How online lottery promotions influence consumer responses toward online retailers

Purpose Existing research on how lottery-based promotions influence consumers’ online decisions and behaviors is limited. Drawing on prospect theory and regret literature, this study investigated the unexpected negative effect of online lottery promotions on consumer responses toward online retailers and the underlying mechanism as well as the boundary conditions. Design/methodology/approach We conducted three experimental studies to test hypotheses. Study 1 explored the main effect of outcome valence and the mediating role of consumer regret. Study 2 examined the moderating effect of dispositional optimism. Study 3 further examined the three-way interaction of outcome valence, dispositional optimism and promotion type. Findings Results revealed a significant effect of lottery promotion outcome valence on consumers’ overall online shopping satisfaction and repurchase intention, which is driven by feelings of regret and moderated by consumers’ dispositional optimism because of the difference in their internal reference point and perceived loss. Promotion type further moderates the above effect. In particular, outcome valence has a greater impact for optimistic consumers than for pessimistic consumers in hedonic, but not in utilitarian, promotions. Originality/value This research explored the adverse effect of online lottery outcome valence on consumer responses and the underlying mechanism. This study is among the first efforts examining the impact of non-price promotions on consumer regret from a prospect theory perspective and in an online context. Our findings also contribute to optimism literature by showing that individual differences in optimism bias can influence consumers’ online consumption decisions and experiences.