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Do real payments really matter? A re-examination of the compromise effect in hypothetical and binding choice settings

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Abstract

Numerous empirical studies have confirmed the existence of the compromise effect, which stipulates that options positioned between extreme alternatives in a product space are perceived as more attractive, hence becoming more likely to be chosen by consumers. However, literature on the topic frequently addresses the limited realism of prior work due to the artificial designs that were used. In a laboratory-based replication study, we examine the compromise effect across several categories in a more market-like scenario, in which experienced consumers make unforced decisions between real brands. In particular, we investigate whether the compromise effect varies in strength across the choice settings, depending on whether a hypothetical choice setting or a binding setting (in which subjects face buying obligations in terms of real payments for products) has been applied. While our results prove the robustness of the compromise effect for both choice frames, its strength differs significantly. Specifically, the compromise effect is evidently not as strong when real payments are introduced in binding choice settings. In addition, analysis of moderating factors confirms that compromise effects are stronger for categories where subjects are more in agreement about the relative quality of the options.

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Acknowledgements

The authors thank two anonymous reviewers and the responsible editor Joel Steckel for providing helpful suggestions and comments on a former version of this paper. In addition, the authors thank the participants of the sessions on consumer behavior contributed at the 25th Annual Congress of the European Economic Association 2010 (Glasgow) and the 4th GFA Conference on Quantitative Marketing 2010 (Vienna) for the useful comments and discussions on this particular research topic.

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Authors and Affiliations

  1. Department of Marketing, Faculty of Economics and Management, Otto-von-Guericke-University Magdeburg, P.O. Box 4120, 39016, Magdeburg, Germany

    Holger Müller

  2. Institute for Economic Theory and Statistics, Karlsruhe Institut of Technology (KIT), P.O. Box 6980, 76128, Karlsruhe, Germany

    Eike Benjamin Kroll

  3. Department of Empirical Economics, Faculty of Economics and Management, Otto-von-Guericke-University Magdeburg, P.O. Box 4120, 39016, Magdeburg, Germany

    Bodo Vogt

Authors
  1. Holger Müller
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  2. Eike Benjamin Kroll
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Correspondence to Holger Müller.

Appendices

Appendix 1

Table 2

Table 2 Experimental designs of studies on compromise effects
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Appendix 2

Table 3

Table 3 Means of price and quality rankings of brands in the control condition
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Appendix 3

Table 4

Table 4 Purchase rates (PR), shares of no-buy options, product shares under experimental conditions
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Appendix 4

Table 5

Table 5 Coefficients and fit of the regression model
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Müller, H., Kroll, E.B. & Vogt, B. Do real payments really matter? A re-examination of the compromise effect in hypothetical and binding choice settings. Mark Lett 23, 73–92 (2012). https://doi.org/10.1007/s11002-011-9137-2

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