IDEAS home Printed from https://ideas.repec.org/a/eee/jobhdp/v106y2008i2p153-167.html
   My bibliography  Save this article

Criteria instability and the isolated option effect

Author

Listed:
  • Palmeira, Mauricio M.
  • Krishnan, H. Shanker

Abstract

In two-stage choices, decision makers often compare a new (isolated) option with the winner from the first stage. Previous research has identified a choice advantage for an isolated option, ostensibly due to loss aversion. We propose an alternative mechanism suggesting that instability of the criteria used in each choice stage is the main driver of the isolated option effect. Results from a series of experiments support the criteria instability account and not loss aversion as the explanation for the isolated option effect.

Suggested Citation

  • Palmeira, Mauricio M. & Krishnan, H. Shanker, 2008. "Criteria instability and the isolated option effect," Organizational Behavior and Human Decision Processes, Elsevier, vol. 106(2), pages 153-167, July.
    • Handle: RePEc:eee:jobhdp:v:106:y:2008:i:2:p:153-167
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0749-5978(08)00005-8
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Nedungadi, Prakash, 1990. "Recall and Consumer Consideration Sets: Influencing Choice without Altering Brand Evaluations," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 17(3), pages 263-276, December.
    2. McCusker, Christopher & Carnevale, Peter J., 1995. "Framing in Resource Dilemmas: Loss Aversion and the Moderating Effects of Sanctions," Organizational Behavior and Human Decision Processes, Elsevier, vol. 61(2), pages 190-201, February.
    3. de Dreu, Carsten K. W. & Carnevale, Peter J. D. & Emans, Ben J. M. & van de Vliert, Evert, 1994. "Effects of Gain-Loss Frames in Negotiation: Loss Aversion, Mismatching, and Frame Adoption," Organizational Behavior and Human Decision Processes, Elsevier, vol. 60(1), pages 90-107, October.
    4. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    5. Daniel Kahneman & Jack L. Knetsch & Richard H. Thaler, 1991. "Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 193-206, Winter.
    6. Kahn, Barbara & Moore, William L & Glazer, Rashi, 1987. "Experiments in Constrained Choice," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 14(1), pages 96-113, June.
    7. Amos Tversky & Daniel Kahneman, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 1039-1061.
    8. Gregory W. Fischer & Mary Frances Luce & Jianmin Jia, 2000. "Attribute Conflict and Preference Uncertainty: Effects on Judgment Time and Error," Management Science, INFORMS, vol. 46(1), pages 88-103, January.
    9. Zhang, Jiao & Hsee, Christopher K. & Xiao, Zhixing, 2006. "The majority rule in individual decision making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 99(1), pages 102-111, January.
    10. Hsee, Christopher K., 1996. "The Evaluability Hypothesis: An Explanation for Preference Reversals between Joint and Separate Evaluations of Alternatives," Organizational Behavior and Human Decision Processes, Elsevier, vol. 67(3), pages 247-257, September.
    11. Hsee, Christopher K & Leclerc, France, 1998. "Will Products Look More Attractive When Presented Separately or Together?," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 25(2), pages 175-186, September.
    12. Elrod, Terry & Johnson, Richard D. & White, Joan, 2004. "A new integrated model of noncompensatory and compensatory decision strategies," Organizational Behavior and Human Decision Processes, Elsevier, vol. 95(1), pages 1-19, September.
    13. Ariely, Dan & Zauberman, Gal, 2003. "Differential partitioning of extended experiences," Organizational Behavior and Human Decision Processes, Elsevier, vol. 91(2), pages 128-139, July.
    14. Amos Tversky & Itamar Simonson, 1993. "Context-Dependent Preferences," Management Science, INFORMS, vol. 39(10), pages 1179-1189, October.
    15. Gregory W. Fischer & Jianmin Jia & Mary Frances Luce, 2000. "Attribute Conflict and Preference Uncertainty: The RandMAU Model," Management Science, INFORMS, vol. 46(5), pages 669-684, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jacobs Martin, 2016. "Accounting for Changing Tastes: Approaches to Explaining Unstable Individual Preferences," Review of Economics, De Gruyter, vol. 67(2), pages 121-183, August.
    2. Ralf Elbert & Lowis Seikowsky, 2017. "The influences of behavioral biases, barriers and facilitators on the willingness of forwarders’ decision makers to modal shift from unimodal road freight transport to intermodal road–rail freight tra," Journal of Business Economics, Springer, vol. 87(8), pages 1083-1123, November.
    3. Heribert Gierl & Hans Höser, 2002. "Der Reihenfolgeeffekt auf Präferenzen," Schmalenbach Journal of Business Research, Springer, vol. 54(1), pages 3-18, February.
    4. Kalyanaram, Gurumurthy & Winer, Russell S., 2022. "Behavioral response to price: Data-based insights and future research for retailing," Journal of Retailing, Elsevier, vol. 98(1), pages 46-70.
    5. Satakhun Kosavinta & Donyaprueth Krairit & Do Ba Khang, 2017. "Decision making in the pre-development stage of residential development," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 35(2), pages 160-183, March.
    6. Smeele, Nicholas V.R. & Chorus, Caspar G. & Schermer, Maartje H.N. & de Bekker-Grob, Esther W., 2023. "Towards machine learning for moral choice analysis in health economics: A literature review and research agenda," Social Science & Medicine, Elsevier, vol. 326(C).
    7. Rhode, Alexander & Schönbohm, Avo & van Vliet, Jacobus, 2014. "The tactical utilization of cognitive biases in negotiations," Working Papers 80, Berlin School of Economics and Law, Institute of Management Berlin (IMB).
    8. Jose Apesteguia & Miguel Ballester, 2009. "A theory of reference-dependent behavior," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(3), pages 427-455, September.
    9. Botond Kőszegi & Matthew Rabin, 2006. "A Model of Reference-Dependent Preferences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(4), pages 1133-1165.
    10. Moore, Don A., 1999. "Order Effects in Preference Judgments: Evidence for Context Dependence in the Generation of Preferences, ," Organizational Behavior and Human Decision Processes, Elsevier, vol. 78(2), pages 146-165, May.
    11. Jidong Zhou, 2011. "Reference Dependence and Market Competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(4), pages 1073-1097, December.
    12. Domenico Colucci & Chiara Franco & Vincenzo Valori, 2021. "Endowment effects at different time scenarios: the role of ownership and possession," Discussion Papers 2021/279, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    13. Mao, Wen, 2016. "Sometimes “Fee” Is Better Than “Free”: Token Promotional Pricing and Consumer Reactions to Price Promotion Offering Product Upgrades," Journal of Retailing, Elsevier, vol. 92(2), pages 173-184.
    14. A. Peter McGraw & Eldar Shafir & Alexander Todorov, 2010. "Valuing Money and Things: Why a $20 Item Can Be Worth More and Less Than $20," Management Science, INFORMS, vol. 56(5), pages 816-830, May.
    15. Bowman, David & Minehart, Deborah & Rabin, Matthew, 1999. "Loss aversion in a consumption-savings model," Journal of Economic Behavior & Organization, Elsevier, vol. 38(2), pages 155-178, February.
    16. repec:ken:wpaper:0601 is not listed on IDEAS
    17. Francisco Gomes & Michael Haliassos & Tarun Ramadorai, 2021. "Household Finance," Journal of Economic Literature, American Economic Association, vol. 59(3), pages 919-1000, September.
    18. Fershtman, Chaim, 1996. "On the value of incumbency managerial reference points and loss aversion," Journal of Economic Psychology, Elsevier, vol. 17(2), pages 245-257, April.
    19. Lars Petersen & Jacob Hörisch & Kathleen Jacobs, 2021. "Worse is worse and better doesn't matter?: The effects of favorable and unfavorable environmental information on consumers’ willingness to pay," Journal of Industrial Ecology, Yale University, vol. 25(5), pages 1338-1356, October.
    20. Kwon, Kyoung-Nan & Lee, Jinkook, 2009. "The effects of reference point, knowledge, and risk propensity on the evaluation of financial products," Journal of Business Research, Elsevier, vol. 62(7), pages 719-725, July.
    21. Cheng, Yin-Hui & Chuang, Shih-Chieh & Pei-I Yu, Annie & Lai, Wan-Ting, 2019. "Change in your wallet, change your choice: The effect of the change-matching heuristic on choice," Journal of Retailing and Consumer Services, Elsevier, vol. 49(C), pages 67-76.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jobhdp:v:106:y:2008:i:2:p:153-167. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/obhdp .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.