Abstract:

This study examines the effect of financial constraints on consumers’ variety-seeking behavior. Using different measures of variety-seeking choice, we conducted three experiments to demonstrate that feeling financial constrained increases consumers’ insecurity, which in turn decreases their subsequent variety-seeking behavior. Besides, individuals’ positive illusion is found to moderate the aforementioned effect. The negative effect of financial constraints on variety-seeking behavior only exists among consumers of low positive illusion. For those of high positive illusion, no significant differences are found in their variety-seeking behavior either under the financially-constrained condition or the non-financially-constrained condition.

Key words: Financial constraint, Variety-seeking behavior, Personal insecurity, Positive illusion