We hypothesized that windfall gains are spent more readily than other
types of assets. Three questionnaire studies supported this hypothesis
and led us to the conclusion that the unanticipated nature of windfal
l gains is responsible for their heightened proclivity to be spent. We
then tested this hypothesis in two studies using actual money. In bot
h studies using money, one group of students was told 1 to 5 days befo
re an experiment that they would be paid for their participation, wher
eas another group was told about the money only after they arrived at
the experiment. In the first of the cash studies, those who were given
no forewarning of the money bet significantly more during a gambling
game than did those who anticipated the payment. In the second cash st
udy, those who did not anticipate the money spent more money at a bask
etball game than did those who anticipated the money. We relate the re
sults of these studies to economic theories and to theories of choice.
(C) 1994 Academic Press, Inc.