Choice: Assortment Size and No-choice Option

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Choice Assortment Size and No-choice Option
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Choice in Laboraory

• Two-key procedure
• Concurrent schedules of reinforcement
• Typically VI-VI
• Each option associated with separate schedule
• Distribution of time and behaviour
• COD

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Choice in Real World

• Many simultaneous options
• Combination of schedules
• Unequal levels of reinforcement
• Bias common

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Bias

• Spend more time on one alternative than predicted
• Biological predispositions
• Previous conditioning
• Quality and amount
• Advertising!

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Herrnsteins Basic Matching Law

• B behaviour
• R rate of reinforcement
• A amount
• Q quality

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Self-Control

• Conflict between short- and long-term choices
• Choice between small, immediate reward or larger,
  delayed reward

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Ainslie-Rachlin Theory

• Value of reinforcer decreases as delay b/t choice
  getting reinforcer increases
• Choose reinforcer with higher value at the moment
  of choice
• Ability to change mind binding decisions

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Assortment

• Assortment benefits consumers
• Common marketing assumption
• From classic economic theories
• Large assortment should offer better match
  between consumers preferences and product
  offering
• Is large choice really better?

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Large Assortment Positives

• Better matching argument
• Individual preferences and product
  characteristics
• Option value argument
• Keeps consumer options open
• Flexibility when making purchasing decisions
• Anticipation of future variety-seeking behaviour
• Perceived freedom of choice

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• Reducing uncertainty of choice set
• Do options adequately represent all contingencies
  available?
• Delay in purchasing can occur if consumer
  uncertain about alternatives

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Large Assortment Negatives

• Increased demand on cognitive resources
• May produce weaker preferences for product(s)
• Increased effort to evaluate attractiveness of
  alternatives
• Consumer confusion
• As choices increase, confusion increases, and no
  choice may be made

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A Common Assumption

• Consumers possess readily available criteria for
  evaluating choice alternatives
• Main task is to find alternative that best
  matches criteria

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But...

• Consumers regularly make choices when lacking
  sufficient expertise
• May lack good decision criteria
• Might have to construct criteria before making
  choice
• Information gathering
• Choice behaviour
• Easier in smaller assortment

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Perfect Condition

• Consumer has decision criteria
• Preformed preference for a particular alternative
• If alternative is available, selection doesnt
  require detailed evaluation
• But...

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Product Ideal Point

• Combination of attributes and attribute values
  describing ideal choice alternative

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Example

• Consumer A
• Familiar with scotch products and has favourite
  brand, e.g., Oban (peaty, smoky)
• Consumer B
• Familiar with key attributes describing scotch,
  and has ideal combination, but doesnt know
  specific brand
• Consumer C
• Familiar with key attributes but lacks favourite
  brand and ideal attribute combination

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• Consumers A, B, and C differ in availability of
  ideal point
• A has readily defined ideal point and a specific
  option corresponding to that point
• B also has ideal point, but no specific option
  corresponding to it

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Decision Process

• As decision process will be different from Bs
  and Cs
• A has a memorized preference for a choice option
• Match specific option to ideal point
• Affect referral strategy
• Simply retrieve memorized evaluation without
  actively processing attributes
• B and C still have to construct option-specific
  preferences

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Chernev (2003)

• Focuses on scenarios in which consumers face
  decision problems for which affect referral does
  not provide a ready solution
• Asking what the impact of assortment size is on
  choice

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Experiment

• Subjects asked to articulate their ideal
  attribute combination
• Made choice from large (16) or small (4)
  assortment
• Strength of preference (dependent variable) was
  operationalized as likelihood of switching to
  another option

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• Stimuli were various chocolate assortments
• Chocolate type, cocoa content, flavour, nut
  content
• 88 undergraduates
• Dependent variable
• Reward of 2 chocolates of same kind selected in
  choice task or 2 of the most popular chocolates
  from the Godiva collection
• Would they stay with choice or switch?
• Measures preference strength

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Results
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• Subjects perceive larger set to offer more
  variety
• But, variety offered not perceived to be extreme
  in either direction
• Switching
• Ideal point and assortment size

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switching behaviour
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small assortment
large assortment
Ideal point not available
Ideal point available
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Additional Experiments

• Articulated/non-articulated ideal state
  conditions
• Choices from more varied options
• General patterns from exp. 1 hold

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General Findings

• Readily formed ideal attribute combinations
  provide subject with a benchmark for evaluating
  alternatives in choice set
• For these subjects, large assortments less likely
  to generate weak preferences
• Subjects lacking ideal point susceptible to
  cognitive overload with large assortments

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Cognitive Dissonance

• Consumer ranks two attributes as equally
  attractive
• Difficult to trade off these attribute levels
• Committed to both attributes
• Cognitive dissonance associated with rejecting
  either more pronounced
• Lowers consumers decision confidence
• Increases probability of switching

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Conclusions

• Consumers without an ideal point
• Complex simultaneous tasks of forming ideal
  attribute combination and searching for best
  match
• For large assortment, having ideal point
  simplifies task
• In small assortment, having strong ideal point
  may complicate task if no ideal match is available

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Example

• Mid 1990s Apple computer
• Reduced number of Macintosh sub-brands
• Hoped to increase sales by decreasing consumer
  confusion

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Choice/No-choice

• Desired vs. undesired options
• Easy choice
• Several equally desired options
• Difficult to choose
• Whether or not to choose at all
• May lead to choice delay

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Real World

• Timing of purchasing decisions
• Rarely fixed or predictable
• Option of not choosing usually available
• Defer-choice options
• Seeking more information on alternatives
• Searching for new alternatives

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Theoretical Approach

• Rational theory of search
• No-choice option chosen when none of the
  alternatives are attractive or there are benefits
  to continued searching
• Predecisional processes
• Select no-choice to avoid making difficult
  trade-offs

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Completeness Assumption

• Completeness assumption
• Consumers have complete access to choice
  information and that information processing is
  costless
• In reality
• Consumers rarely have complete information on all
  brands
• Either unavailable or impossible to process
• Information gathering/processing is very costly
• Time, resources, effort, etc.

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Preference Assumption

• Preference ordering
• Consumer has definitive preference ranking
  between options
• Determines if one item is as good as another
• In reality
• Decisions made not through clearly ranked
  preferences but due to forced choice
• May narrow choice to the extent that consumer is
  unable/incapable of discriminating relative
  differences
• Indecision

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No-choice Option

• No-choice selected when
• None of the alternatives are attractive
• When search may produce better options
• Consumer is unaware of full range of potential
  alternatives
• Research should distinguish between these
  conditions

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Distinction

• Indifference
• Dont care which option is obtained
• Random choice
• Indecision
• Not ready to make a choice

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Dhar (1997)

• Choice deferral
• Expanding choice set by
• adding new alternatives
• changing decision task for same alternatives
• Role of preference uncertainty on no-choice
• Tested predictions regarding purchasing for
  different choice sets
• Used verbal protocols to understand decision
  processes
• Manipulated decision task to change effect size

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Results

• Expanding choice set size with attractive
  alternative
• Increases preference for no-choice option
• Adding inferior alternative
• Decreases preference for no-choice option
• Shouldnt have an effect, based on trade-off
  hypothesis
• Suggests decision to purchase is influenced by
  need to clearly differentiate between
  alternatives
• Decreasing differences in attractiveness between
  alternatives increased preference for no-choice
  option

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Applications

• Attractive/unattractive options
• e.g., decision made in-store
• Providing instant special discount
• Makes alternative less attractive
• Makes choice decision easier
• e.g. Realtors showing several unattractive houses
  and one attractive house
• e.g., Advertising
• Brand compares itself to another, less attractive
  brand

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Delay

• Active decision time (ADT)
• Time on info gathering, alternative comparison,
  place to purchase, etc.
• Doesnt explain excessive delay in purchase
• Total decision delay time (TDDT)
• Total elapsed time between need recognition and
  purchase
• Includes ADT
• Delay closure

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Timing Features

• Temporal reference point
• Consumers demand higher reward to delay
  consumption past this point
• Order of outcomes
• Consumers prefer pleasant experience after
  unpleasant experience

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Greenleaf Lehmann (1995)

• Interviewed business graduate students
• Reasons for delaying purchase and for delay
  closure
• Major (100-200) items
• Delay of at least a month
• Factor analysis of responses

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10 Factors in Delay

• Too busy to devote time to decision
• Shopping is unpleasant
• Performance and financial risk
• Social and psychological risk
• Need someone elses advice or consent

• Gather information
• Change in market
• Uncertain need
• Cannot afford to purchase
• Substitute available at home

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9 Reasons for Delay Closure

• Found time to make decision
• Tired of shopping
• Obtained advice or consent
• Decided which alternative to choose
• Price lowered

• Need increase
• Justify expenditure
• Word of mouth
• Good store

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Delay Reasons and Attribution
caused by external factor
await market change
sub. at home
uncertain need
need info.
Locus of causation for delay
perf. finan. risk
time pressure
cant afford
need others advice
shopping unpleasant
caused by me
related to making decision
not related to making decision
Related to decision
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Study Limitations

• Graduate students
• May not generalize to other sections of
  population
• Some delay reasons omitted because rare
• e.g., procedural uncertainty could be very
  significant in some situations (completely
  unfamiliar product)

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Deliberation Process

• Decision making process
• Careful consideration of options
• Weighing of alternatives
• Expectation increased satisfaction with choice
• Reality sense of making incorrect choice
• Attractiveness of unchosen option increased
  post-choice

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Option Attachment

• Consumer considers decision closely
• Selecting between options
• May feel discomfort, not satisfaction, upon
  choice
• Deliberation makes consumer attached to options
  before selecting from them
• Prefactual ownership of options

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Carmon, Wertenbroch Zeelenberg (2003)

• Scenario-based study
• Effects of
• Proximity to options
• Duration of deliberation
• Hedonic vs. utilitarian choices
• Prior ownership

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Results

• Post-choice loss due to perceived increase in
  value of non-chosen option
• Not a decrease in attractiveness of selected
  option
• Longer deliberation --gt increased option
  attachment
• Greater exposure to options, more invested
• Effects of delay
• No choice option to avoid sense of loss