1. ABSTRACT
Context effects, widely demonstrated in the literature
(see, e.g. Huber et al., 1982; Simonson, 1989; Simonson
and Tversky, 1992), have been advocated as one of the
major causes producing decision outputs that violate the
normative theories of decision - making. In particular,
context effects refer to the changes in the choice set
that provide new arguments in favour of one of the
alternatives, and thus produce a preference reversal. That
is to say, the preferences are often constructed, not
revealed, and the composition of the choice set influences
the final choice.
This dissertation focuses on some of the most important
and discussed effects, namely: 1-attraction effect (Huber
et al., 1982; Simonson and Tversky, 1992); 2-background
(Tversky and Simonson, 1993) and 3-phantom alternatives
(Pratkanis and Farquhar, 1992).
Little attention has been paid to the analysis of the
interactions between these different phenomena and to
understand under which conditions such interactions might
occur. The purpose of this work is to avoid these
limitations and to provide an empirical analysis of
context effects combination. More specifically, the main
research question is to understand the role played by the
context when the experience acquired during past purchases
contrasts with the information included in the current
choice set.
After a brief discussion of the concepts of experience,
attraction and irrelevant alternatives, four research
hypotheses are formulated. In the literature, the majority
of empirical analyses about context effects are based on
small convenience sample of students with a paper-and-
pencil questionnaire. On the contrary, in this study the
research hypotheses are tested on a large data set of more
than thousand consumers, collected by means of a website.
Particular attention has been given to select a product,
Mp3 player, familiar to the sample, of frequent purchase
and realistically described in terms of few attributes.
Four experiments have been performed:
In the Experiment A, the attraction effect is
demonstrated and the variables that have been manipulated
are placement and nature of decoys (real and phantom).
Objective of this experiment is to verify the existence of
the attraction effect for the considered product category.
Experiment B highlights that people show different
preferences when they have different background
experiences and have to choose between the same target
options.
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2. In Experiment C, experience is used as a conflicting
stimulus and the target set is manipulated (with the
addition of a real decoy) to make the less attractive
alternative more desiderable.
Experiment D, finally, follows the structure of
experiment B but uses a decoy represented by a phantom
alternative (i.e. an option that looks real but is
unavailable at the time the decision is made).
Results show that the decoy is capable of producing a
significant shift in the preference share of the target
product if it provides information contrasting with the
background experience. Moreover, the effects of the decoy
in the final choice task are different for real decoy and
phantom decoy.
In a nutshell, results show that: 1) there is a strong
interaction between the three stimuli; 2) people are more
likely to base their choice on contingent information when
this contrasts with some previous experience; 3) a
conflicting state between experience and context of choice
leads consumers to “forget” the information gathered in
the past.
The study provides empirical support to the calls by the
most recent literature for studying interactions between
context effects (Novemsky et al., 2004; Sheng et al. 2005)
and indicates new interactions which have to be further
addressed by future research. At the same time,
practitioners should be aware that: 1) when they decide to
modify the strategic positioning of their product changing
the level of specific attributes (e.g. price or quality),
they have also to evaluate the impact of these changes on
consumer past experience (e.g. looking at previous sales
through scanner data, fidelity cards, etc); 2) the
introduction of a less attractive product enhances the
sales for the more attractive product (a decoy could for
instance be used to further increase sales volumes during
a promotion); 3) context effects can be used to improve
communication and sales tactics(e.g. 1-comparative ads; 2-
let’s consider for instance the case of two firms with a
similar market share: firm A could introduce an
asymmetrically dominated product in order to highlight the
importance of the attribute which constitutes the strength
of its “old” core-product, thus shifting preferences
toward its “old” product increasing its market share at
the expenses of firm B. In other terms, the new product
would be introduced not to be sold per se, but rather to
increase the perceived importance of a certain attribute).
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