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The compromise effect in action: Lessons from a restaurant's menu

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  • Pinger, Pia
  • Ruhmer-Krell, Isabel
  • Schumacher, Heiner

Abstract

The compromise effect refers to individuals’ tendency to choose intermediate options. Its existence has been demonstrated in a large number of hypothetical choice experiments. This paper uses field data from a specialties restaurant to investigate the existence and strength of the compromise effect in a natural environment. Despite the presence of many factors that potentially weaken the compromise effect (e.g., a very large choice set, the opportunity to choose familiar options), we find evidence for it both in descriptive statistics and regression analyses. Options which become a compromise after a change in the choice set gain on average five percent in market share.

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  • Pinger, Pia & Ruhmer-Krell, Isabel & Schumacher, Heiner, 2016. "The compromise effect in action: Lessons from a restaurant's menu," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 14-34.
    • Handle: RePEc:eee:jeborg:v:128:y:2016:i:c:p:14-34
    DOI: 10.1016/j.jebo.2016.04.017
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    Cited by:

    1. Fabio Galeotti & Maria Montero & Anders Poulsen, 2022. "The Attraction and Compromise Effects in Bargaining: Experimental Evidence," Management Science, INFORMS, vol. 68(4), pages 2987-3007, April.
    2. Dertwinkel-Kalt, Markus & Köster, Mats, 2017. "Salient compromises in the newsvendor game," Journal of Economic Behavior & Organization, Elsevier, vol. 141(C), pages 301-315.
    3. Ekström, Mathias, 2018. "The (un)compromise effect," Discussion Paper Series in Economics 10/2018, Norwegian School of Economics, Department of Economics, revised 16 May 2018.
    4. Liang Guo, 2022. "Testing the Role of Contextual Deliberation in the Compromise Effect," Management Science, INFORMS, vol. 68(6), pages 4326-4355, June.
    5. Ekström, Mathias, 2021. "The (un)compromise effect: How suggested alternatives can promote active choice," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 90(C).
    6. Im, Changkuk & Lee, Jinkwon, 2022. "On the fragility of third-party punishment: The context effect of a dominated risky investment option," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 98(C).
    7. Cheng, Yin-Hui & Chuang, Shih-Chieh & Pei-I Yu, Annie & Lai, Wan-Ting, 2019. "Change in your wallet, change your choice: The effect of the change-matching heuristic on choice," Journal of Retailing and Consumer Services, Elsevier, vol. 49(C), pages 67-76.

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    More about this item

    Keywords

    Utility theory; Restaurant data; Compromise effect;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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