Do Exclusivity Rebates Cause Psychological Switching Costs in Consumers?

Firms, be it coffee shops or airlines, often try to bind customers with exclusivity rebates rewarding loyalty. The lab experiment presented in this video reveals that these programs are “sticky”: customers stay in those programs longer than would be “rational”. As ALEXANDER MORELL explains, customers often don’t switch to alternatives even if reaching the rebate becomes improbable. Contrary to common behavioral assumptions, the duration of rebate programs or the size of rebates did not affect the stickiness of the rebate.