Attention, Information Processing, and Choice in Incentive-Aligned Choice Experiments

Abstract

In incentive-aligned choice experiments, each decision is realized with some probability, Prob. In three eye-tracking experiments, we study the impact of varying Prob from 0 (as in purely hypothetical choices) to 1 (as in real-life choices) on attention, information processing, and choice. Consistent with the bounded rationality literature, we find that as Prob increases from 0 to 1, consumers process the choice-relevant information more carefully and more comprehensively. Consistent with the psychological distance literature, we find that as Prob increases from 0 to 1, consumers become less novelty seeking and more price sensitive. These findings underscore that even with incentive alignment, preference measurement choice experiments such as choice-based conjoint analyses only represent an approximation of real-life choices. Although it is not feasible to systematically use questions with high Prob in the field, we predict and find that placing a higher probability question (such as an external validity task) at the beginning rather than the end of a questionnaire has a carryover effect on attention and information processing throughout the questionnaire, and it influences preference estimates as well.