Choice in Context: Tradeoff Contrast and Extremeness Aversion

ITAA\AR SIMONSON and AMOS TVERSKY*

Consumer choice is often influenced by the context, defined by the set of alter-natives under consideration. Two hypotheses about the effect of context on choiceare proposed. The first hypothesis, tradeoff contrast, states that the tendency toprefer an alternative is enhanced or hindered depending on whether the tradeoffswithin the set under consideration are favorable or unfavorable to that option. Thesecond hypothesis, extremeness aversion, states that the attractiveness of an optionis enhanced if it is an intermediate option in the choice set and is diminished if itis an extreme option. These hypotheses can explain previous findings (e.g., attrac-tion and compromise effects) and predict some new effects, demonstrated in a seriesof studies with consumer products as choice alternatives. Theoretical and practical

implicotions of the findings are discussed.

Choice in Context: Tradeoff Contrast andExtremeness Aversion

The development of effective marketing strategies re-quires an understanding of the manner in which con-sumers choose among alternatives. It is commonly as-sumed that each alternative has a utility or subjectivevalue, and the consumer selects the alternative with thehighest value. This assumption, called value maximi-zation (VM), underlies the classical economic theory ofthe consumer, and it has been widely used in marketingfor both theoretical and practical purposes. A major im-plication of VM is that the preference between alterna-tives is independent of the context, as defined by the setof alternatives under consideration.' Thus, if the con-sumer prefers brand .x to brand y in one context (e.g.,when only x and y are available), then v cannot be pre-ferred to X in another context (e.g., when a third brand,z, is added to the choice set).

Recent evidence, however, indicates that consumer

'The term "context" is sometimes used in the literature in a broadersense that includes, in addition to the choice set, other characteristicsof the choice environment (see, e.g., Bettman, Johnson, and Payne1991).

•Itamar Simonson is Assistant Professor. Haas School of Business.University of California, Berkeley. Amos Tversky is the Davis BrackProfessor of Behavioral Science, Stanford University.

The article has beneTited from the comments of Jim Bettman andthree anonymous JMR reviewers.

preferences are influenced by the context of choice, con-trary to VM (e.g., Payne, Bettman, and Johnson 1992).For example, under certain conditions, the market shareof a given brand increases rather than decreases when anew brand is introduced. Such findings could have sig-nificant implications for marketers' product line, pt)si-tioning, communications, and competitive strategies. Toincorporate context effects in the analysis of consumerchoice, we need to understand how preferences are in-fluenced by the set of alternatives under consideration.This is the main goal of the present research.

We propose two principles, tradeoff contrast and ex-tremeness aversion, that describe the effect of contexton choice. These principles can account for previousfindings, such as the attraction (or asymmetric domi-nance) effect discovered by Huber. Payne, and Puto(1982) and the compromise effect observed by Simonson(1989). In addition, they lead to new predictions that aretested in the following experiments. We first introducethe two hypotheses and then report the empirical evi-dence.

Tradeoff contrast. Contrast effects are ubiquitous inperception and judgment. The same circle appears largewhen surrounded by small circles and small when sur-rounded by large ones. Similarly, the same product mayappear attractive on the background of less attractive al-ternatives and unattractive on the background of moreattractive alternatives. We propose that the effect of con-trast applies not only to single attributes, such as size or

281

Journal of Marketing ResearchVol. XXIX (August 1992). 281-95

282 JOURNAL OF MARKETING RESEARCH, AUGUST 1992

attractiveness, but also to the tradeoffs between attri-butes .

Consider the choice between options that vary on twoattributes. If neither option dominates the other, thecomparison between them involves an evaluation of dif-ferences along the two attributes. Suppose x is of higherquality and y has a better price. The decision between xand y, then, depends on whether the quality differenceoutweighs the price difference, or equivalently on thetradeoff between price and quality implied by these op-tions. According to the tradeoff contrast hypothesis, thechoice between x and y is influenced by other impliedtradeoffs in the set of options under consideration. Inparticular, the tendency to prefer x over y will be en-hanced if the decision maker encounters other compar-isons in which the exchange rate between price and qual-ity is higher than that implied by x and y. Consider, forexample, a consumer who is evaluating two personalcomputers; one has 960K memory and costs $1200 (x)and the other has 640K memory and costs $1000 (y).The choice between x and y then depends on whetherthe consumer is willing to pay $200 more for an addi-tional 32OK of memory. The tradeoff contrast hypothesispredicts that the consumer is more likely to select Jt ifthe choice set includes pairs of options for which the costof additional memory is greater than that implied by thecomparison between x and y.

Extremeness aversion. One of the major fmdings thathas emerged from the analysis of both risky and risklesschoice is the presence of loss aversion: outcomes thatare below the reference point (losses) are weighted moreheavily than outcomes that are above the reference point(gains). Loss aversion explains a variety of phenomena,such as the status quo bias, the buying-selling discrep-ancy, and the endowment effect (Kahneman, Knetsch,and Thaler 1991; Tversky and Kahneman 1991). To ex-plain the effect of context, we extend the notion of lossaversion to advantages and disadvantages that are de-fined in relation to the other available alternatives, ratherthan in relation to a neutral reference point. A consumerwho considers three VCRs that differ in quality and price,for example, is likely to evaluate the advantages and dis-advantages of these products in relation to each other.Suppose X has the highest quality and price, z has thelowest quality and price, and y is intermediate on bothattributes. The assumption that disadvantages loom largerthan the respective advantages tends to favor the inter-mediate option y, because it has only small disadvan-tages in relation to the other options. This is the extreme-ness aversion hypothesis.

Method. The effects of context on choice were ex-amined in a series of 22 experiments. The number ofparticipants in each experiment ranged from 100 to 220,with about equal numbers of men and women. The sub-jects were undergraduate and graduate students of busi-ness administration (about two-thirds) and psychology atthree West Coast universities. Several problems werereplicated with business executives. The respondents in

all studies received a questionnaire titled "Survey ofConsumer Preferences." which was administered in aclassroom setting. Questionnaires included differentnumbers of choice problems (between three and 14) andrequired between five and 25 minutes to complete. Sub-jects were told that there were no right or wrong answersand that they should consider only their personal pref-erences. All tests are based on a between-subjects com-parison.

We went to great pains to use realistic materials andto give subjects infonnation similar to what is typicallyavailable to consumers who are making actual pur-chases. For example, in choice among paper towels, thestimuli consisted of samples of paper towels that the sub-jects could inspect to assess their quality. In other cases,subjects received color pictures of consumer productstaken from the Best General Merchandise Catalog, aswell as the written descriptions of the products from thatcatalog (see Figure 1). In several studies, subjects wereinformed that some of them, drawn at random, wouldreceive the item they selected from certain choice sets.

In the following two sections we investigate two fam-ilies of context effects implied by tradeoff contrast andextremeness aversion, respectively, and review the em-pirical evidence. (Additional data are included in Ap-pendices A and B). Theoretical and practical implica-tions are discussed in the final section.

TRADEOFF CONTRAST

In deciding whether or not to select a particular op-tion, people commonly compare it with other alterna-tives that are currently available as well as with relevantalternatives that have been encountered in the past. Ac-cordingly, we distinguish between two types of contexteffects—local effects due to the impact of the offeredset of alternatives and background effects due to the in-fluence of past options. In this section, we discuss intum tradeoff contrasts that are induced by the back-ground and by the local context.

Background Contrast

Figure 2 illustrates the experimental design used in thestudy of background contrast.^ Respondents first madethree choices between options in the background set, fol-lowed by two choices between options in the target set.The independent variable was the rate of exchange be-tween the attributes in the background set. Half of thesubjects chose between options on the upp>er line wherethe exchange rate between attributes I and 2 was highand the other half chose between options on the lowerline where the exchange rate was low (see Figure 2). Allsubjects received the same target options on the middle(dotted) line.

"LInless specified otherwise, the alternatives used in the studies var-ied on two dimensions labeled so that higher values are preferable tolower values.

CHOICE IN CONTEXT 283

Figure 1EXAMPLE OF CHOICE STIMULI: 35MM CAMERAS

ALT. A (MINOLTA X-370)

PRICE: $169.99

Minolta X-370 35min SLR Camera BodyCompact quartz controlled aperture pnonty plusfully auiotnacic/miinual mcicnng LED viewfinder1/1000 to 4 sec shutter speed Minolta 2-yT ltdwarranty Self-timer Safe film-load signal. 3 lbs4.172405 iftMir Price J169.99

ALT. B (MINOLTA-MAXXUM 3000i)

PRICE: $239.99

Minolta Maxxum 3000i 33mm SLR CamenBody. Predictive auto-focus camera. High-speedprogram mode. Integrated dual area mcLerina.Advanced auto multi program selector Minolta 2-yr. kd warrancy, 1 Ib.A 282073 „ Kbur Price $239.99

• World's bsttst•uii>-focusSLRI

• Spot memingcapability

• Continuoas programadjnsooeni

• Buili-in AFiUtuninator

• Shutter ^>ecd1/4000(0 30 sec

• Minolta USA2-yr.ltd. warranty.

ALT. C (MINOLTA-MAXXUM 7000i)

PRICE: $469.99

Minolta Maxxum 7000i 35mni SLR CameraBody, Predictive auto focus adjusts (or movingsubjects up to the instant ol exposure Auto filmhandling and advance up to 3 frames per secondwith auio-focus controL 1 IbA 282014 Vbar Price $469.99


Figure 2BACKGROUND CONTRAST: CHOICE BETWEEN GIFTS

20 30 40 50 60 70

Attribute 1: Cash

This design was employed in two domains, personalcomputers and gifts. The personal computers varied inmemory and cost. The background exchange rate was$4 per IK memory in one version and $0.5 per IK mem-ory in the other version. The exchange rate in the targetsets was $2 per IK memory. We predicted that subjectsexposed to the background in which the cost of memoryis high would be more likely to select from the targetsets the computer with the bigger memory than thoseexposed to the background in which the cost of memoryis low. Respondents also chose between gifts consistingof a combination of cash and couptms. Each coupon couldbe redeemed for a regular book or a compact disk atlocal stores. Subjects were informed that one of them,selected randomly, would actually receive the gift thathe or she had selected. The exchange rate was $15 percoupon in one version and $5 per coupon in the other.The exchange rate in the target sets was $10 per coupon.We predicted that subjects exposed to the former back-ground would be more likely to select from the targetsets the gift with more coupons than those exposed tothe latter background. The choice sets and the data forpersonal computers and gifts are presented in Table I.

It is evident that the background influenced subse-quent choices in the predicted direction. Of subjects whowere exposed to background comparisons with a highcost of memory, 52% (averaged across the two targetchoices) chose the PCs with more memory from the tar-get sets in contrast to 18% of those who encounteredbackground comparisons in which memory was less ex-pensive (/ = 3.8, p < .01). Similar results were ob-served for gifts. Of subjects who were first exposed tothe $5 per coupon background, 73% subsequently chosethe gifts with a larger cash component in contrast to 47%in the $15 per coupon condition {t ^ 2.8, p < .01).

Note that for personal computers the effect of thebackground could be justified on normative grounds. Aconsumer who observed a background tradeoff of $4 perIK of memory can reasonably conclude that $2 per IKrepresents a good deal. Conversely, a consumer who en-countered a tradeoff of $0.5 per IK may reach the op-posite conclusion. However, the background effect forgifts is more difficult to justify. Suppose a person is justwilling to trade $10 in cash for a book coupon. Whyshould that person change his or her mind after observ-ing gifts in which the corresponding tradeoff is $5 or$15? People's choices appear to be influenced by thebackground, whether or not it provides pertinent infor-mation about the quality of the options.

In the preceding experiment the background consistedof three pairs of options. Does the effect occur when thebackground is reduced to a single comparison? To an-swer this question, we used a similar design (see Figure3). Half the subjects chose fu t between a and b, whereasthe other half chose between a' and b'. After the back-ground choice, all subjects chose between x and y. Thebackground contrast hypothesis implies that y should bemore popular among subjects who first chose between aand b than among those who first chose between a' andb'.

This hypothesis was tested in two product categories,personal computers that varied in memory and price, andtires that varied in duration of wananty and price. Theresults, reported in Table 2, confirmed our prediction (t= 4.7 and t = 3.7 for PCs and tires, respectively, p <.01 in both cases). The size of the effect was comparableto that observed in the previous experiment in which thebackground consisted of three comparisons instead of one.We replicated this result in other product categories (e.g.,paper towels, dental insurance), using several variationsof the experimental design, including a configuration inwhich both background pairs were on the same side ofthe target pair (see Appendix A).

A different interpretation of the data in Tables I and2 is based on the variation in the range of the attributes.Recall that in the preceding tests, one background pre-sents a wider range of values on one attribute and a smallerrange on the other. If extending the range of values ona given dimension reduces the advantage (disadvantage)of an alternative on that attribute, the preceding resultscan be explained by variations in the range of the attri-butes without invoking the notion of tradeoffs.^ Huberand Puto (1983) tested this hypothesis using two-dimen-sional alternatives and found that, whereas variations inthe rate of exchange influenced choice in a manner con-sistent with the tradeoff contrast hypothesis, extensionof the range had no significant impact (see also Wedell1991). It appears that the large background effect re-ported above cannot be explained by attribute range.

'For a discussion of range effects, see, for example. Lynch. Chak-ravarti. and Mitra(l991), Mellers and Bimbaum (1982). and Parducci(1965).


Table 1BACKGROUND CONTRAST: MULTIPLE COMPARISONS

Version

Choice set

A (slope:= 49)

U/K)

Share (",

Category:

h)

personal computer

Version

Choice set

Bin

(slope: .= 51)

$.5/K)

Share (%)Background pairs

640K/$l560or740K/$I960

1000K/$3000 orIO24K/$3O96

5I2K/$1O48 or640K/$1560

Target pairs (slope: $2/K)640K/$l380or840K/$1780

960K/$2020 orI024K/$2I48

53

640K/$1320or74OK/$1370

1000K/$1500orIO24/$15I2

512K/$I256 or640K/$132O

640K/$l380or840K/$1780

960K/$2020 orIO24K/$2148

92

7327

Version

Choice set

ACategory: gifts

islope: $I5/coupon)(n = 51)

Share (%)

(cash and coupons for free books/CDs)Version

Choice set

B (slope: $5/coupon)in = 49)

Share (Wo)

Background pairs$52 and 3 coupons or$22 and 5 coupons

$82 and I coupons or$67 and 2 coupons

$37 and 4 coupons or$22 and 5 coupons

Target pairs (slope: SW/coupon)$47 and 5 coupons or$37 and 6 coupons


4753

4753






7723

m31

Local Contrast

Recall that background contrast refers to past experi-ence, whereas local contrast refers to tradeoff compari-sons within the offered set. Suppose y is clearly superiorto z hut X is not (see Figure 4). The tradeoff contrasthypothesis predicts that the addition of 2 to the set {x,y}wiil increase the attractiveness of >' relative to x.

Let P{x;y) be Ihe proportion of consumers who choseX from the offered set {x,y} and Pix;y,z) be the proportionof consumers who chose x from the set {x,y,z}. Next, let

;y) - P{x\y,z)/[P(x;y,z)

Thus, PXx;y) measures the popularity of x relative to y,inferred from the choice set { ,_v,z}. If y is clearly su-perior to z but X is not (Figure 4), the tradeoff contrasthypothesis implies P-iy^) > P(y^). If the effect is very

strong, the addition of z can actually increase y's marketshare, yielding F(yjc,z) > P(y,x). This pattern of pref-erence, called asymmetric dominance effect, violates theassumption that the popularity of an option cannot beincreased by enlarging the offered set. The significanceof this assumption, called "regularity," stems from thefact that if each individual satisfies value maximization,regularity holds in the aggregate data.* Failures of reg-ularity therefore represent violations of value maximi-zation. Regularity is also implied by most probabilisticchoice models (see, e.g.. Luce 1977; McFadden 1973;Tversky !972).

thai VM does not imply P{x,y) = /',(.»:;>•). Because of tastedifferences, Ihe addition of z can change the (aggregate) share of xrelative to y. even if each individual satisfies VM (Tversky and Si-monson in press).


Figure 3BACKGROUND CONTRAST

Figure 4ASYMMETRIC ADVANTAGE

Attribute 1

Table 2BACKGROUND CONTRAST: SINGLE COMPARISON

Memory

Background pairsa 600Kb 620K

a' 740Kb' I200K

Target pairy 640KX 72OK

Warranty

Background pairsa 55.000 milesb 75.000 miles

a' 30.000 miles6' 35.000 miles

Target pairX 40.000 milesy 50.000 miles

Category: personal computer

Price (S)

650950

12501350

10001200

Share (

Version A(n = 109)

919

3862

Category: tires

Price (S)

8591

2549

6075

Share (

Version A(n = III)

1288

5743

Version Bfn = HI)

694

6832

%)

Version BIn = 109)

U16

3?

Attribute 1

Asymmetric dominance was first demonstrated byHuber, Payne, and Puto (1982; see also Huber and Puto1983; Ratneshwar. Shocker, and Stewart 1987; Simon-son 1989) and several explanations of this phenomenonhave been proposed. We have already discussed an ac-count based on range effects that has been rejected bythe data of Huber and Puto. Another possible explana-tion is that the region with more alternatives {see Figure4) is perceived as more desirable, leading to the selectionof the best alternative in that region. However, this ex-planation is inconsistent with the results of the back-ground contrast studies in which respondents were mostlikely to select from the target set the alternative that wasthe most distant from the background set they considered(see Figure 3). Finally, Ratneshwar, Shocker, and Stew-art argued that the asymmetric dominance effect resultsfrom the respondents' inability to evaluate the alterna-tives meaningfully, and that it will be substantially re-duced with more meaningful alternatives. Indeed, pre-vious demonstrations of asymmetric dominance employedfairly schematic alternatives, such as hypothetical beersvarying in price and taste rating. In the present studies,we replicate the asymmetric dominance effect usingricher and more meaningful alternatives and explore tworelated phenomena, called enhancement and detraction.

Asymmetric Dominance

Differential discounts. Subjects were first given pic-tures and descriptions of five microwave ovens taken fromthe Best catalog. They were asked to examine the prod-ucts carefully to familiarize themselves with the optionsavailable on the market. Subjects were then asked tochoose among some of these products. Half of the sub-jects chose between x and v, whereas the other half choseamong x, y, and z (see tabulation below). Though _v does


not dominate z, it seems more attractive because itfavored by the sale (35% off vs. 10% off).

Share (%)

IS

Category: microwave ovenSet I Set 2

(n = 60) (n = 60)

27

60

X Emersoti 57(,5 cu. ft.; regular $109.99;sale price 35% off)

y Panasonic I 43(.8 cu. ft.; regular $179.99;sale price 35% ofO

z Panasonic [1 -—. 13(1.1 cu. ft.; regular $199.99;sale price 10% ofO

As predicted, the addition of the less attractive Pan-asonic II increased the market share of the more attrac-tive Panasonic I (/ = 1.9, one-tail, p < .05) at the ex-pense of the Emerson. It is noteworthy that asymmetricdominance was observed even though the respondentsreviewed all relevant options prior to the choice. Thatis, those who chose between x and y were also aware ofz. This effect therefore cannot be explained by the in-formation conveyed by the offered set.

Choice across categories. It could be argued that con-text effects in general and asymmetric dominance in par-ticular are confined to situations in which consumers arenot familiar with the products and have no direct way toevaluate their quality. To address this question, we testedthe asymmetric dominance effect using paper towels andfacial tissues. These product categories were selected be-cause they are highly familiar and because subjects canreadily assess the quality of the various brands by in-specting the samples. A pilot study showed a high agree-ment among subjects in the rankings of the quality ofpaper towels, which were highly correlated with thosepublished by Consumer Reports. The inclusion of bothpaper towels and facial tissues in the same choice setalso enabled us to test asymmetric dominance in choicesacross categories, which are commonly made by con-sumers (Johnson 1984).

Subjects were asked to select either a roll of papertowels or a box of facial tissues. In one version of thequestionnaire, they were presented two brands of papertowels and one brand of facial tissues, whereas in theother version they were presented two brands of facialtissues and one brand of paper towels. In the categorywith two options, the quality of one of the samples wasclearly superior to that of the other. The superior toweland the superior tissue were included in both versions ofthe questionnaire. The following tabulation summarizesthe results.

Share

Category: paper towels/facialtissues

Version A(n = 115)

Version B(n = 106}

X High quality paper towel 63 52w Low quality paper towel 10 —

_v High quality facial tissue 28 42z L-ow quality facial tissue — 7

Evidently, the asymmetric dominance effect holds evenfor products that are highly familiar and whose qualitycan be readily assessed. As predicted, the market sharesof both the high quality paper towel and high qualityfacial tissue were significantly greater it = 1.7 and / =2.2, respectively, bothp < .05) when they were superiorto another option in the same category. This exampleshows that dominance or near-dominance within a cat-egory increases the tendency to choose that category.Another example of this phenomenon, involving dinnersand photo portraits, is described by Tversky and Kahne-man (1991).

Cash versus goods. In this study subjects were in-formed that some of them, selected randomly, would re-ceive $6. They were further told that the winners wouldhave the option of trading the $6 for a pen. Subjectswere asked to examine the available pens and indicatewhether they would like to trade the $6 for a pen. Later,10% of the participants received either $6 or the pen theyhad chosen.

In one version of the questionnaire, subjects were pre-sented an elegant Cross pen. In the other version, sub-jects were given an additional option—a lesser knownbrand name that was selected specifically for its unat-tractiveness. The following tabulation summarizes theresults.

Share (%}

Category: cash/penVersion A(n ^ 106)

Version B(n - 115)

.r $6y Cross penz Other pen

6436

5246

2

Though very few subjects selected the less attractivepen, its inclusion in the offered set increased the per-centage of respondents who preferred the more attractiveCross pen from 36% to 46% (/ = 1.5, p < .10). Thisobservation suggests that the tendency to pay cash for agood can be increased by the introduction of an inferioralternative.

Risky choice. In an unpublished study conducted byPayne, Bettman, and Simonson, subjects chose amongthree-outcome bets with non-negative outcomes. Eachchoice set consisted of a basic pair {x,y) and a third bet{x') that was dominated by x but not by y. Subjects werepresented both {J:,>',J:'} and {x,yy], where y' was dom-inated by y but not by JC. They were informed tbat theywould actually play one of the bets and receive the ap-propriate payoffs. The results showed that bets were, onaverage, 17% more popular when they dominated an-other bet than when they did not (p < .01). This findingagain illustrates tradeoff contrast in a situation where theoffered set provides no additional information about theworth of the options.

We also tested the asymmetric dominance effect whenthe added alternative was not available for choice (e.g.,out of stock). The inclusion of an unavailable alternativethat dominates one option but not the other did not pro-duce a consistent pattern of results. In some cases it de-


creased the market share of the "dominated" alternative(in accord with asymmetric dominance), in some casesit increased the share of the "dominated" alternative (seeFarquhar and Pratkanis 1987). and in other cases it hadno effect.^ The effect of an unavailable alternative ap-pears to depend on the product category, the position ofthe unavailable alternative in the set, and the perceivedcause of unavailability, which may indicate either lowor high popularity. The effect of unavailable alternativescalls for further research.

Enhancement and Detraction.

The typical demonstration of asymmetric dominanceemploys three options x, y, z, such that z is dominated(or nearly dominated) by y but not by x. The tradeoffcontrast hypothesis, however, implies that the offeredset will affect choice even when no option has a decisiveadvantage over another. Asymmetric dominance there-fore can be viewed as an extreme form of tradeoff con-trast. In this section, we investigate a milder form oftradeoff contrast, which is probably more common ineveryday life.

Consider the options displayed in Figure 5. Supposethe consumer does not have a strong preference betweenX and 2 and that y and w, respectively, are slightly moreand less attractive than jc and z. Because the contrast ofthe x-z tradeoff with the y-z and the y-x tradeoffs fa-vors y, it is expected to fare better in the triple than inthe pairs; that is, P,iy\z) > P{y;z) and Pîy^x) > PiyrX).This pattern is called "enhancement." Similarly, be-cause the contrast of the x-z tradeoff with the w-z andw—x tradeoffs is unfavorable to w, it is expected to fareworse in the triple than in the pairs; that is, P,(w;z) <P(w:z) and P,{w,x) < P(wix). This pattern is called "de-traction." Note that in the binary choice there is onlyone tradeoff, and hence no room for tradeoff contrast.Once a third option is introduced, a decision maker cancompare the three tradeoffs, which enhances the attrac-tiveness of y and detracts from the attractiveness of w.We report two tests of enhancement and detraction, us-ing unleaded gasoline and personal computers.

Subjects were told that oil companies were soon ex-pected to introduce a greater variety of unleaded gasoline(between 85 and 95 octane), and that independent re-search had shown that higher octane gasoline improvesthe performance of most cars. They were then asked tochoose among different types of unleaded gasoline thatvaried in octane and price. In a second task, subjectschose among personal computers that varied in memoryand price. The choice sets, presented to different groupsof subjects, and the data are reported in Tables 3 and 4,which also include the normalized shares, for example,PAy;z) = P(y,x,z)/[Piy,x,z) + P(z;y,x)].

As implied by enhancement, _v had a higher relativeshare in the triples than in the pairs in all four cases. Let

Figure 5ENHANCEMENT AND DETRACTION

Attribute t

DAy) = PXy\z) - P(y;z) and D,Cv) = P,Cy;x) - P(y',x).Thus, D,iy) measures the degree to which the additionof X to the set {y,z} changes the relative popularity of yand z. In particular, D,(y) > 0 if the addition of J: hurtsz more than _y, and D,iy) < 0 if x hurts y more than z.In accord with enhancement, the average value of D,(y)and D:(y) for personal computer and unleaded gas was.15, which was statistically significant separately in two

Table 3ENHANCEMENT AND DETRACTION:

UNLEADED GASOLINE

Enhancement

Option Share f%>

OctanePrice

/gallon ($)Set I Set 2 Set 3

(n = 56) (n = 61) (n ^ 50)X

yz

879093

i.Ol1.081.21

27649

3961

—6832

7188

Detraction

Option Share (%)

OctanePrice

/gallon ($)Set 4 Set 5 Set 6

(n = 52) (n = 57) (n = 52)

'The data can be obtained from the first author.

X

w2

/'..(w;jc)

P,(w,z)

879093

1.011.141.21

482329

5842—

32

—6733

44


Table 4ENHANCEMENT AND DETRACTION:

PERSONAL COMPUTERS

Enhancement

Option yMemory Price ($} (n =

f /55)

Share

Setin =

(%}

753)

Set 3in = 54)

640K76OK84OK

100011751400

225820

3664

72

5446

74

Detraction

Option

Memory Price <S)Set

in =J58}

Share

Setin =

(%}

256}

Setin =

351}

640K720K840K

100012251400

481735

5941

26

4357

33

of the four comparisons {p < .05). Similarly, as impliedby detraction, w had a lower relative share in the triplesthan in the pairs in all four cases. The average value ofD^(w) and D.iw) was - . 1 5 , which was statistically sig-nificant in one comparison (p < .05) and marginally sig-nificant in another comparison {p < . 10).

These data support the predicted patterns of enhance-ment and detraction. They differ from the tests of asym-metric dominance in that the tradeoffs were not extremeand the results were accordingly less dramatic. Thoughthe predicted changes in relative popularity were con-firmed, no significant violations of regularity were ob-served. Note that detraction (but not enhancement) isconsistent with the similarity hypothesis that the additionof an extreme option hurts the similar (middle) alterna-tive more than the less similar (extreme) alternative (seeTversky and Simonson 1992). However, enhancement(but not detraction) can be explained by extremenessaversion, discussed in the next section. Tradeoff contrastaccounts for both enhancement and detraction, but thesimilarity hypothesis and extremeness aversion may alsocontribute to the observed effects.

EXTREMENESS AVERSION

Studies of both risky and riskless choice provided evi-dence for the principle of loss aversion, according to whichlosses generally loom larger than the corresponding gains(Tversky and Kahneman 1991). Losses and gains areusually defined in relation to a neutral reference pointthat corresponds to the status quo. In many choice prob-lems, however, altematives are evaluated in terms of their

advantages and disadvantages defined in relation to otheroptions. To explain the effect of context on choice, weextend the notion of loss aversion and propose that dis-advantages are weighted more heavily than the corre-sponding advantages.

Consider a set of three options that vary on two attri-butes, such that y is between x and z, denoted x\y\z; forexample, x, < y, < z, and X2> y2> 22 (see Figure 6).Here, each extreme option (x and z) has a large advan-tage and a large disadvantage relative to the other ex-treme, and it has a small advantage and a small disad-vantage relative to the middle option iy). The middleoption, in contrast, has small advantages and small dis-advantages in relation to both extremes. If (pairwise)disadvantages loom larger than the corresponding ad-vantages, the middle option y should fare better in thetriple than in the pairs. That is, P,Sy',z) > P(y\z) and P.iy,x)

> Piy^x).We distinguish two forms of extremeness aversion—

compromise and polarization. Compromise occurs whenboth inequalities hold. That is, the addition of JC to {y,z}increases the share of y relative to z and the addition ofz to {x,y} increases the share of y relative to x. Compro-mise is expected if disadvantages loom larger than ad-vantages on both attributes. Polarization occurs when onlyone of the inequalities holds. It is expected if disadvan-tages loom larger than advantages on one dimension butnot on the other. We use the term "extremeness aver-sion" to refer to either compromise or polarization—thatis, at least one of the above inequalities holds.

Compromise and polarization are generally inconsis-tent with value maximization, even though they need notviolate regularity. We have shown (Tversky and Simon-son 1992) that under very plausible conditions, whichwere confirmed by data, value maximization implies the

Figure 6EXTREMENESS AVERSION

Anribiite 1


following betweenness inequality: if y is between x and2 on all relevant attributes, then Piy,z) > /^.(j-z) and Piyjc)> P.(y',x). That is, the middle option y (in Figure 6) isexpected to lose relatively more than the extreme optionX from the introduction of the other extreme z. This im-plication of value maximization is at variance with ex-tremeness aversion, which implies that y will lose rela-tively less than x from the introduction of z. The opposingpredictions were tested in the next series of studies.

Compromise

In the following tests of the compromise effect., eitherz or w is added lo the pair JC, y, such that either JC or ybecomes the middle alternative (i.e., w\x\y and JCI IZ; seeFigure 6).

Cameras. This test involved 35mm Minolta cameras(see Figure 1). In one version there were two cameras,whereas in the other version a third camera was added.The prices and the descriptions of the cameras (includingpictures) were taken from the Best catalog. The resultsfollow.

Share (%)Category:

Brand

X Minolta X-370y Minolta Maxxum

35 mm

3000i7000i

camera

Price ($)

169.99239.99469.99

Set 1In = 106)

5050

Set 2In = 115)

225721

The results show that JC and y were equally popular inset 1, but the addition of the top-of-the-line Maxxum7(X)0i in set 2 increased the popularity of y relative to xfrom 50% to 72%, D,(y) = P,(y^) - P{y^) = .57/(.57+ .22) - .50 = .22, SE = .068, / = 3.2, p < .0\. Wereplicated this result in a subsequent study in which thesubjects reviewed a set of five cameras, including thepreceding three cameras, before making a choice fromset 1 or from set 2. The observed violation of the be-tweenness inequality and hence of value maximizationtherefore cannot be explained by different states of in-formation about the alternatives available on the market.

Unavailable options. We also tested the compromiseeffect when the added (extreme) alternative was notavailable for choice. Table 5 summarizes the data forcalculator batteries (from Simonson 1989). The resultsdemonstrate a compromise effect even though the effec-tive choice set was identical in all three conditions iD,{y)= .09, / - 1.5,/) < .10, and D.{y) = .26, t = 4.3, p< .01).

An altemative design used to test the compromise ef-fect involves three sets with the betweenness relationsv\w\x, w\x\y, and x\y\z. In this design, w, x, and y serveas a middle altemative in one set and as an extreme al-temative in one or two of the other sets. Table 6 reportsthe results for calculators varying in number of functionsand reliability (from Simonson 1989) and portable grillsvarying in size and weight. As can be seen, each cal-culator was relatively more popular when it was in themiddle than when it was extreme. To test the between-

ATable 5

COMPROMISE EFFECT WITHALTERNATIVES

UNAVAILABLE

Category: calculator battery'

Brand

Expected Probabilitv of Set 1life

wX

y

(hr.

10121416

.) corrosion (%) (n = 126)

0 —2 574 436 —

Share <%)

Set 2<n = 124)

UA"6634—

Set 3(n = 119)

4060UA

"From Simonson (1989).ÛA indicates that the altemative was presented but was unavailable

for choice.

ness inequality in this design, we compare choice sets(e.g., sets ! and 2) that have two options in common(e.g., w and x). Compromise implies P^w.^) > P^(w^),etc. The share of w relative to JC is .51 in set 1 (.48/(.48-F .47)) and .37 in set 2 (.26/(.26 + .45)) (/ = 2.0, p< .05). The corresponding values for the comparison ofX with y are .61 in set 2 and .47 in set 3 (t = 2.0, p <.05).

The same pattern of results was obtained for portablegrills. The share of w relative to x is .58 in set I and.38 in set 2 (/ = 2.1, p < .05). The corresponding valuesfor the comparison of x to y are .62 in set 2 and .36 inset 3 (t = 2.5, p < .05).

Polarization

We have attributed the compromise effect to the no-tion that disadvantages loom larger than the correspond-

No. offunctions

V 8w 16X 24V 32z 40

Cooking

Table 6COMPROMISE EFFECT

Category: calculator'

Option

Chancesof defect

in 2 years 1%) (n

13579

Set I^ 124)

54847——

Share 1%)

Set 2(n = 126)

264529—

Category: portable grill

Option

area <sq. in.) Weight (Ib.) (r>

V 160w 220X 280y 340z 400

47

fO1316

Set I1 = 77)

314029__—

Share {%)

Set 2(n = 70)

274429—

Set 3(n = 121)

—364024

Set 3(n = 72)

—264726

'From Simonson (1989).


ing advantages. The difference in the evaluation of ad-vantages and disadvantages, however, may depend onthe attributes in question; it can be large for one attributeand negligible for another. The combination of two suchattributes should yield an asymmetric pattem of extreme-ness aversion, called "polarization."

We have encountered this pattem in several studies inwhich the options varied in quality (e.g., magnifyingpower of binoculars, coverage of dental insurance) andprice. In most cases, the low quality, low price optionwas relatively less popular in sets of three options thanin sets of two, but this was not true for the high quality,high price option. These findings suggest extremenessaversion for quality, but little or no extremeness aversionfor price. The asymmetry between price and quality wasexamined in several categories.

AM/FM cassette recorder. The descriptions of the al-tematives (taken from the Best catalog) included brandnames, features, pictures, and prices. The options andthe results are summarized in Table 7.

As in previous tests, we compared the relative sharesof options in binary and trinary choices. Given the triplex\y\z, with X| < yi < z, and X2> y2> Z2, we computedthe following measures:

Dîy) = P,,(y;z) - Piy;z)

D,(jc) = P^{x;z) - P(x;z)

DXy) and D-(y) estimate the impact of adding an extremeoption on the relative shares of the adjacent and non-adjacent attematives, whereas Dîx) measures the effectof adding a middle option on the relative shares of thetwo extremes.

The betweenness inequality implies that the additionof jr (or z) should reduce the share of the adjacent optiony more than that of the nonadjacent option z (or JT). Com-promise, in contrast, predicts that the addition of eitherX or z would increase the share of y relative to the otherextreme. Finally, polarization makes the same predictionfor one dimension but not for the other. This discussioncan be summarized in the following statements.

Table 7POLARIZATION

Category: AM/FM cassette player

Share (%)Option

Brand

X Emerson(mid-line)

y Sony(mid-line)

z Sony(top)

Price 1$)

39.99

64.99

149.99

Set 1(n = 51)

45

55

—

Set 2 Set 3In = 57) {n = 58)

9

40 48

60 43

Set 4In = 57}

51

49

1. If both D,(y) and D-(y) are nonpositive, the betweennessinequality holds (i.e., no compromise, no polarization).

2. If both D,iy) and Dîy) are positive, we obtain compro-mise (i.e., betweenness is violated in both directions).

3. If D,iy) and Dy(x) are positive and DAy) is not, we obtainpolarization that favors JC; similarly, if D,(y) is positive,Dîx) is negalive, and />,(y) is nonpositive, we obtainpolarization that favors z.

We applied these indices to the AM/FM cassette data(Table 7), where the two dimensions are quality and price.The data yield:

D,(y) = .53 - .40 = .13, / = 1.4, NS,D,(y) = .29. t = 3.2, p < .01, andD,(x) = - . 3 4 , t - - 3 . 6 , p < .01.

This pattem indicates polarization that favors quality,because D (y) is positive, DÎJ:) is negative, and £>,(y) isnot significantly different from zero. As we move frombinary to trinary choice, the low quality option JC is thebig loser. Note that the two extreme options x and z wereabout equally popular in the binary comparison (set 4),but z was nearly five times more popular than x in thetrinary choice.

Additional examples of polarization that favor quality(or performance) over price are presented in Table 8 (see

Table 8POURIZATION

Product category: denial insurance

Plan Share (%)

Coverage Annual Set I Set 2 Set 3 Set 4<%} premium (S) In = 54) (n = 57} In = 58} In = 5/

V 50w 67X 67y 67z 90

130165180195240

57———43

2825—-—47

31—24

45

33

1255

Category: binoculars

Option Share {%)

Magnifyingpower Price 1$)

Set I Set 2 Set 3 Set 4<n = 38) (n = 40} (n = 41) (n = 40)

V

wX

V

z

7X12X12XI2X17X

Option

2028323644

Category:

45———55

personal

Set I

1253——35

computer

Share

Set 2

17—28—55

(%)

Set 3

5——2471

Set 4Memory Price ($} In = 56) fn = 57} (n = 50} In = 55}

w 640KX 645Ky 700KX 740K

1200128014001420

57

43

2616

58

8614

34

758

292 JOURNAL OF /MARKETING RESEARCH, AUGUST 1992

also Appendix B). In all three categories, the introduc-tion of a middle alternative substantially reduced the rel-ative share of the low quality, low price option and in-creased the relative share of the high quality, high priceoption. This effect was statistically significant in six ofseven comparisons. Moreover, in five of seven tests,regularity was violated.

We interpret these results in terms of extremenessaversion that applies to quality but not to price. Recallthat there is no extremeness aversion in binary choicebecause no option is more extreme than another. Thequestion remains why, given a set of three or more op-tions, consumers fmd the lowest quality more aversivethan the highest price. We have no definite answer tothis question. We speculate that quality or performancedefines the goal of a purchase, whereas price is merelya means for achieving that goal. As a consequence, qual-ity may be perceived as more important than price, andthis tendency is enhanced in the trinary choice becausethe lowest quality in a set of three (or more) appears lessacceptable than the lower quality in a set of two. If thisconjecture is valid, we would expect polarization for otherpairs of attributes in which one is more prominent thanthe other (Tversky, Sattath, and Slovic 1988). Some evi-dence consistent with this hypothesis, involving CDplayers and bets, is reported in Appendix B. In both cases,polarization favors the dimension that respondents con-sider more important (sound quality for CD players andprobability of winning for bets). The conditions that giverise to polarization warrant further study.

In sum, the betweenness inequality leads to the pre-diction that the addition of an extreme alternative willhurt the middle alternative more than the other extreme.This prediction of value maximization appears intu-itively compelling. For example, the addition of a top-of-the-line camera might be expected to reduce the mar-ket share of a mid-line camera more than the share of abasic camera. However, contrary to both standard theoryand naive intuition, we found large and systematic vi-olations of the betweenness inequality. In a wide rangeof choice problems, the extreme rather than the middlealternative was the big loser. Future research may helpcharacterize the situations in which the betweenness in-equality is violated or satisfied. In particular, we hy-pothesize that the betweenness inequality (and hence valuemaximization) is more likely to be satisfied when con-sumers evaluate each alternative separately on the basisof its absolute rather than relative characteristics.

DISCUSSION

We investigated two hypotheses about the effect ofcontext on choice—tradeoff contrast and extremenessaversion. These hypotheses account for several phenom-ena reported in the literature and predict additional ef-fects observed in the present studies. In this section webriefly summarize the main results and discuss their the-oretical and practical implications.

The tradeoff contrast hypothesis extends the notion ofcontrast to the comparison of tradeoffs. It explains the

asymmetric dominance effect (Huber, Payne, and Puto1982) whereby the addition of an inferior option in-creases the market share of the superior option. We alsodemonstrated more common forms of tradeoff contrast,called enhancement and detraction, that do not involveextreme tradeoffs or clearly inferior options. Tradeoffcontrasts are not limited to the local context defined bythe offered set. Indeed, we show that preferences aresystematically influenced by the tradeoffs among pre-viously encountered options.

The extremeness aversion hypothesis derives from thenotion that disadvantages loom larger than the respectiveadvantages, which extends the notion of loss aversion.It explains the compromise effect (Simonson 1989)whereby the addition of an extreme option increases theshare of the middle option relative to the other extreme.This is a symmetric form of extremeness aversion thatapplies to both attributes. In many cases, extremenessaversion applies lo only one attribute. We observed thispattern, called polarization, in choices involving trade-offs between quality and price. In such situations, theaddition of a middle option favors the high quality, highprice option relative to the low quality, low price option.

We have discussed tradeoff contrast and extremenessaversion separately. Sometimes, both hypotheses maybe relevant to the interpretation of a particular pattern ofchoice. For example, we interpreted enhancement anddetraction in terms of tradeoff contrast. However, in atest that involves nondominated two-dimensional op-tions, extremeness aversion also comes into play. Spe-cifically, compromise is expected to amplify enhance-ment and inhibit detraction.

Both tradeoff contrast and extremeness aversion areexpected to have less impact in situations in which con-sumers have well-established preferences. If a consumerhabitually purchases the same brand in a category, forexample, context effects are unlikely to play a major role.In contrast, when people are uncertain about the valuesof options, they are more likely to use the context indetermining the ''best buy." Context effects can some-times be justified normatively in terms of the informa-tion derived from the background or the local context.However, the same effects are observed even when thecontext provides no new information about the options.Evidently, people make context-based inferences aboutthe worth of alternatives whether or not the context pro-vides a valid basis for such inferences.

In some cases, people are unaware of context effects,as they are generally unaware of priming and anchoring.In other situations, people use the context explicitly tojustify their choices to themselves and to others. For ex-ample, people often rationalize the choice of a middleoption as a compromise between extremes, as docu-mented in verbal protocols of choice experiments (Si-monson 1989). We investigated tradeoff contrast and ex-tremeness aversion using aggregate choices as thedependent variable. The use of process measures, suchas verbal protocols or patterns of information acquisi-tion, might improve our understanding of the conscious


and unconscious inferences that underlie the observedcontext effects.

Theoretical Implications

Our findings suggest that context effects are both com-mon and robust, representing the rule rather than the ex-ception in choice behavior. The prevalence of contexteffects presents a challenge to marketing researchers andmore generally to decision theorists. The systematic fail-ure of value maximization undermines the standard the-ory of consumer choice and calls for an analysis thatexplains the effects of context on choice. Though theseeffects can be viewed as manifestations of bounded ra-tionality, they cannot be readily explained as attempts toreduce effort and minimize the cost of thinking. Bothtradeoff contrast and extremeness aversion entail assess-ments that seem more complicated than those implied byvalue maximization. More generally, context effects im-ply that people take into account comparative character-istics of altematives that tend to complicate the choicetask. This process, we believe, is driven primarily by anattempt to achieve better resolution and identify the bestchoice, not merely by the tendency to simplify the task.

Elsewhere (Tversky and Simonson, in press), we haveproposed a theoretical analysis of the effect of contexton choice. As in the standard theory of the consumer,each alternative x is characterized by a vector (x,, . . . ,.v ) and preference is monotone in each attribute. Assumethat an option x is selected from an offered set S if V^(x)exceeds V^(v) for all v in S. Thus, VÛ) represents thevalue of option x in context S. To obtain a simple rep-resentation, we impose additivity, that is, V' jc) = v]ix^)+ . . . + v iUn)- T he simplest context-dependent additivemodel that accounts for tradeoff contrast is obtained byletting v'^(Xi) = H'fv,(jr,), / - ! , . . . , « . Here, the choiceset S affects only the weight associated with each attri-bute or, equivalently, the rate of exchange between at-tributes. This form is essentially the same as the contin-gent weighting model of Tversky, Sattath, and Slovic(1988). We assume that the tradeoff between a pair ofattributes in a given set is a weighted combination of the"prior" tradeoff and the mean tradeoff in the set of op-tions under consideration, where the weight reflects thedegree of context dependence. It is easy to show thatthis model can explain the various manifestations of tra-deoff contrast described above.

To account for extremeness aversion as well, we gen-eralize the above form and set \^(xi) = w /lv,<x,) — v,<mf)],where mf is the minimal level of attribute / in 5. Thisyields an additive difference model in which the contri-bution of attribute / is evaluated (by / ) relative to thelowest level of that attribute in the relevant choice set.It follows readily that, in the two-dimensional case,compromise occurs if both/, and/, are strictly concave,and polarization occurs if one function is strictly concaveand the other is linear. In this analysis, called the con-tingent additive model, the effect of the choice set onthe value of an option is captured by two adjustments:an updating of the rate of exchange between attributes

and a shift of the reference point within each attribute.Though this model is at best approximate and incom-plete, it provides a parsimonious account of the patternsof choice discussed in this article.

Marketing Implications

Aside from their theoretical significance, context ef-fects could have important practical implications for theprediction of consumer choice and the design of productpositioning, communications, and competitive strate-gies. Tradeoff contrast and extremeness aversion mightbe used to critique and perhaps even revise standardmethods for predicting consumer choice and market share.Because these methods (see, e.g.. Green and Srinivasan1990) assume value maximization, they do not take intoaccount the presence of context effects. If these phe-nomena are as common and as orderly as suggested bythe results reported here, a model that incorporates trade-off contrast and extremeness aversion is likely to makebetter predictions than a model that ignores these effects.Though the contingent additive model outlined abovecannot be readily estimated from aggregate data, a sim-plified version of this model could perhaps be used tomodify standard methods of prediction that rely on valuemaximization. The development of such a procedure isleft for future research.

The research reviewed here suggests that, when de-signing a new product, managers should consider not onlyits attribute values, but also its likely position in the rel-evant choice sets. For instance, polarization suggests thatthe introduction of a middle option between a high price,high quality brand and a low price, low quality brandwill hurt the latter more than the former. Similarly, anew product that is positioned as clearly superior to an-other brand is likely to benefit from the asymmetricdominance effect.

Asymmetric dominance may contribute to the Impactof promotions on sales and suggest an additional expla-nation for the finding that the elasticity associated witha deal exceeds price elasticity (Blattberg and Neslin 1990).Previous explanations of the impact of promotions havefocused on their influence on purchase timing, on pricediscrimination, and on advertising. Asymmetric domi-nance provides an additional explanation. Because a brandon saie dominates the same brand when it is not on sale,the sale brand is likely to compare more favorably withother brands. In other words, the attractiveness of buy-ing an item on sale may derive not only from the pricereduction per se, but also from the implicit asymmetricdominance effect that is induced by the sale.

Context effects can be used to improve communi-cations (e.g., comparative ads) and sales tactics. Forexample, Williams Sonoma, a mail order and retail busi-ness located in San Francisco, used to offer one bread-baking appliance priced at $275. Later they added a sec-ond bread-baking appliance, which was similar to thefirst but was somewhat larger. The price of this item was$429, more than 50% higher than that of the originalappliance. Not surprisingly, perhaps, Williams-Sonoma

294 JOURNAL OF /MARKETING RESEARCH, AUGUST 1992

did not sell many units of the new item. However, thesales of the less expensive appliance almost doubled, asimplied by tradeoff contrast. To the best of our knowl-edge, Williams-Sonoma did not anticipate this effect.

In other situations, salespeople intentionally exploitcontext effects. A common tactic used to convince con-sumers to purchase a given product is to present anotherproduct and argue that the former is a bargain in com-parison with the latter. Our analysis may help explainthe basis for such tactics. It may also offer the consumersome insight, which could lead to more thoughtful de-cisions.

REFERENCES

Bettman, James R., Eric J. Johnson, and John W. Payne (1991),"Consumer Decision Making," in Handbook in ConsumerBehavior. Thomas S. Robertson and Harold H. Kassarjian,eds. Englewtwd Cliffs, NJ: Prentice-Hall, Inc., 50-84.

Blattberg. Robert C. and Scott A. Neslin (1990), Sales Pro-motion: Concepts, Methods, and Strategies. EnglewoodCliffs, NJ; Prentice-Hall, Inc.

Farquhar, Peter H. and Anthony R. Pratkani.s (1987), "Phan-tom Choices: The Effects of Unavailable Alternatives onDecision Making," Technical Report No. 87-2, Center forDecision Technology and Strategy Research, Carnegie Mel-lon University, I52I3.

Green, Paul E. and V. Srinivasan (1990), "Conjoint Analysisin Marketing Research: New Developments and Direc-tions," Journal of Marketing. 54 (October), 3-19.

Huber, Joel, John W. Payne, and Christopher Puto (1982),"Adding Asymmetrically Dominated Alternatives: Viola-tions of Regularity and the Similarity Hypothesis," Journalof Consumer Research. 9 (June), 90-8.

and Christopher Puto (1983), "Market Boundaries andProduct Choice: Illustrating Attraction and Substitution Ef-fects," Journal of Consumer Research, 10 (June). 31-44.

Johnson, Michael D. (1984). "Choice Among NoncomparableAlternatives," Journal of Consumer Research, 11 (Decem-ber), 741-53.

Kahneman, Daniel. Jack L. Knetsch. and RichardThaler(1991),"The Endowment Effect, Loss Aversion, and the Status QuoBias ," Journal of Economic Perspectives, 5 ( I ) , 193-206.

Luce, R. Duncan (1977), "The Choice Axiom After 20 Years,"Journal of Mathematical Psychology, 15 (3), 215-33.

Lynch, G. John. Jr., Dipankar Chakravarti, and Anusree Mitra(1991). "Contrast Effects in Consumer Judgments: Changesin Mental Representation or in the Anchoring of RatingScales?" Journal of Consumer Research, 18 (December),284-97.

McFadden, Daniel (1973). "Conditional Logit Analysis ofQualitative Choice Behavior," in Frontiers in Economet-rics, Paul Zarembka, ed. New York: Academic Press, Inc.,105-42.

Mellers, Barbara and Michael H. Bimbaum (1982), "Loci ofContextual Effects in Judgment." Journal of ExperimentalPsychology: Human Perceptions and Performance. 8 (4),582-601.

Parducci, Allen (1965). "Category Judgment: A Range-Fre-quency Model," Psychological Review, 72 (6). 407-18.

Payne, John W., James R. Bettman, and Eric J. Johnson (1992),"Behavioral Decision Research: A Constructive Processing

APPENDIX ABACKGROUND CONTRAST: ADDITIONAL EXAMPLES

Memory

Category: personal computer

Option

Price ($}

Background pairsa 880K 1200b 480K 1000

a- 720Kb' 640K

Target pairX 720K> 640K

Quality

1500700

12001000

Category:

Option

Price/roll($)

Share (

(n = 62)

982

4060

paper towels

Share (

Version AIn = 66)

%J

Version B(n = 65)

1189

8020

Version BIn = 69)

Background pairsa Mediumb High

a' Very lowb' Very high

Target pairX Mediumy High

Plan

Coverage {%)

Background pairsa 55b 60

a' 80b- 100

Target pairX 65y 75

Plan

Coverage (%)

Background pairsa 80b 85

a' 80b- 100

Target pairX 65y 75

.691.13

.85

.99

.84

.99

Category:

Cost 1$)

65150

245275

170220

Category:

Cost ($)

245340

245275

170220

6634

2872

dental insurance

Share

In = 109)

919

5050

dental insurance

Share

In = 61}

928

3070

1684

5050

1%)

Version BIn = / / / )

694

7921

(%)

In --= 60)

193

5842


APPENDIX BPOLARIZATION: ADDITIONAL EXAMPLES

Brand

w Minolta Compact.V Minolta X-370V Minolta Maxxum 3000i2 Minolta Maxxum 7(XX)i

Sound qualityrating

iO-lOO)w 80X 82y 87z 89

Plan

Coverage i%)

V 50w 60X 70V 80z 90

Bet

Probabilityof winning

V .25w .35X .45y .55z .65

Option

Price (S)

84.99169.99239.99469.99

No.programmable

tracks

Annualpremium i$)

110150190230270

$ amount

800550350225150

32281814

Category: camera'

Set I(n = 41)

6337

Category: CD player^

Set 1(n = 46)

26

74

Category: dental insurance"

Set I(tt = 71)

4951

Category: bets

Set Iin = 75)

5149

Set 2(n = 77)

292249

Set 2(n = 75)

281755

Share (%)

Set 2in = 41)

443224

Share (%)

Set 2(n = 46)

9

3754

Share (%)

Share (%)

Set 3(n = 85)

292347

Set 3(n = 79)

332542

Set 3(n = 39)

314623

Set 3(n = 45)

l\22

67

i

Set 4(n = 81)

322048

Set 4(n = 83)

281l359

Set 4n = 40}

5248

UA"

*A comparison of set 1 with sets 2, 3, and 4 indicates polarization, which favors quality."UA indicates that the alternative was presented but was unavailable for choice.'A comparison of set I with sets 2 and 3 indicates polarization favoring sound quality, which was Judged to be the more important attribute

in a separate study.•'A comparison of set I with sets 2 and 3 indicates polarization, which favors coverage."A comparison of set I with sets 2 and 3 indicates polarization, which favors probability of winning.

Perspective." Attnual Review of Psychology, 43, forthcom-ing.

Ratneshwar, Srinivasan, Allan D. Shcx:ker, and David W.Stewart (1987). "Toward Understanding the Attraction Ef-fect: The Implications of Product Stimulus Meaningfulnessand Familiarity," Journal ofCotisumer Research. 13 (March),411-20.

Simonson, Itamar (1989), "Choice Based on Reasons: The Caseof Attraction and Compromise Effects," Journal of Con-sumer Research, 16 (September), 158-74.

Tversky, Amos (1972), "Elimination by Aspects: A Theory ofChoice," Psychological Review. 79 (4), 281-99.

— and Daniel Kahneman (1991), "Loss Aversion in

Riskless Choice: A Reference Dependent Model," Quar-terly Journal of Economics, 106 (November), 1040-61.

, Shmuel Sattath, and Paul Slovic (1988), "ContingentWeighting in Judgment and Choice," Psychological Review,95 (July), 371-84.

and Itamar Simonson (in press), "Context-DependentPreferences," Management Science.

Wedell, Douglas H. (1991). "Distinguishing Among Modelsof Contextually Induced Preference Reversals," Journal ofExperimental Psychology: Learning, Memory, and Cogni-tion. 17 (4), 767-78.

ReiKinl No. JMR2931(K)

Documents

Choice in Context: Tradeoff Contrast and Extremeness Aversion