Effect Propensity: The Location of the Reference State in the Option Space as a Determinant of the Direction of Effects on Choice

Itamar Simonson, Thomas Kramer and Maia Young
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Itamar Simonson: Stanford U
Thomas Kramer: ?
Maia Young: ?

Research Papers from Stanford University, Graduate School of Business

Abstract: In a choice between any two options, decision makers can be divided into three segments: those who strongly prefer the first option, those who strongly prefer the second option, and those who might choose either option depending on the particular conditions ("switchers"). In any reference state, such as the experimental control, most switchers are likely to favor one of the two options. Thus, the growth potential of the option favored by switchers in the reference state creates "effect propensity" in the opposite direction, whereby any condition or manipulation applied to the reference state is more likely to increase the share of the other option. We test this proposition in a series of studies in the context of choices between "action" (e.g., a gamble or a higher-price/quality) and "inaction" (e.g., a sure gain or a lower-price/quality) alternatives. The results indicate that a large majority of conceptually unrelated manipulations tend to increase the choice share of "action" alternatives. This effect propensity can be reversed when the "action" alternative is the status quo option in the reference (control) state. We discuss the implications of effect propensity for the interpretation of research findings and theory tests.

Date: 2003-02
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Citations: View citations in EconPapers (4)

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