigate potential differences in the perceived ease of purchasing the
movie in different formats or any perceived difference in the delivery of the movie.

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Then, all of the participants indicated whether they already owned “a physical
copy (for instance a DVD or a Blu-ray Disc) of the movie The Empire Strikes Back”, “a
digital copy (for instance from iTunes, Amazon, or Google Play) of the movie The
Empire Strikes Back”, and answered demographic questions.
Results
Participants reported a higher purchase intention for a physical (M = 2.57, SD =
1.76) than digital copy of The Empire Strikes Back (M = 2.20, SD = 1.63; t(399) = 2.16, p
= .03, d = 0.22). In the analysis that follows, we tested whether identity relevance
moderated this effect. We added previous ownership of the movie in both formats as
statistical controls; analyses without these controls yield similar results.
To calculate the identity-relevance of the Star Wars series for each participant, we
used its rank among the ten series. For instance, if a participant gave Star Wars the
highest identity relevance rating out of all ten series, that participant’s rank for Star Wars
was coded as 10 (if lowest then 1). Mean rank numbers were assigned to ties. For
instance, if a participant gave Star Wars and James Bond the same identity relevance
rating, and each of the remaining eight series lower ratings, that participant’s rank for
Star Wars was coded as 9.5. We reasoned that relative ranking is a more sensitive
measure of identity-relevance than the score of Star Wars in isolation because it controls
for individual differences in interpreting the identity-relevance question (alternative ways
to measure identity relevance, discussed below, yield similar effects).

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We tested the moderating effect of identity-relevance by regressing purchase
intention on product format, identity-relevance, and their interaction as explanatory
variables, and existing ownership of a physical and a digital copy as statistical controls.
Product format was coded as in Study 2 (i.e., digital = 0, physical = 1).
Whereas product format (b = -0.56, t(395) = -1.18, p = .24, 95% CI [-1.50, 0.37])
and identity-relevance (b = 0.01, t(395) = 0.28, p = .78, 95% CI [-0.08, 0.11]) did not
significantly predict purchase intention, their interaction did (b = 0.13, t(395) = 2.06, p =
.04, 95% CI [0.01, 0.26]), indicating that identity-relevance moderated the relationship
between product format and purchase intention. Among the statistical controls, existing
ownership of a physical copy of the movie significantly predicted purchase intention (b =
0.56, t(395) = 3.01, p = .003, 95% CI [0.19, 0.93]). Existing ownership of a digital copy
had a marginal effect on purchase intention (b = 0.49, t(395) = 1.78, p = .08, 95% CI [-
0.05, 1.02]).
The difference between the purchase intention for the physical and digital copies
increased (in favor of the physical) for participants who considered Star Wars to be more
relevant to their identity than other movie series (Figure 6): the conditional effect of
product format on purchase intention at -1 SD of identity relevance (i.e., at ranking =
4.45) was 0.02 and not statistically significant (t(395) = 0.09, p = .92, d = .01, 95% CI [-
0.43, 0.48]), at the mean (i.e., at ranking = 7.01) it was 0.36 (t(395) = 2.19, p = .03, d =
.22, 95% CI [0.04, 0.68]), and at +1 SD (i.e., at ranking = 9.57) it was 0.70 (t(395) =
3.00, p = .003, d = .30, 95% CI [0.24, 1.15]).

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––––––––––––––––––––––––
Insert figure 6 about here
––––––––––––––––––––––––
The results of Experiment 4 held in similar analyses using alternative coding of
identity-relevance, and other statistical controls. A similar regression analysis with the
less sensitive raw identity-relevance ratings of Star Wars as a proposed moderator
yielded a marginally significant interaction effect b = 0.13, t(395) = 1.16, p = .097, 95%
CI [-0.02, 0.28], and conditional effects with a similar structure as reported above. A
regression analysis with the Z-scored identity-relevance ratings of Star Wars as a
proposed moderator, where normalization was done within individual (i.e., using the
mean and standard deviation of each individual for normalizing), yielded similar results
with a marginally significant interaction effect b = 0.26, t(352) = 1.72, p = .086, 95% CI
[-0.04, 0.56]. Finally, adding gender and age as additional statistical controls to the
reported analyses, to account for the movie series’ potentially different appeal to different
demographic groups, led to similar results and these controls did not predict purchase
intention (t’s < 0.7).
Discussion
Participants reported a higher purchase intention for a physical than digital copy
of a popular movie, but this effect of product format was moderated by the identity-
relevance of the good. Participants who identified with Star Wars more than with other
popular movie series exhibited a higher purchase intention for a physical than digital

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copy of the movie, whereas participants who identified with Star Wars less than with
other popular movie series did not exhibit a higher purchase intention for a physical or
digital copy of it. As identity-relevance is an important precursor for the object-self
associations that establish psychological ownership for goods (Dommer and
Swaminathan 2013; Morewedge and Giblin 2015; Weiss and Johar 2013, 2016), its
moderating effect in Experiment 4 provide additional evidentiary support for our theory
that psychological ownership underlies the greater value ascribed to physical than digital
goods.
In addition, as value was elicited via purchase intention in this experiment, the
results suggest that the greater value ascribed to physical than digital goods is not due to
anchoring on different reference prices or production costs. Furthermore, it helps to
elucidate how this effect might hold when both formats are offered, and provide insight
into the relatively low market share of digital goods (Digital Entertainment Group 2016;
Pew Research Center 2016).
EXPERIMENT 5: NEED-FOR-CONTROL AS A PROCESS MODERATOR
In Experiment 5, we tested a third moderator of the greater value ascribed to
physical than digital goods and examined the likely underpinnings of the effect: whether
differences in perceived control underlies the different capacity of digital and physical
goods to garner psychological ownership (H3). We propose that perceived control, an

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antecedent to psychological ownership (Peck and Shu 2009; Pierce et al. 2003), may be
easier for consumers to establish for physical than for digital goods. We tested this
hypothesis by measuring individual differences in NFC (Burger and Cooper 1979; Leotti,
Iyengar, and Ochsner 2010), psychological ownership, and valuation of a physical or
digital good. As being able to control one’s environment is more important for some
people than for others, we expected that differences in this need would influence the
difference in psychological ownership garnered by physical and digital goods. As
perceived control is an important antecedent of psychological ownership (Peck and Shu
2009; Pierce et al. 2003), if it is greater for physical than digital goods, then differences
in psychological ownership for physical and digital goods should be greater for people
with high NFC than for people with low NFC. And due to the value-enhancing effects of
psychological ownership, differences in value ascribed to physical and digital goods
should then be greater for people with high NFC than for people with low NFC.
In Experiment 5, participants indicated their WTP and anticipated psychological
ownership for either a physical or a digital copy of a popular book. We also measured
individual differences in their NFC. In a test of moderated mediation, we expected that
the greater valuation via psychological ownership that is attributed to physical than
digital goods would be moderated by individual differences in NFC. Participants with a
higher NFC should exhibit a greater difference in psychological ownership and value
between physical and digital goods relative to participants with a lower NFC, who should
show no difference in the psychological ownership and value they ascribed to physical
and digital goods. Additionally we asked participants to make estimates of the production

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cost and retail price of the book they evaluated, so that we could statistically control for
the possible effects of these factors on what participants were WTP for the book.
Method
Participants
Two hundred two Amazon Mechanical Turk workers (45.5% female, Mage =
35.90, SDage = 12.71) completed the experiment for $0.30. They were randomly assigned
to either the physical or the digital product condition.
Procedure
Participants in the physical condition read, “Imagine that printed copies of the
new book by an author that you like are available for purchase.” Participants in the digital
condition read, “Imagine that digital copies of the new book by an author that you like
are available for purchase. (Digital books are downloaded online).” Then they indicated
their WTP and anticipated psychological ownership (α = .96) for the book, as in
Experiment 2, in counterbalanced order.
Next, on a separate screen, all participants answered the open-ended questions,
“Please estimate the approximate cost of producing a single printed [digital] copy of the
book that you considered previously in this survey (in USD)” and “In your opinion, what
is the usual retail price of a printed [digital] copy of the book that you considered
previously in the survey (in USD)?”
Participants then completed a four-item need-for-control scale (Rijk et al., 1998):
“I prefer giving orders instead of receiving them”; “I prefer having control over what I do

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and the way I do it”; “I prefer doing my own planning”; “I prefer being able to set the
pace of my tasks.” Items were presented in random order, with responses made on 5-
point scales with endpoints, strongly disagree (1) and strongly agree (5) (α = .69).
Finally, participants reported their age and gender.
Results
Neither question order nor their interaction with product format had an effect on
WTP or psychological ownership. We thus collapsed across question order in all analyses
reported here.
Because WTP, production cost, and retail price estimates were skewed (skewness
> 2.00) except for the retail price estimates of the digital book, these data were square
root transformed; analyses on untransformed data yield similar results.
Participants were WTP significantly more for the printed book (MSQRTWTP = $4.36,
SD = 1.33) than for the digital book (MSQRTWTP = $3.14, SD = 1.32; t(200) = 6.56, p <
.001, d = 0.93). Moreover, this difference was statistically significant (F(1, 198) = 28.16,
p < .001, ηp2 = .13) when controlling for the effects of the square root of retail price
estimates (F(1, 198) = 40.42, p < .001, ηp2 = .17) and the square root of production cost
estimates (F(1, 198) = 0.83, p = .37, ηp2 = .004). As predicted, participants also reported
higher anticipated psychological ownership for the printed book (M = 6.18, SD = 0.84)
than for the digital book (M = 4.78, SD = 1.63; t(200) = 7.69, p < .001, d = 1.09).
In order to test whether differences in perceived control over physical and digital
goods underlie the difference in their capacity to garner psychological ownership, we

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conducted a moderated mediation analysis. We examined whether individual differences
in NFC moderate the a path of our model in which differences in psychological
ownership mediate the greater willingness to pay for physical than digital goods (Figure
7). We tested the model with 5,000 bootstrap iterations, as in Experiment 2. Product
format was coded as in the previous studies (i.e., digital = 0, physical = 1).
As predicted, the indirect effect through psychological ownership was significant
and greater for participants with higher NFC: indirect effects 0.21 [0.07, 0.49], 0.32
[0.15, 0.58], and 0.43 [0.22, 0.75] for NFC levels 3.48, 4.04, and 4.61, respectively,
corresponding to the mean NFC and plus or minus one standard deviation from the mean.
The index of moderated mediation was significant (95% CI [0.06, 0.44]), indicating that
NFC moderated the mediation through psychological ownership. The direct effect of
product format was significant (95% CI [0.18, 0.86]), indicating partial mediation by
psychological ownership.
The direction of the effects in the mediation analysis (Figure 7) indicates that the
influence of the physical format of the book on its capacity to garner psychological
ownership was stronger for participants with higher NFC, which in turn contributed to
higher WTP, even after the effects of retail price and production cost estimates were
statistically controlled.
––––––––––––––––––––––––
Insert figure 7 about here
––––––––––––––––––––––––

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Discussion
Participants were WTP more for a new book by an author they enjoyed if it was
offered in a physical than digital format, which was due, in part, to the greater capacity
for physical than digital goods to garner psychological ownership. More important, the
results of Experiment 5 suggest that the greater capacity for physical than digital goods to
garner psychological ownership is due to differences in perceived control over those
goods. This hypothesis was supported by the moderated mediation of psychological
ownership via individual differences in NFC. The meditating role of psychological
ownership was present for participants with a higher NFC and absent for participants
with a lower NFC.
In addition, the results provide evidentiary support that the greater value ascribed
to physical than digital goods is not due to obvious differences in their perceived retail
price or production costs. Participants in Experiment 1 also estimated production costs of
their souvenir photograph. Those estimates, however, included factors such as wages and
materials including the photograph and historical figure’s costume, some of which
participants may not have considered spontaneously. Experiment 5 specifically measured
a more standard estimate of production cost, the cost of producing a single copy of the
product. Still, neither production cost nor retail price estimates appeared to influence the
mediating effect of psychological ownership on the relationship between product format
and WTP.

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GENERAL DISCUSSION
Digital goods possess many unique desirable features that their physical
counterparts do not. Yet across a variety of products and elicitation measures, we find
that people ascribe greater value to physical goods than digital goods. In a PWYW field
study, tourists donated more money to charity in exchange for a physical than a digital
souvenir photograph. Americans indicated higher purchase intention and WTP for
physical than digital books and movies. Even business students indicated a higher WTP
to purchase a physical than digital textbooks. These differences were observed when
controlling for potential differences in perceived production costs (Experiments 1 and 5),
retail prices (Experiments 3 and 5), resale value (Experiments 1 and 5), and consumption
utility and perceived permanence (Experiment 2).
The greater establishment of psychological ownership appears to underlie the
higher value ascribed to physical than digital goods. Anticipated psychological ownership
mediated (Experiments 2 and 5) the difference in their value, and antecedents and
consequents of psychological ownership moderated the difference in their value
(Experiments 3 and 4). Furthermore, individual differences in psychological control—a
basic underpinning of psychological ownership—moderated the mediating effect of
psychological ownership on the greater value ascribed to physical than digital goods
(Experiment 5). Of course, there are likely to be other factors that contribute to this
difference in value. Psychological ownership partially but did not fully mediate the
greater value ascribed to physical than digital goods in Experiments 2 and 5, suggesting

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that other yet unidentified factors may also play important roles in their difference in
value.
In addition to further illustrating the important role that psychological ownership
plays in the establishment of value (e.g., Beggan 1992; Morewedge and Giblin 2015;
Pierce et al. 2003; Shu and Peck 2011), our experiments corroborate existing qualitative
research suggesting that people value digital goods less than their physical counterparts
(McCourt 2005; Giles et al. 2007; Petrelli and Whittaker 2010; Siddiqui and Turley 2006;
Belk 2013). Moreover, the results rule out obvious differences in market value,
transaction utility, feature-based utility, and consumption utility, thereby elucidating
which of the many proposed mechanisms underlie the greater value of physical than
digital goods.
Theoretical Implications
Our findings point out at least four new paths for consumer theory. First, the
majority of research on psychological ownership to date has focused on person-oriented
determinants from physical interactions with objects to internal temporary and chronic
psychological processes and states (for reviews, see Belk 2013, Morewedge and Giblin
2015; Pierce et al. 2001; Shu and Peck 2011). Our findings demonstrate that object-
oriented factors play a role in the capacity for objects to garner psychological ownership.
Furthermore, our findings suggest that a variety of object-oriented factors influencing
perceived control, such as the riskiness and autonomy of products, may influence the
extent to which consumers can establish psychological ownership over those products

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(e.g., Waytz et al., 2010). Consumers may never establish the same degree of ownership
for smart technologies (e.g., autonomous cars) as for less advanced manually controlled
technologies (e.g., manual cars), for instance, because the self-controlling features of
autonomous devices impair the ability of consumers to feel like those devices are under
their control.
Second, our findings contribute to the growing literature elucidating how
psychological ownership influences the value of goods before their acquisition. They
show how features of a good influence pre-acquisition extension of psychological
ownership to the good, influencing both the value of the good and likelihood of
acquisition. Our work shows that perceived changes in the present or future ownership
status of a good (e.g., Brasel and Gips 2014; Ericson and Fuster 2011; Kim and Johnson
2014; Peck et al. 2013; Peck and Shu 2009; Reb and Connolly 2007) are not the sole
determinants of the extent to which psychological ownership is extended to a good before
it is acquired.
Third, our results inform the distinction between material and experiential
purchases. Material purchases are objects of value such as cars and furniture, whereas
experiential purchases are events that last for only a limited time such as vacations and
concerts (Van Boven and Gilovich 2003). The main finding in this stream of research is
that experiential purchases generally lead to more happiness than do material purchases
(Van Boven and Gilovich 2003; Nicolao, Irwin, and Goodman 2009; Carter and Gilovich
2010). Our findings suggest that because experiential purchases are intangible, consumers

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may undervalue them because they may anticipate feeling less psychological ownership
for material than experiential goods.
Last, an implication of our control account to be tested by future research, is that
consumers may exhibit a greater preference for physical relative to digital goods when
their control is reduced, or when consumers adopt a prevention focus on avoiding risks
(Higgins 1998). Their greater perceived control over physical goods may help restore
their sense of control or reduce risk in uncertain circumstances or surroundings.
Implications for Marketing Strategy
Consumers have responded positively to the liquidity, practicality, and lower cost
of digital goods, as indicated by their proliferation throughout modern life (Bardhi et al.
2012; Denegri-Knott, Watkins, and Wood 2012). Still, digital goods have not replaced
physical goods in any product category including music, movies, and books. Given the
growing market for digital goods (Goldfarb et al., 2015), our findings make at least four
practical, actionable recommendations for marketing strategy.
First, the absence of this reliable difference in value for rented goods in
Experiment 3 suggests that firms offering goods in a subscription or rental format may
not create more value for consumers by offering products in both physical and digital
formats, assuming that consumers see the two formats as perfect substitutes (which they
may not).
Second, our results may help explain why consumers generally view stealing
physical goods to be morally wrong, but view the billion dollars worth of digital piracy in

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which many of them engage to be morally acceptable (Lysonski and Durvasula 2008).
Harm inflicted by an action is a basic determinant of the extent to which it is considered
morally blameworthy (Gray, Young, and Waytz, 2012). The lower value ascribed to
digital than physical goods may imbue consumers with the perception that digital piracy
is less harmful to companies and creative content producers than the analogous theft of a
physical good. In other words, if consumers view the value of a pirated PDF of a book to
be lower than the value of a stolen physical copy of a book, they may view its theft as a
less severe moral violation and be more willing to steal it.
A third implication is that psychological ownership for digital goods is
relatively weak and the strengthening of psychological ownership is a potential means to
increase their valuation. Skeuomorphism, adding unnecessary characteristics to digital
goods so they resemble their physical counterparts, is a strategy used in the design of
digital products and user interfaces (Page 2014). Apple employs it by displaying digital
books on a virtual wooden shelf in its iBooks application. Our findings suggest elements
of physical products that increase a feeling of psychological ownership may be most
effective in increasing their desirability and value. Adding features that give consumers
an increased feeling of control over the product (Pierce et al. 2003), such as interacting
with the product by touching it (Brasel and Gips 2014; Peck et al. 2013; Peck and Shu
2009) or increasing their control over it through low-cost customization opportunities
involving them in the production or design of the product (Buechel and Janiszewski
2014; Fuchs, Prandelli, and Schreier 2010), should increase consumers’ feelings of

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psychological ownership for digital goods, their perceived value, and the desirability of
their adoption.
Fourth, links between psychological ownership and valuation are often contingent
on self-enhancement (Beggan 1992; Dommer and Swaminathan 2013; Maddux et al.
2010; Morewedge and Giblin 2015). People with more favorable self-views may exhibit
a stronger preference for physical relative to digital goods. There may also be cultural
effects such that the disparity in value ascribed to physical and digital goods may be
smaller in cultures with less self-enhancing tendencies (e.g., East Asian) than in cultures
where self-enhancement is more acceptable and prevalent (e.g., Western Europe and
North America; Maddux et al. 2010).
Conclusion
The digitization of content and goods has tremendous potential to improve
consumer welfare through means such as increasing access to new information and
technology, reducing pecuniary costs and non-pecuniary costs such as transaction
disutility, as well as reducing the impact of production on the environment (Goldfarb et
al. 2015; Lehdonvirta 2012). Digital goods may be better suited for consumers in an
increasingly mobile and liquid world (Bardhi et al. 2012). As digital goods continue to
improve consumer welfare, however, their potential may face limits imposed by the
architecture of cognition. Our findings illustrate how psychological ownership engenders
a difference in the perceived value of physical and digital goods, yielding new insights
into the relationship between consumers and their possessions.

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44
DATA COLLECTION
The first author supervised the collection of data for all experiments by himself
and research assistants in Boston and online from Spring 2015 to Spring 2017. The first
author analyzed the data with the assistance of the second author. The second author ran
the paper through Statcheck.io, which found 0 errors.

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45
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FIGURE 1
THEORETICAL MODEL
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FIGURE 2
TOURISTS’ DONATIONS FOR A SOUVENIR (PWYW)
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FIGURE 3
WILLINGNESS TO PAY FOR DIGITAL AND PHYSICAL GOODS
Note. Participants were WTP more for popular movies and books in physical than
digital formats Experiment 2. Error bars indicate ±1 SEM.
!
$0
$2
$4
$6
$8
$10
Movie Book
WTP
Digital Physical

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FIGURE 4
PARALLEL MEDIATION MODEL OF WILLINGNESS TO PAY FOR
DIGITAL AND PHYSICAL GOODS
Note. Psychological ownership partially mediated the effect of product format on
WTP in Experiment 2. Numbers annotating curved arrows indicate indirect effects.
Dashed lines indicate paths that are not statistically significant. Bracketed numbers
indicate 95% CI’s. * p < .05, ** p < .01, *** p < .001.
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FIGURE 5
WILLINGNESS TO PAY TO RENT OR BUY A DIGITAL OR PHYSICAL
TEXTBOOK
Note. Participants were WTP more to buy than rent a physical copy of a textbook,
but were not WTP more to buy than rent a digital copy of a textbook in Experiment 3.
Error bars indicate ±1 SEM.
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$0
$20
$40
$60
$80
$100
Digital Physical
WTP for a textbook
Rent Buy

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FIGURE 6
INTENTION TO PURCHASE THE EMPIRE STRIKES BACK BY PRODUCT
FORMAT AND IDENTITY-RELEVANCE OF THE STAR WARS SERIES
Note. Participants who ranked the identity-relevance of the Star Wars series
higher than the Johnson-Neyman point 6.74 (54.86%) exhibited significantly greater
purchase intention for a physical than digital copy of The Empire Strikes Back.
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FIGURE 7
MODERATED MEDIATION MODEL FOR THE SQUARE ROOT OF
WILLINGNESS TO PAY IN EXPERIMENT 5
Note. Psychological ownership partially mediated the effect of product format on
WTP, but that mediation was moderated by NFC in Experiment 5. The three parameter
estimates on the left of the figure indicate the conditional effects of format on ownership
at the mean (a0) and plus/minus one SD from the mean (a1/a-1) of NFC. The effects of the
statistical controls, the square root of production cost estimate and the square root of
retail price estimate, on ownership were 0.01 [-0.07, 0.09] and 0.01 [-0.10, 0.12], and on
the square root of WTP were 0.03 [-0.03, 0.09] and 0.31*** [0.22, 0.40] respectively.
Bracketed numbers indicate 95% CI’s. * p < .05, ** p < .01, *** p < .001.
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HEADINGS LIST
1) THEORETICAL BACKGROUND
1) HYPOTHESES AND EXPERIMENTS
1) EXPERIMENT 1: PWYW FOR DIGITAL AND PHYSICAL SOUVENIRS
2) Method
3) Participants
3) Procedure
2) Results
2) Discussion
1) EXPERIMENT 2: PSYCHOLOGICAL OWNERSHIP AS UNDERLYING
MECHANISM
2) Method
3) Participants
3) Procedure
2) Results and Discussion
3) Willingness to pay
3) Process measures

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3) Mediation analysis
1) EXPERIMENTS 3 AND 4: BOUNDARIES PREDICTED BY
PSYCHOLOGICAL OWNERSHIP
1) EXPERIMENT 3: MODERATION BY EXPECTED OWNERSHIP
2) Method
3) Participants
3) Procedure
2) Results
2) Discussion
1) EXPERIMENT 4: MODERATION BY IDENTITY RELEVANCE
2) Method
3) Participants
3) Procedure
2) Results
2) Discussion
1) EXPERIMENT 5: NEED-FOR-CONTROL AS A PROCESS MODERATOR
2) Method

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3) Participants
3) Procedure
2) Results
2) Discussion
1) GENERAL DISCUSSION
2) Theoretical implications
2) Implications for marketing strategy
2) Conclusion