TO BE OR NOT TO BE PRICE-CONSCIOUS - A SEGMENT-BASED ANALYSIS OF COMPROMISE EFFECTS IN MARKET-LIKE FRAMINGS

Holger Müller ()
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Holger Müller: Faculty of Economics and Management, Otto-von-Guericke University Magdeburg
Authors registered in the RePEc Author Service: Holger Mueller

No 110002, FEMM Working Papers from Otto-von-Guericke University Magdeburg, Faculty of Economics and Management

Abstract: Numerous researchers have investigated the compromise effect, according to which a middle option of a consideration set is assumed to be perceived more attractive by consumers, thus becoming more likely to be chosen than the extreme options. However, a closer examination of the experimental designs that were used in previous studies on compromise effects clearly reveals a lack of realism in terms of forced choices between fictitious options in hypothetical choice settings of student samples. In two consecutive studies, this article demonstrates that the compromise effect is robust even in an enhanced design that incorporates basic conditions of real purchase decisions in lab-based experiments. Specifically, the relative share of the middle option increases significantly in an overall analysis when experienced consumers make unforced decisions between real brands in a binding choice context. However, segmented analysis indicates substantial differences, meaning that (1) the compromise effect is strong and significant among quality-seeking consumers; whereas (2) the compromise effect is weak and insignificant among price-conscious subjects.

Keywords: Compromise Effect; Experimental Designs; Price Consciousness; Purchase Decisions (search for similar items in EconPapers)
Pages: 15 pages
Date: 2011-02
New Economics Papers: this item is included in nep-exp
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