Choice Based on Reasons: The Case of Attraction and Compromise Effects

Citation: Itamar Simonson Choice Based on Reasons: The Case of Attraction and Compromise Effects.
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Summary

When consumers make choices, they usually find it difficult to determine the exact utilities of alternatives, and are therefore uncertain about their preferences. The author in this article proposes that choice under preference uncertainty may be easier to explain in some situations by assuming that decision makers select the alternative that is supported by the "best" reasons. The author states that this approach explains the “attraction effect” and leads to the prediction of the “compromise effect”. Furthermore, he indicates that (1) when brands become compromise alternatives in a set of choices, they increase their share; (2) attraction and compromise effects are usually stronger among subjects who expect to justify their decisions to others; and (3) selections of dominating and compromise brands are associated with more difficult decisions. The author presents studies to examine the ability of a "choice based on reasons" approach to account for the effect of these relations on preferences and finds the following:

• The attraction effect: this research focused on the impact of an expectation to justify decisions on the magnitude of the effect. The studies supported the hypothesis that the attraction effect is stronger among those who expect to be evaluated by others and showed that after adding a dominated alternative, a choice of an asymmetrically dominating alternative is seen easier to justify and less likely to be criticized. The findings also indicate that when decision makers compare the dominating with the non-dominated competitor, they take into account the benefits of the dominating relative to the dominated alternative.
• The Compromise Effect: Studies in this research demonstrate that a similarity effect is not the only effect of a new competitor on the shares of existing alternatives in a choice set and similarity is also not the only reason that the assumption of” independence of irrelevant alternative” is violated. Similar to the attraction effect, the compromise effect was predicted based on the proposition that a search for reasons and a need to be favorably evaluated by others increase the likelihood that decision makers will prefer middle alternatives.

Finally, authors claim, based on his research, that even when the views of the audience are unknown, accountable decision makers use available information to anticipate how particular decisions is evaluated.