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Irregular Demand: The Anti-Compromise Effect in the Field

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Listed:
  • Nicola Gennaioli
  • John List
  • Matthias Rodemeier
  • Gregory Sun

Abstract

Neoclassical demand obeys regularity: adding a good can only draw demand away from existing goods. In a natural field experiment with Lyft covering 7.2 million riders and 47 million choices, we randomize the presence and price of a premium ride. Contrary to regularity, the premium ride raises demand for the cheapest incumbent and for not buying. The effect grows with the premium price and with repeated exposure, and persists in sessions where the premium ride is not displayed. Rational inference and inattention cannot account for these facts. A model in which a surprisingly high price, cued on the app and retrieved from memory, draws attention to prices explains them.

Suggested Citation

  • Nicola Gennaioli & John List & Matthias Rodemeier & Gregory Sun, 2026. "Irregular Demand: The Anti-Compromise Effect in the Field," Natural Field Experiments 00842, The Field Experiments Website.
    • Handle: RePEc:feb:natura:00842
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