Abstract

Most prior gift card research based on the mental accounting theory investigated the difference in consumer preference towards product types when different payment methods were used. However, little attention has focused on the influence of the gift card presentation format on consumers’ mental accounting. The purpose of this research is to test the difference in (1) the number of mental accounts that people allocate their budgets and (2) the preference towards product types when the gift card is presented in aggregate form or in segregated form. First, this research hypothesized that the number of mental accounts that people allocate their budgets will be higher in the segregated condition than in the aggregate condition because they perceive physically partitioned gift cards as segregated assets. The findings of this research consistently demonstrated that the budget was allocated into higher number of mental accounts when the gift card was presented in segregated form than in aggregate form (Studies 1-3). Furthermore, this research showed the preference towards hedonic products was lower in segregated (vs. aggregate) gift card condition because the budgets are not easily transferable across different mental accounts (Studies 2-3). The influence of the presentation format on mental accounting was only observed in gift card conditions, but not in cash conditions (Study 3). This research contributes to the literature by demonstrating that people use different mental accounting rules for an aggregate gift card versus segregated gift cards even when the total amount of financial reward is constant. Moreover, this research expands the understanding on preferred product types when gift cards are used as a payment method.