The Compromise Effect in Action: Lessons from a Restaurant’s Menu

Heiner Schumacher, Isabel Ruhmer-Krell and Pia Pinger

Working Papers from eSocialSciences

Abstract: The compromise effect refers to individuals’ tendency to choose intermediate options. Its existence has been demonstrated in a large number of hypothetical choice experiments. This paper uses field data from a specialties restaurant to investigate the existence and strength of the compromise effect in a natural environment. Despite the presence of many factors that potentially weaken the compromise effect (e.g., a very large choice set, the opportunity to choose familiar options), we find evidence for it both in descriptive statistics and regression analyses. Options which become a compromise after a change in the choice set gain on average five percent in market share. We also find that the compromise effect is especially pronounced in groups, while for single customers it is statistically insignificant.

Keywords: intermediate options; hypothetical choice; experiments; specialties restaurant; compromise effect; natural environment; single customers; utility theory; restaurant data (search for similar items in EconPapers)
Date: 2016-02
Note: Institutional Papers
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Citations: View citations in EconPapers (8)

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