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

Pia Pinger, Isabel Ruhmer-Krell () and Heiner Schumacher

No 9648, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: restaurant data; compromise effect; utility theory (search for similar items in EconPapers)
JEL-codes: D03 M31 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2016-01
New Economics Papers: this item is included in nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published - published in: Journal of Economic Behavior and Organization, 2016, 128, 14-34

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Journal Article: The compromise effect in action: Lessons from a restaurant's menu (2016)
Working Paper: The Compromise Effect in Action: Lessons from a Restaurant's Menu (2016)
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