Three essays on moderators of context effects

It is now well recognised that consumers do not have well-defined preferences; instead, they construct them during making the choice. Perhaps most representative of this constructive view is research on context effects – particularly the attraction and compromise effects. According to the attraction effect, adding a dominated option (i.e. a decoy) into a choice set increases the relative attractiveness of the option that dominates it. According to the compromise effect, adding an extreme option increases the relative attractiveness of the option which becomes a middle position in the choice set. This thesis explores some variables that may moderate context effects. It consists of three essays. Essay one examines the moderating effect of individual differences in intuitive versus rational thinking styles on the attraction and compromise effects. Results show that the attraction effect is more prominent among individuals relatively high on intuitive and experiential thinking, whereas the compromise effect is not moderated by either thinking styles. Essay two examines the moderating effect of the timing of option entry on the attraction and compromise effects. Experiment 1 shows that entering a strong decoy later into the choice task, compared with presenting it at the beginning of the choice task, attenuates the attraction effect. Experiment 2 shows that the compromise effect is not affected by the timing of entering an extreme option. Essay three demonstrates a new context effect – the proximity enhancement effect, and tests the psychological mechanisms underlying it. According to proximity enhancement, adding an intermediate option increases the relative attractiveness of the option to which the intermediate option is structurally proximate, relative to the option to which the intermediate option is structurally distant. Experiment 1 demonstrates the proximity enhancement effect and shows that the timing of entering the intermediate option does not affect proximity enhancement. Experiment 2 finds that proximity enhancement is a function of deliberate and effortful information processing (as opposed to automatic and effortless processing), such that proximity enhancement is weakened when people’s cognitive resources are depleted by solving complex arithmetic questions. Experiment 3 shows that people’s general tendency of avoiding risk and extremeness might be the psychological mechanism underlying proximity enhancement, such that proximity enhancement is weakened when people adopt a risky and extremeness seeking perspective during choices, compared to when they adopt a riskless and extremeness avoidant perspective. Finally, experiment 4 shows that proximity enhancement can be reversed when people have endowed with options from a choice set prior to seeing the intermediate option. Theoretical and managerial implications are discussed, along with suggestions for future research