Set Of Choice Alternatives Research Articles

Compromise effect and consideration set size in consumer decision-making

ABSTRACTThe compromise effect dictates that a decision-maker chooses a middle option over an extreme one given a set of choice alternatives since choosing an intermediate option is easier to justify, less likely to be criticized, and is consistent with loss aversion. Our experiment is designed to identify whether the connection between the extremeness of the options and the size of the consideration sets is economically and statistically significant and thus would have important behavioural implications. Specifically, we compare decision-making under small and large consideration sets where the extremeness of the comprising choice options is high, as opposed to low. The results demonstrate that an increase in consideration set size leads to weaker compromise effect (i.e. boundary condition) but when composed of high extremeness, strengthens the compromise effect.

A lexicographic semiorder polytope and probabilistic representations of choice

I consider the convex polytope defined by the convex hull of the set of all simple lexicographic semiorders (Davis-Stober, 2010) compatible with a fixed linear ordering over a set of choice alternatives. Simple lexicographic semiorders have been previously used by decision theorists to model intransitive choice (e.g., Tversky, 1969). This convex polytope is a full dimensional 0/1 polytope in Rn(n−1). I present seven families of inequalities that constitute a complete linear description of this polytope for any finite n. I prove that these inequalities are a minimal such list, i.e., they are facet-defining for any finite n. I go on to demonstrate that this polytope is equivalent to a ‘mixture model’ of probabilistic choice.

The impact of imagery-evoking category labels on perceived variety

Does sensory imagery influence consumers’ perception of variety for a set of products? We tested this possibility across two studies in which participants received one of three alternate coffee menus where all the coffees were the same but the category labels were varied on how imagery-evocative they were. The less evocative labels (i) were more generic in nature (e.g., ‘Sweet’ or ‘Category A’), whereas the more evocative ones related either (ii) to the sensory experience of coffee (e.g., ‘Sweet Chocolate Flavor’ or ‘Smokey-Sweet Charred Dark Roast’) or (iii) to imagery related to where the coffee was grown (e.g., ‘Rich Volcanic Soil’ or ‘Dark Rich Volcanic Soil’). The labels relating to where the coffee was grown was included as a second control to show that merely increasing imagery does not increase perceived variety; it is increasing the sensory imagery relating to the items that does so. As expected, only category labels that evoked sensory imagery increased consumers’ perception of variety, whereas imagining where the coffee was grown did not enhance perception of variety. This finding extends recent research that shows that the type of sensory information included in an ad alters the perceptions of a product (Elder and Krishna, 2010) by illustrating that the inclusion of sensory information can also alter the perceived variety of a set of products. Thus, the inclusion of sensory information can be used flexibly to alter perceptions of both a single product and a set of choice alternatives.

A Poisson mixture model of discrete choice

In this paper, we introduce a new Poisson mixture model for count panel data where the underlying Poisson process intensity is determined endogenously by consumer latent utility maximization over a set of choice alternatives. This formulation accommodates the choice and count in a single random utility framework with desirable theoretical properties. Individual heterogeneity is introduced through a random coefficient scheme with a flexible semiparametric distribution. We deal with the analytical intractability of the resulting mixture by recasting the model as an embedding of infinite sequences of scaled moments of the mixing distribution, and newly derive their cumulant representations along with bounds on their rate of numerical convergence. We further develop an efficient recursive algorithm for fast evaluation of the model likelihood within a Bayesian Gibbs sampling scheme. We apply our model to a recent household panel of supermarket visit counts. We estimate the nonparametric density of three key variables of interest–price, driving distance, and their interaction–while controlling for a range of consumer demographic characteristics. We use this econometric framework to assess the opportunity cost of time and analyze the interaction between store choice, trip frequency, search intensity, and household and store characteristics. We also conduct a counterfactual welfare experiment and compute the compensating variation for a 10%–30% increase in Walmart prices.

New Methodology for Analyzing Competitive Positions: A Demonstration Study of Travelers' Attitudes Toward Their Modes of Transport

This research introduces a new methodology for analyzing the competitive relationships among a set of choice alternatives. The nonparametric methodology recommended for analyzing the competitive relationships works on a disaggregate level. It combines an exploratory step—condensing the attitudes about modes into a small set of attitudinal patterns—with an inferential step of using contingency for pairs of alternatives to examine relationships. A simple coefficient derived from these tables indicates the amount of “similarity” competition. Data on travelers' attitudes toward the modes of transport train, air, and bus are used to illustrate applying the methodology. Segments are identified based on specific attitudes. Interdependence of attitudes means that, for example, a consumer's judgment of air travel influences his/her simultaneous judgment of train travel. Asymmetry of the travelers' belief systems implies that managers of airline, train, or bus companies face unequal attitudinal conditions in their target groups leading to competitive advantage or disadvantage. For the segments the meaning and implication of attitudes towards modes being interdependent and not symmetric is considered. The results obtained are not meant to be generalized. Rather they are a vehicle to highlight the method's value for both researchers and practitioners for studying the competitive positions of businesses associated with classes of tourist products or services.

Random utility threshold models of subset choice

Subset choice denotes a situation in which decision makers are offered available sets from a fixed master set of choice alternatives and each decision maker is asked to choose a subset of any size from the available set. In this paper, we study the relationships between various random utility models of subset choice. Random utility threshold models of subset choice assume that there is a (random) utility associated with each available option, and a (random) utility threshold, such that the decision maker selects those options in the available set whose utilities are greater than or equal to the threshold. A special case of the random utility threshold model is the latent scale model, in which the threshold has a constant value and the random variables associated with the available options are independent of each other. We show that the size-independent random utility model for approval voting of Falmagne and Regenwetter (1996) is a random utility threshold model, and develop numerous results relating that model to the class of random utility threshold models in general, and to the latent scale model in particular. Among the features distinguishing some of these models is a closure property that we call stability under substructures. The size-independent model is not stable, in the sense that certain marginals of a given size-independent model for n choice alternatives may violate all size-independent models for n -1 choice alternatives. In contrast, the general class of random utility threshold models and also the specific subclass of latent scale models are stable under substructures.

Similarity between stimuli: An experimental test of the Luce and Restle choice models

A set of choice alternatives was constructed to test Restle's (1961) hypothesis about the role of similarity between alternatives in choice behavior. The set contained names of three political figures, three actresses, and three athletes, with the intention of producing considerable similarity within subsets and minimal similarity between subsets. Subjects were asked to select the individual with whom they would prefer to spend an hour of conversation. Paired-comparison choice data from 234 college subjects were consistent with expectations based on Restle's model, and disconfirmed Luce's (1959) stronger model which does not take similarity into account. Measurements of response strength for choosing the individual alternatives, and of perceived similarity between pairs of alternatives can be obtained using Restle's model, and the present test provides evidence for the validity of such measurements. Finally, Restle's model is shown to be indistinguishable from a modification of Thurstone's (1927) Case V, where the assumption of zero correlation is relaxed to permit nonnegative correlations between pairs of discriminal dispersions.