Extremeness Aversion Research Articles

Small, regular or large? The effect of size options on online food choices

The aim of the present study was to examine the effect of verbal size descriptors on portion size selections. Specifically, we investigated a range of size options within an online ordering setting. A sample of 216 female Flinders University students were asked to select a side dish, drink, and dessert from one of three online menus with varying portion size options: (1) small, regular, and large (SRL), (2) regular, large, and extra-large (RLXL), or (3) small, regular, large, and extra-large (SRLXL). Participants also completed a measure of dietary restraint. Across conditions, participants most frequently selected the ‘regular’ size for sides and drinks; however, for desserts a small size was equally preferred. In contrast to the concept of extremeness aversion, incorporating a small (S) or extra-large (XL) option into the choice-set did not significantly increase or decrease large size choices, respectively. However, dietary restraint moderated the effect of size option condition on portion selection for side-dish selections (but not for drinks and desserts), such that when an XL size was available, unrestrained eaters were relatively more likely than restrained eaters to pick a large or XL side dish. The findings support an overall preference for a normative sounding portion size. Accordingly, one useful strategy would be to reduce the size of regular serving portions to reflect an amount closer to current health guidelines.

Social sampling and expressed attitudes: Authenticity preference and social extremeness aversion lead to social norm effects and polarization.

A cognitive model of social influence (Social Sampling Theory [SST]) is developed and applied to several social network phenomena including polarization and contagion effects. Social norms and individuals’ private attitudes are represented as distributions rather than the single points used in most models. SST is explored using agent-based modeling to link individual-level and network-level effects. People are assumed to observe the behavior of their social network neighbors and thereby infer the social distribution of particular attitudes and behaviors. It is assumed that (a) people dislike behaving in ways that are extreme within their neighborhood social norm (social extremeness aversion assumption), and hence tend to conform and (b) people prefer to behave consistently with their own underlying attitudes (authenticity preference assumption) hence minimizing dissonance. Expressed attitudes and behavior reflect a utility-maximizing compromise between these opposing principles. SST is applied to a number of social phenomena including (a) homophily and the development of segregated neighborhoods, (b) polarization, (c) effects of norm homogeneity on social conformity, (d) pluralistic ignorance and false consensus effects, (e) backfire effects, (f) interactions between world view and social norm effects, and (g) the opposing effects on subjective well-being of authentic behavior and high levels of social comparison. More generally, it is argued that explanations of social comparison require the variance, not just the central tendency, of both attitudes and beliefs about social norms to be accommodated.

Supplemental Material for Social Sampling and Expressed Attitudes: Authenticity Preference and Social Extremeness Aversion Lead to Social Norm Effects and Polarization

Supplemental Material for Social Sampling and Expressed Attitudes: Authenticity Preference and Social Extremeness Aversion Lead to Social Norm Effects and Polarization

Adding more portion-size options to a menu: A means to nudge consumers to choose larger portions of healthy food items

We propose and find that the extremeness aversion bias when choosing portion-sizes is stronger for healthy food as compared to unhealthy food items. In two studies (and a follow-up) we find that adding an extra-large option to a standard menu of small, medium, and large portions increases the choice share of the larger portion-sizes; but more so for healthy food than for unhealthy food. Furthermore, we find evidence for the lay belief that larger portions of healthy food do not have incremental health costs. When health costs of the larger portions of healthy food were made salient by providing calorie information, the above effects disappeared. These findings show (1) a boundary condition to the extremeness aversion effect when choosing portion sizes, and (2) imply that this bias can act as a nudge to increase the consumption of healthy food.

An Evolutionary Perspective in Tourism: The Role of Socioeconomic Status on Extremeness Aversion in Travel Decision Making

The present research investigates a novel relationship between travelers’ childhood socioeconomic status (SES) and travel decision-making. We theorize that travelers from lower childhood SES or resource-scarce/unpredictable environments are more likely to avoid extreme options in a choice set. Five studies consistently show that childhood SES is negatively associated with extremeness aversion in diverse travel choices. We also demonstrate that the general risk tendency mediates the relationship between childhood SES and extremeness aversion in travel decision making (studies 3A and 3B). Lastly, we reveal that childhood SES is more likely to predict extremeness aversion when a choice set involves a quality–price trade-off rather than a quality–quality trade-off (study 4). This research introduces evolutionary aspects to explain pervasive behavioral tendencies in the context of travel and tourism and offers new insights to practitioners.

COVID-19 and Extremeness Aversion: The Role of Safety Seeking in Travel Decision Making

Combining conceptual perspectives from emerging research on COVID-19, safety-seeking motivations, and extremeness aversion in choice (i.e., compromise effects), we examine how and why the perceived threat of COVID-19 affects consumers’ choice and decision making in the hotel and restaurant domains. Across seven studies (two studies from secondary data sets and five experimental studies), we provide novel evidence that the perceived threat or threat salience of COVID-19 amplifies the general tendency to select compromise options, avoiding extreme ones, within a choice set. We highlight the role of safety-seeking motivations as the underlying mechanism in the relationship between perceived threat and extremeness aversion in choice. We further document a boundary condition that the extremeness aversion effect is stronger for leisure travelers than for business travelers.

Risks of Observable and Unobservable Biases in Artificial Intelligence Predicting Consumer Choice

Companies are increasingly adopting Artificial Intelligence (AI) today. Recently however debates started over the risk of human cognitive biases being replicated (and scaled) by AI. Research on biases in AI predicting consumer choice is incipient and focuses on observable biases. We provide a short synthesis of cognitive biases and their potential risk of being replicated in AI-based choice prediction. We also discuss for the first time the risk of unobservable biases, which affect choice indirectly, through other biases. We exemplify this by looking at looking at three prevalent, most frequently investigated biases in consumer behaviour: extremeness aversion, regret aversion and cognitive regulatory focus (prevention- versus promotion-focus). Based on a sample of 1747 respondents, through partial least squares structural equation modelling and significance testing, we show that regret aversion (unobservable bias) significantly reduces extremeness aversion (observable bias) and mediates the influence of cognitive regulatory focus (unobservable bias).

Range effect on extremeness aversion

Extremeness aversion is the tendency of choice makers to avoid extreme options and choose an intermediate option. This leads to an increase in the relative choice share of an extreme alternative (target) by the introduction of a new extreme alternative that makes the target an intermediate option. This paper examines the range effect, which is the impact of the increase in the perceived distance between the target alternative and the new extreme alternative, on extremeness aversion. To examine the research question, an experimental study is conducted in a classroom setting using four product categories. The results show that extremeness aversion is the highest when the distance between the new extreme alternative and the target alternative is such that the target alternative is placed exactly at the center in the trinary choice set. This paper validates the existing models of extremeness aversion. The findings of this paper support the reference-dependent model, which is based on the principle of loss aversion. The findings of this paper have noteworthy practical implications for the design of extreme alternatives to achieve effective extremeness aversion.

The Asymmetric Impact of Context on Advantaged versus Disadvantaged Options

Despite substantial prior research regarding the effect of context on choices, uncertainty remains regarding when particular context effects will be observed. In this article, the authors advance a new perspective on context-dependent choices, according to which context effects are a function of the relative advantage of one option over another and of the different strategies that decision makers evoke when making a choice. They propose that context effects resulting from the addition of a third option to a two-option set are more frequently observed when the added option is relatively similar (adjacent) to the “disadvantaged” alternative (i.e., the lower-share option) in the set. The authors conduct a series of studies to analyze the occurrence of context effects and find support for predictions related to asymmetric dominance and extremeness aversion.

Heterogeneity in decision processes: Embedding extremeness aversion, risk attitude and perceptual conditioning in multiple process rules choice making

There is an increasing interest, in the discrete choice modelling literature, in alternative behavioural paradigms that represent ways in which individuals make choices when faced with a choice set of alternatives. We see an increasing number of studies using process heuristics such as attribute non-attendance, relative advantage maximisation, extremeness aversion and value learning. With some exceptions, the study of each heuristic has been undertaken in isolation from other candidate heuristics; the exceptions being joint investigation into a fully compensatory model defined by a linear additive in attributes and parameters specification and one process heuristic, commonly using latent class models. This paper investigates the role that two behaviourally appealing decision rules play jointly in explaining choice making, both of which reflect risk attitude in different ways. We jointly estimate a model that accounts for extremeness aversion and an extended expected utility transformation for an attribute that accounts for risk attitude and perceptual conditioning under fully compensatory attributes. We use a stated choice experiment associated with a car choice between tolled and non-tolled roads in Australia. The findings suggest that the mean VTTS from the multiple-rule model is higher than the mean estimates obtained from each of the stand-alone models.

Preference-Construction Habits: The Case of Extremeness Aversion

We propose that choice construction strategies often meet the criteria for “habits.” As an example of a constructed preference habit, we focus on extremeness aversion, namely, the tendency to prefer a middle or “compromise” option versus an “extreme” option from a given options set. We present evidence that some consumers appear to have a habitual tendency to avoid extreme options that is (1) partly heritable, (2) formed in childhood, and (3) moderated by age and personality traits such as preference for moderation. We discuss the implications of the notion of preference-construction habits and future research directions.

Introduction to Special Issue: The Habit-Driven Consumer

Introduction to Special Issue: The Habit-Driven Consumer

Price Range Effect on Extremeness Aversion and Compromise Effect

Recent decision research has discovered the presence of the extremeness aversion and compromise effect in choice. The extremeness aversion and compromise effect extend the principle of loss aversion. Based on the inference that a loss will not be possibly prominent when the price range for alternatives in a choice set was narrower, the present research pointed out that the prices difference for alternatives in the choice set, via different psychological mechanisms, loss aversion versus cost-effectiveness, affects a consumer's choice. Two studies demonstrated that the level of extremeness aversion (Study 1) and compromise effect (Study 2) in the case of a wider price range will be higher than that in the case of a narrower price range. Theoretical and practical implications of the finding were discussed.

A meta-analysis of extremeness aversion

Using a meta-analysis of 142 experimental observations, this work examines the influence of different research design and outcome measures on extremeness aversion (i.e., the propensity to avoid extreme options in choice situations). The results indicate that extremeness aversion is a robust phenomenon: middle options are significantly more often selected than other options. However, the strength of this behavioral effect exhibits substantial variation (up to three times the average magnitude) across methodological decisions: employing price-quality tradeoffs, nondurable categories, or binary-trinary choice-set comparisons tend to reduce the probability of extremeness aversion among consumers, whereas using a larger number of tradeoff dimensions, non-numeric attributes, high-quality extensions, or utilitarian products increase its likelihood. Because extremeness aversion has been assessed using three different measurement paradigms (absolute-share changes, relative-share shifts, and middle-option proportions), we discuss their characteristics and investigate their degree of agreement. We find that the three measures can lead to rather different effect magnitudes and even contradictory conclusions about the effect of moderators.

Misunderstanding of the binomial distribution, market inefficiency, and learning behavior: Evidence from an exotic sports betting market

Abstract This paper uses the setting of a volleyball game and an exotic sports betting on the point difference of volleyball games to test whether people correctly understand the probabilities related to outcomes of a process which follows a binomial distribution. We find that people consistently underestimate the probabilities of outcomes that correspond to extreme ends of the distribution. This is consistent with the extremeness aversion bias documented in decision making studies. Whereas previous studies on the extremeness aversion bias find the existence of the bias in a consumer choice setting, we document that this bias also exists in an investment setting. We find evidence of learning behavior over time; however, it is not sufficient to eliminate the bias.

Experimental departures from self-interest when competing partnerships share output

When every individual’s effort imposes negative externalities, self-interested behavior leads to socially excessive effort. To curb these excesses when effort cannot be monitored, competing output-sharing partnerships can form. With the right-sized groups, aggregate effort falls to the socially optimal level. We investigate this theory experimentally and find that while it makes correct qualitative predictions, there are systematic quantitative deviations, always in the direction of the socially optimal investment. Using data on subjects’ conjectures of each other’s behavior we investigate altruism, conformity and extremeness aversion as possible explanations. We show that deviations are consistent with both altruism and conformity (but not extremeness aversion).

Does menu design influence retirement investment choices? Evidence from Italian occupational pension funds

AbstractPrevious research has demonstrated that consumers’ decisions regarding supplementary pensions could be affected by biases. Bernatzi and Thaler’s experiment demonstrated that menu design can influence pension fund enrollment decisions, in that participants appear to adopt a naïve heuristic, i.e., “extremeness aversion”. Using a database of 27 occupational pension funds from 2007 to 2011, representing 1,732,530 employees, this study asked whether menu design affected Italian workers’ choices regarding the supplementary pension system as a result of the new rules enacted by the regulator in 2007. Most enrolled workers opted for the median investment line. I discuss the possible relevance of this result to public policy, in particular the possibility of including these preferences in the regulations, with the aim of benefiting employees.

Current Identifiable Biases in Italian Occupational Pension Fund Enrolment Decisions: Default Bias and Extremeness Aversion

Previous researches have demonstrated that consumer decisions could be affected by some biases in the supplementary pension field. Decision-making is very often not guided by reason, and in many cases, if forced to choose, people will decide not to decide, passively accepting the decisions made for them by others. Such behaviour deserves to be analyzed and studied in order to better understand its consequences, and determine whether the latter can be turned to the advantage of the decision-makers themselves. Using a database of 24 occupational pension funds representing 1,732,530 employees, this paper examines the presence of default bias and extremeness aversion in Italian workers’ choices regarding the supplementary pension system, as a result of the new rules enacted by the regulator in 2007. The results provide insights which are important for public policy as regards the possibility of taking account of these biases when formulating the regulations, with the aim of benefiting employees.

The 2013 Hong Kong International Arbitration Centre Kaplan Lecture – Arbitral Decision-Making: Art, Science or Sport?

The following article is a print version of the annual Kaplan Lecture delivered by Lucy Reed in Hong Kong in December 2012.The lecture is divided into two parts. It begins with a discussion of heuristics and cognitive biases in adjudication. It relates various findings in experimental settings of how cognitive biases such as the anchoring effect, hindsight bias, egocentric bias, cultural effects and extremeness aversion may have an impact on adjudicators. The second part describes how, from a practical point of view, both advocates and arbitrators can reduce the potential for bias, and increase efficiency and responsiveness in arbitral proceedings.

Experimental Departures from Self-Interest When Competing Partnerships Share Output

When every individual's effort imposes negative externalities, self-interested behavior leads to socially excessive effort. To curb these excesses when effort cannot be monitored, competing output-sharing partnerships can form. With the right-sized groups, aggregate effort falls to the socially optimal level. We investigate this theory experimentally and find it makes correct qualitative predictions but there are systematic quantitative deviations, always in the direction of the socially optimal investment. By using data on subjects' conjectures of each other's behavior we show that deviations are consistent with both altruism and conformity (but not extremeness aversion).