Range effect on extremeness aversion

Pravesh Kumar Padamwar (), Jagrook Dawra and Vinay Kumar Kalakbandi
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Pravesh Kumar Padamwar: Indian Institute of Management Raipur
Jagrook Dawra: Indian Institute of Management Raipur
Vinay Kumar Kalakbandi: Institute of Management Technology Hyderabad

DECISION: Official Journal of the Indian Institute of Management Calcutta, 2018, vol. 45, issue 4, No 6, 345-355

Abstract: Abstract Extremeness aversion is the tendency of choice makers to avoid extreme options and choose an intermediate option. This leads to an increase in the relative choice share of an extreme alternative (target) by the introduction of a new extreme alternative that makes the target an intermediate option. This paper examines the range effect, which is the impact of the increase in the perceived distance between the target alternative and the new extreme alternative, on extremeness aversion. To examine the research question, an experimental study is conducted in a classroom setting using four product categories. The results show that extremeness aversion is the highest when the distance between the new extreme alternative and the target alternative is such that the target alternative is placed exactly at the center in the trinary choice set. This paper validates the existing models of extremeness aversion. The findings of this paper support the reference-dependent model, which is based on the principle of loss aversion. The findings of this paper have noteworthy practical implications for the design of extreme alternatives to achieve effective extremeness aversion.

Keywords: Choice behavior; Consumer decision making; Extremeness aversion; Compromise effect; Context effect (search for similar items in EconPapers)
JEL-codes: M30 M31 M39 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s40622-018-0197-5

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