Incentive alignment in anchored MaxDiff yields superior predictive validity

Abstract

AbstractMaximum Difference Scaling (MaxDiff) is an essential method in marketing concerning forecasting consumer purchase decisions and general product demand. However, the usefulness of traditional MaxDiff studies suffers from two limitations. First, it measures relative preferences, which prevents predicting how many consumers would actually buy a product and impedes comparing results across respondents. Second, market researchers apply MaxDiff in hypothetical settings that might not reveal valid preferences due to hypothetical bias. The first limitation has been addressed by implementing anchored MaxDiff variants. In contrast, the latter limitation has only been targeted in other preference measurement procedures such as conjoint analysis by applying incentive alignment. By integrating anchored MaxDiff (i.e., direct vs. indirect anchoring) with incentive alignment (present vs. absent) in a 2 × 2 between-subjects preregistered online experiment (n = 448), the current study is the first to address both threats. The results show that incentive-aligning MaxDiff increases the predictive validity regarding consequential product choices—importantly—independently of the anchoring method. In contrast, hypothetical MaxDiff variants overestimate general product demand. The article concludes by showcasing how the managerial implications drawn from anchored MaxDiff differ depending on the four tested variants. In addition, we provide the first incentive-aligned MaxDiff benchmark dataset in the field.