When indulgence gets the best of you: Unexpected consequences of prepayment

Consumers often pay for consumption events up front. For example, consumers may pay an entrance fee for a food festival or a VIP pass to skip the line at a nightclub. However, research has yet to investigate how this prepayment affects consumers' subsequent consumption decisions. This paper investigates the effect of prepayment on escalation of commitment and the unexpected effects on subsequent consumption decisions. Specifically, we investigate consumers' inclination to indulge and spend once they have made a prepayment in the form of money or time. Our findings from a field study and two experiments suggest that under certain conditions, prepayment results in increased spending and indulgent consumption.