If we have to choose between a
situation where there is only one option and a situation where we can choose
for ourselves out of several options, we will prefer the second situation and
for good reasons.
Imagine that you live in a
country under a dictatorial regime and in order to keep the appearances the regime
organizes elections. At the same time for president there is only one candidate
and for parliament there is only one political party participating in the elections.
It doesn't take a genius to figure out that you – who are living in this
country – will not be very happy with the situation and you would like to have
to choose from more than one option.
It goes similarly for other areas of our lives. We like to
have to choose from a menu at a restaurant, we like to choose from multiple
options for mobile phone plans and we clearly want to have more options for our
summer vacation. We like to make choices. I have discussed in previous posts
that having more choices is not necessarily good , but it is clear that in most areas we like to make our own choices.
What we are less aware of is that
in many instances the options we have to choose from can and do influence our
choice. In theory it will be ideal to have virtually an infinite number of
choices, but in real life it is not so. For example if you’re going out for
dinner at a restaurant, regardless of what you choose from the menu, you’ll end
up eating something that that restaurant sells and the cooks at the restaurant
know how to cook. To make this a bit clearer…
if you go for dinner at a “Pizza and Pasta” restaurant, you will make your
choice out of the generous (or not) menu. What is for sure is that you will
have for dinner a type of pizza or a type of pasta and you will not have steak
or stew.
The choice set we are presented
with clearly influences our choice. The choice set may only restrict our choice
as in the pizza and pasta example or it can in fact guide our choice to a
particular option.
One way of guiding choice towards
a particular option was presented in the post “Not too… but not too…”
In this post I’m going to present
another influence that the choice set has on our choice. This is called the “Attraction
effect”. To better illustrate this I’ll use an example from Dan Ariely’s book “Predictably
Irrational”.
A newspaper has the following
options for subscription:
Option A: On-line Only (Newsletter
+ access on-line to the current edition and archive): 49 Euros/year.
Option B: Print and On-Line (Printed
Edition + Newsletter + on-line access to the current edition and archive): 100
Euros/year.
What would your option be?
In this scenario about 65% went
for the On-line Only option (option A) and about 35% of people went for the
Print + Online option (option B).
I guess that most likely the preferences
among my readers are roughly the same as in the experiment.
But, now clear your mind and
imagine that you are faced with the following choices…
Option A: On-line Only (Newsletter
+ access on-line to the current edition and archive): 49 Euros/year.
Option B’: Print Only (Printed
Edition): 100 Euros/year.
Option B: Print and On-Line (Printed
Edition + Newsletter + on-line access to the current edition and archive): 100
Euros/year.
As you can see, options A and B
are the same as in the previous case. What is new is option B’, namely Print only
for 100 Euros per year.
At first glance this option (B’) has
no reason to be chosen since it is clearly inferior to option B. It gives fewer
advantages than B (print and on-line) and it costs exactly the same. Most
people think about this option in terms like “Who is stupid enough to choose
this (B’) when the third option (B) is clearly much better?”
Thankfully, people are not (that)
stupid to choose option B’ (print only). But this is rather obvious, right?
What is less obvious is how the introduction of a clearly inferior option to
the choice set influences the choices for the other two options that were already
there. But before I reveal the results, I’d like to take you a bit in the land
of Economics.
In the land of Economics there one of the laws is that preferences are stable.
So if you prefer A over B in a situation, in any other situation you will prefer
A over B regardless of any other options available.
Another law in the land of
Economics is that when introducing an additional option in a choice set, the
shares of preferences of the options previously in the choice set can decrease
or remain constant.
To translate this in normal
language, in the previous example where there were only two options: A (on-line
only) and B (Print + On-line), the introduction of a new option B’ (Print only)
should not lead to an increase of preference share of A or of B.
The reasoning is quite simple. If
option B’ is preferred by some people than it will take its preference share
form A or B or both. If B’ is not preferred by anyone (which is the case here)
there is no reason that the preference shares of A and B should be affected.
Now, I assume you’ve guessed what
the results of preferences are in the second situation when the undesired by
anyone B’ option is included. The results go something like this: B’ (Print
only) had a zero share of preference (no one wanted it); Option A (On-line
only) had about 15% preference share and option B (Print and On-line) had about
85% preference share.
If we compare the two scenarios
you will see that introducing the clearly inferior option B’ has led to a huge
change in preferences. Without it about 65% of people chose the on-line only
option (A) and about 35% of people chose the print + on-line option (B). But
when the inferior option B’ was introduced, only 15% of people chose the
on-line only and about 85% of people chose print and on-line (option B). This
is a huge shift…
I would like to point out that this is a huge violation of the economic
laws briefly presented above. I will explain what is happening here. First, we can state that in the first choice
set, options A and B can be considered
equivalent. If we take the benefits and costs we can say that they are more
or less the same and that people can choose what is best for them.
Second, option B’ is clearly worse than option B. It doesn’t take a genius
to see that Print only for 100 Euros is worse than Print + On-line for 100
Euros. Even if the on-line option is never used, it is better to have it than
not to have it especially that it doesn’t cost more.
What is happening is called the “Attraction effect” (or asymmetric
domination). The only real difference between the two choice sets is that in
the first one A and B are equivalent while in the second A and B remain
equivalent and B is clearly better than B’.
Since B is better than B’ what is the point of comparing B with A? When comparing A with B it is quite
effortful for our brains, but when comparing B’ with B there is no effort, the
answer comes quickly and a decision is readily made. Of course it would be
rational to still compare B with A but why bother when we know that B is
clearly better than B’.
In brief, the “Attraction effect”
occurs when in a choice set there is an option that clearly dominates another. Because it is easy to compare a superior
and an inferior option we tend to ignore the other options in the choice set.
The
attraction effect becomes stronger when people who make the choices expect to
be under the scrutiny of others. Choices
of the dominating option are both easy to justify to one’s self and to others
and less likely to be criticized by others. In this case the chooser can
easily say: “Hey, of course I picked “Print and On-line” since it was for the
same price as “Print only””.
A particularity of the “Attraction
effect” is that it occurs mainly when the (initial) choices are quite difficult
to compare against one-another. If in the previous example options A and B
would be easily comparable (such as one is clearly better than the other) there
would be no attraction effect.
The key element in the attraction
effect is that introducing a dominated option in the choice set makes
comparisons easier. Now the chooser doesn’t need to compare against each-other
two options that are difficult to compare. Now the chooser can make a simple
comparison and not a difficult one, reach a conclusion and subsequently make a
choice.
You might think that the
Attraction effect is something more of theoretical nature than practical one,
but it is not exactly so. On-line shopping is one of the areas where it is
used. Imagine that you’re shopping for a laptop computer and you see that there
are two roughly equivalent computers that are sold with a laptop bag. It’s hard
to decide between, let’s say, Asus and Lenovo with similar configurations. But
you see that the Lenovo is also available without a bag for the same price…
Should this change anything? In principle you still have to choose between Asus
and Lenovo, but now it is clear that to buy a Lenovo with a bag is better than
buying the same Lenovo without a bag… and for a couple of seconds the Asus just
went out of your mind. Before you know it, you have the Lenovo with a bag in
your “shopping cart” and you’re filling in your bank card details.
My dear wife, who works in
recruitment, tells me that the Attraction effect is encountered often in her
line of work. When they have three candidates invited for an interview (one
position available) it happens that one candidate is clearly worse than
another, but somehow they can’t figure out what is with the third candidate …
I’ll end with two questions for
you. Do you choose what you want? Do you want what you chose?
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