Essays on decoy effect in consumer choice behavior

Abstract

Extended abstract newlineThe systematic change in the relative preference between two equi-preferred alternatives caused newlineby the introduction of a new alternative into the choice set is the decoy effect.and#8223; For instance, the newlineintroduction of a moderate-quality, high-price decoy alternative into a binary choice set that newlineconsists of a low-quality/-price alternative (L) and a moderate-quality/-price alternative (H) newlineincreases the choice share of the target alternative H. Since 1982, the decoy effect has been one newlineof the most-discussed and most-documented phenomena in consumer behavior literature. newlineNumerous attempts have been made to explain the decoy effect. However, there is no clear newlineconsensus in the literature regarding its underlying mechanism. Also, its moderating factors are newlinestill not understood clearly. We attempt to bring more clarity regarding the underlying newlinemechanism of the decoy effect and its moderating factors. newlinePrevious studies have reported that individual difference can moderate the decoy effect. newlineHowever, there is a scarcity of literature examining the role of individual difference with respect newlineto the decoy effect. We examine the role of two types of individual differences in thinking style newlineon the decoy effect. Firstly, using a novel priming procedure in two experimental studies, we newlineshow that high (versus low) cognitive reflection amplifies the attraction effect (attraction effect, newlinecompromise effect, and phantom decoy effect are the three types of decoy effect). Secondly, newlineusing an established priming procedure, we demonstrate that analytical (versus holistic) thinking newlinestyle amplifies the compromise effect. newline newlineFurther, the literature is not in consensus regarding the impact of range extension (i.e., the newlinedegree to which the decoy is positioned away from the target alternative) on the attraction effect, and whether asymmetric dominance is a necessary condition of attraction effect.