Using Extremeness Aversion to Fight Obesity: Policy Implications of Context Dependent Demand

Kathryn M. Sharpe, Richard Staelin and Joel Huber

Journal of Consumer Research: An Interdisciplinary Quarterly, 2008, vol. 35, issue 3, pages 406-422

Abstract: This article illustrates how the compromise effect alters consumers' selection of soft drinks. Using three within-subject studies, we show that extremeness aversion and price insensitivity cause consumers to increase their consumption when the smallest drink size is dropped or when a larger drink size is added to a set. As a result rational firms find it best to drop the smaller sizes and add a larger size, thus increasing overall consumption. After estimating each individual's demand as a function of price and drink size availability, policy experiments demonstrate how it is possible to reduce soft drink consumption without additional taxation. (c) 2008 by JOURNAL OF CONSUMER RESEARCH, Inc..

Date: 2008

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