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Why does context matter? Attraction effects and binary comparisons

Author

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  • Wolfgang R. K�hler

Abstract

A large experimental and empirical literature on asymmetric dominance and attraction effects shows that the probability that an alternative is chosen can increase if additional alternatives become available. Hence context matters and choices and, therefore, market shares can not be accurately described by standard choice models where individuals choose the alternative that yields the highest utility. This paper analyzes a simple procedural choice model. Individuals determine their choice by a sequence of binary comparisons. The model offers an intuitive explanation for violations of regularity such as the attraction and the asymmetric dominance effect and shows their relation to the similarity effect. The model analyzes a new rationale why context matters. The model is applied to explain primacy and recency effects and to derive implications with respect to product design.

Suggested Citation

  • Wolfgang R. K�hler, 2007. "Why does context matter? Attraction effects and binary comparisons," IEW - Working Papers 330, Institute for Empirical Research in Economics - University of Zurich.
    • Handle: RePEc:zur:iewwpx:330
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    File URL: https://www.econ.uzh.ch/apps/workingpapers/wp/iewwp330.pdf
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    Cited by:

    1. MS. Eric Santosa, 2020. "Trying to Deteriorate an Attraction Effect: A Lesson for Challengers," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 9, November.

    More about this item

    Keywords

    Asymmetric dominance; attraction effect; similarity effect; binary choice; primacy effect; recency effect; regularity;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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