Comparison, Grouping, and Preference

How does the attractiveness of a particular option depend on comparisons drawn between it and other alternatives? We observe that in many cases, comparisons hurt: When the options being compared have both meaningful advantages and meaningful disadvantages, comparison between options makes each option less attractive. The effects of comparison are crucial in choice problems involving grouped options, because the way in which options are grouped influences which comparisons are likely to be made. In particular, we propose that grouping focuses comparison, making within-group comparisons more likely than between-group comparisons. This line of reasoning suggests that grouping should hurt, and we observe that it does: An option is more likely to be chosen when alone than when part of a group.

[1]  J. Knetsch,et al.  Willingness to Pay and Compensation Demanded: Experimental Evidence of an Unexpected Disparity in Measures of Value , 1984 .

[2]  P. Slovic The Construction of Preference , 1995 .

[3]  C. Plott,et al.  Economic Theory of Choice and the Preference Reversal Phenomenon , 1979 .

[4]  A. Tversky,et al.  Context-dependent preferences , 1993 .

[5]  D. H. Wedell,et al.  Distinguishing Among Models of Contextually Induced Preference Reversals , 1991 .

[6]  Christopher P. Puto,et al.  Adding Asymmetrically Dominated Alternatives: Violations of Regularity & the Similarity Hypothesis. , 1981 .

[7]  A. Tversky,et al.  Loss Aversion in Riskless Choice: A Reference-Dependent Model , 1991 .

[8]  J. Kagel,et al.  Handbook of Experimental Economics , 1997 .

[9]  A. Tversky,et al.  Choice in Context: Tradeoff Contrast and Extremeness Aversion , 1992 .

[10]  A. Tversky,et al.  Choices, Values, and Frames , 2000 .

[11]  A. Tversky,et al.  Choice under Conflict: The Dynamics of Deferred Decision , 1992 .

[12]  Eldar Shafir,et al.  Choosing versus rejecting: Why some options are both better and worse than others , 1993, Memory & cognition.

[13]  I. Simonson,et al.  Choice Based on Reasons: The Case of Attraction and Compromise Effects , 1989 .

[14]  Christopher K. Hsee,et al.  Will Products Look More Attractive When Presented Separately or Together? , 1998 .

[15]  D. Kahneman,et al.  Experimental Tests of the Endowment Effect and the Coase Theorem , 1990, Journal of Political Economy.