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Using Extremeness Aversion to Fight Obesity: Policy Implications of Context Dependent Demand

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  • Kathryn M. Sharpe
  • Richard Staelin
  • Joel Huber
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    Abstract

    This article illustrates how the compromise effect alters consumers' selection of soft drinks. Using three within-subject studies, we show that extremeness aversion and price insensitivity cause consumers to increase their consumption when the smallest drink size is dropped or when a larger drink size is added to a set. As a result rational firms find it best to drop the smaller sizes and add a larger size, thus increasing overall consumption. After estimating each individual's demand as a function of price and drink size availability, policy experiments demonstrate how it is possible to reduce soft drink consumption without additional taxation. (c) 2008 by JOURNAL OF CONSUMER RESEARCH, Inc..

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    File URL: http://www.journals.uchicago.edu/doi/pdf/10.1086/587631
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    Bibliographic Info

    Article provided by University of Chicago Press in its journal Journal of Consumer Research.

    Volume (Year): 35 (2008)
    Issue (Month): 3 (04)
    Pages: 406-422

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    Handle: RePEc:ucp:jconrs:v:35:y:2008:i:3:p:406-422

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    Web page: http://www.journals.uchicago.edu/JCR/

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