Role of product entry and exit on the attraction effect

Abstract

The attraction effect illustrates a violation of the regularity assumption in consumer choice. This effect increases the share of a target brand, relative to a competitor, when a third alternative is added to the choice set such that the target dominates the third alternative completely but the competitor does not. The effect has important marketing implications for design and presentation of choice sets to consumers. This paper studies the influence of sequential product entry and exit on the attraction effect; specifically, it focuses on the differences among simultaneous entry, delayed product entry, and product exit. Using two experiments, the paper shows that even sequential actions, such as entry or exit of products, predictably produce the attraction effect.