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A monetary measure of the strength and robustness of the attraction effect

Author

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  • Paolo Crosetto

    (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA [2016-2019] - Université Grenoble Alpes [2016-2019], INRA - Institut National de la Recherche Agronomique)

  • Alexia Gaudeul

    (Georg-August-University = Georg-August-Universität Göttingen)

Abstract

The Attraction Effect has been studied in conditions of indifference among options and measured at the aggregate level. We introduce a new within-subjects design based on induced preferences and psychometrics. Our method yields two individual-level measures: the traditional, frequency measure and a new, monetary indicator. The monetary indicator measures the robustness of the effect to decreases in the relative utility of the target with respect to the competitor. We find choice frequencies consistent with the literature. Our monetary measure shows that subjects still prefer the target up to the point where it is 8% more expensive than the competitor.

Suggested Citation

  • Paolo Crosetto & Alexia Gaudeul, 2016. "A monetary measure of the strength and robustness of the attraction effect," Post-Print hal-01404549, HAL.
    • Handle: RePEc:hal:journl:hal-01404549
    DOI: 10.1016/j.econlet.2016.09.031
    Note: View the original document on HAL open archive server: https://hal.science/hal-01404549
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    References listed on IDEAS

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    1. Simonson, Itamar, 1989. "Choice Based on Reasons: The Case of Attraction and Compromise Effects," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 16(2), pages 158-174, September.
    2. Doron Sonsino, 2010. "The irrelevant-menu affect on valuation," Experimental Economics, Springer;Economic Science Association, vol. 13(3), pages 309-333, September.
    3. Marcel Lichters & Marko Sarstedt & Bodo Vogt, 2015. "On the practical relevance of the attraction effect: A cautionary note and guidelines for context effect experiments," AMS Review, Springer;Academy of Marketing Science, vol. 5(1), pages 1-19, June.
    4. Crosetto, Paolo & Gaudeul, Alexia, 2012. "Do consumers prefer offers that are easy to compare? An experimental investigation," MPRA Paper 41462, University Library of Munich, Germany.
    5. Crosetto, Paolo & Gaudeul, Alexia, 2016. "A monetary measure of the strength and robustness of the attraction effect," Economics Letters, Elsevier, vol. 149(C), pages 38-43.
    6. Marcel Lichters & Marko Sarstedt & Bodo Vogt, 2015. "On the practical relevance of the attraction effect: A cautionary note and guidelines for context effect experiments," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 5(1), pages 1-19, June.
    7. Kroll, Eike Benjamin & Vogt, Bodo, 2012. "The relevance of irrelevant alternatives," Economics Letters, Elsevier, vol. 115(3), pages 435-437.
    8. Paolo Crosetto & Alexia Gaudeul, 2011. "Do consumers prefer offers that are easy to compare? An experimental investigation," Jena Economics Research Papers 2011-044, Friedrich-Schiller-University Jena.
    9. Robert E. Krider & Priya Raghubir & Aradhna Krishna, 2001. "Pizzas: p or Square? Psychophysical Biases in Area Comparisons," Marketing Science, INFORMS, vol. 20(4), pages 405-425, March.
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    11. Huber, Joel & Puto, Christopher, 1983. "Market Boundaries and Product Choice: Illustrating Attraction and Substitution Effects," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 10(1), pages 31-44, June.
    12. Huber, Joel & Payne, John W & Puto, Christopher, 1982. "Adding Asymmetrically Dominated Alternatives: Violations of Regularity and the Similarity Hypothesis," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 9(1), pages 90-98, June.
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    Cited by:

    1. Crosetto, Paolo & Gaudeul, Alexia, 2016. "A monetary measure of the strength and robustness of the attraction effect," Economics Letters, Elsevier, vol. 149(C), pages 38-43.
    2. Gaudeul, Alexia & Crosetto, Paolo, 2019. "Fast then slow: A choice process explanation for the attraction effect," University of Göttingen Working Papers in Economics 386, University of Goettingen, Department of Economics.
    3. Castillo, Geoffrey, 2020. "The attraction effect and its explanations," Games and Economic Behavior, Elsevier, vol. 119(C), pages 123-147.
    4. Paolo Crosetto & Alexia Gaudeul, 2017. "Choosing not to compete: Can firms maintain high prices by confusing consumers?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(4), pages 897-922, December.

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    More about this item

    Keywords

    psychometrics; attraction effect; asymmetric dominance; induced preferences; experimental economics;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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