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Effect Propensity: The Location of the Reference State in the Option Space as a Determinant of the Direction of Effects on Choice

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Author Info
Simonson, Itamar (Stanford U)
Kramer, Thomas
Young, Maia
Abstract

In a choice between any two options, decision makers can be divided into three segments: those who strongly prefer the first option, those who strongly prefer the second option, and those who might choose either option depending on the particular conditions (“switchers”). In any reference state, such as the experimental control, most switchers are likely to favor one of the two options. Thus, the growth potential of the option favored by switchers in the reference state creates “effect propensity” in the opposite direction, whereby any condition or manipulation applied to the reference state is more likely to increase the share of the other option. We test this proposition in a series of studies in the context of choices between “action” (e.g., a gamble or a higher-price/quality) and “inaction” (e.g., a sure gain or a lower-price/quality) alternatives. The results indicate that a large majority of conceptually unrelated manipulations tend to increase the choice share of “action” alternatives. This effect propensity can be reversed when the “action” alternative is the status quo option in the reference (control) state. We discuss the implications of effect propensity for the interpretation of research findings and theory tests.

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Paper provided by Stanford University, Graduate School of Business in its series Research Papers with number 1788.

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Date of creation: Feb 2003
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Handle: RePEc:ecl:stabus:1788

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Shafir, Eldar & Diamond, Peter & Tversky, Amos, 1997. "Money Illusion," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 341-74, May.
  2. Ferber, Robert, 1977. " Research by Convenience," Journal of Consumer Research: An Interdisciplinary Quarterly, University of Chicago Press, vol. 4(1), pages 57-58, June.
  3. Simonson, Itamar, 1992. "The Influence of Anticipating Regret and Responsibility on Purchase Decisions," Journal of Consumer Research: An Interdisciplinary Quarterly, University of Chicago Press, vol. 19(1), pages 105-18, June.
  4. Simonson, Itamar & Nowlis, Stephen M, 2000. "The Role of Explanations and Need for Uniqueness in Consumer Decision Making: Unconventional Choices Based on Reasons," Journal of Consumer Research: An Interdisciplinary Quarterly, University of Chicago Press, vol. 27(1), pages 49-68, June.
  5. Dhar, Ravi & Nowlis, Stephen M, 1999. "The Effect of Time Pressure on Consumer Choice Deferral," Journal of Consumer Research: An Interdisciplinary Quarterly, University of Chicago Press, vol. 25(4), pages 369-84, March.
  6. Camerer, Colin F. & Hogarth, Robin M., 1999. "The Effects of Financial Incentives in Experiments: A Review and Capital-Labor-Production Framework," Working Papers 1059, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
  7. Bettman, James R & Luce, Mary Frances & Payne, John W, 1998. "Constructive Consumer Choice Processes," Journal of Consumer Research: An Interdisciplinary Quarterly, University of Chicago Press, vol. 25(3), pages 187-217, December.
  8. Huber, Joel & Payne, John W & Puto, Christopher, 1982. " Adding Asymmetrically Dominated Alternatives: Violations of Regularity and the Similarity Hypothesis," Journal of Consumer Research: An Interdisciplinary Quarterly, University of Chicago Press, vol. 9(1), pages 90-98, June.
  9. Ritov, Ilana, 1996. "Probability of Regret: Anticipation of Uncertainty Resolution in Choice," Organizational Behavior and Human Decision Processes, Elsevier, vol. 66(2), pages 228-236, May. [Downloadable!] (restricted)
  10. Lynch, John G, Jr, 1982. " On the External Validity of Experiments in Consumer Research," Journal of Consumer Research: An Interdisciplinary Quarterly, University of Chicago Press, vol. 9(3), pages 225-39, December.
  11. Simonson, Itamar & Nowlis, Stephen M., 2000. "The Role of Explanations and Need for Uniqueness in Consumer Decision Making: Unconventional Choices Based on Reasons," Research Papers 1610, Stanford University, Graduate School of Business. [Downloadable!]
  12. Simonson, Itamar, 1989. "Choice Based on Reasons: The Case of Attraction and Compromise Effects," Journal of Consumer Research: An Interdisciplinary Quarterly, University of Chicago Press, vol. 16(2), pages 158-74, September.
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  1. Dellaert,Benedict G.C. & Stremersch,Stefan, 2004. "Consumer Preferences for Mass Customization," Research Memoranda 044, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization. [Downloadable!]
    Other versions:
    • Dellaert, B.G.C. & Stremersch, S., 2004. "Consumer Preferences for Mass Customization," Research Paper ERS-2004-087-MKT Revision, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni. [Downloadable!]
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