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Using Extremeness Aversion to Fight Obesity: Policy Implications of Context Dependent Demand

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  • Kathryn M. Sharpe
  • Richard Staelin
  • Joel Huber

Abstract

This article illustrates how the compromise effect alters consumers' selection of soft drinks. Using three within-subject studies, we show that extremeness aversion and price insensitivity cause consumers to increase their consumption when the smallest drink size is dropped or when a larger drink size is added to a set. As a result rational firms find it best to drop the smaller sizes and add a larger size, thus increasing overall consumption. After estimating each individual's demand as a function of price and drink size availability, policy experiments demonstrate how it is possible to reduce soft drink consumption without additional taxation. (c) 2008 by JOURNAL OF CONSUMER RESEARCH, Inc..

Suggested Citation

  • Kathryn M. Sharpe & Richard Staelin & Joel Huber, 2008. "Using Extremeness Aversion to Fight Obesity: Policy Implications of Context Dependent Demand," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 35(3), pages 406-422, April.
    • Handle: RePEc:oup:jconrs:v:35:y:2008:i:3:p:406-422
    DOI: 10.1086/587631
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    Cited by:

    1. Matthew Kovach & Gerelt Tserenjigmid, 2023. "The Focal Quantal Response Equilibrium," Papers 2304.00438, arXiv.org.
    2. Marie-Eve Laporte & Géraldine Michel & Sophie Rieunier, 2017. "Towards a better understanding of eating behaviour through the concept of Perception of Nutritional Risk," Post-Print halshs-02923251, HAL.
    3. Marie-Eve Laporte & Géraldine Michel & Sophie Rieunier, 2015. "Toward a better understanding of eating-behaviour through the concept of Perception of Nutritional Risk [Mieux comprendre les comportements alimentaires grâce au concept de perception du risque nut," Post-Print hal-02054434, HAL.
    4. Peggy J. Liu & Kelly L. Haws & Karen Scherr & Joseph P. Redden & James R. Bettman & Gavan J. Fitzsimons, 2019. "The Primacy of “What” over “How Much”: How Type and Quantity Shape Healthiness Perceptions of Food Portions," Management Science, INFORMS, vol. 65(7), pages 3353-3381, July.
    5. Paul W. Dobson & Eitan Gerstner, 2010. "For a Few Cents More: Why Supersize Unhealthy Food?," Marketing Science, INFORMS, vol. 29(4), pages 770-778, 07-08.
    6. Besharat, Ali & Romero, Marisabel & Haws, Kelly, 2021. "Customizing calories: How rejecting (vs. selecting) ingredients leads to lower calorie estimation and unhealthier food choices," Journal of Retailing, Elsevier, vol. 97(3), pages 424-438.
    7. Fabrice Etilé, 2019. "The Economics of Diet and Obesity: Public Policy," PSE-Ecole d'économie de Paris (Postprint) hal-02154445, HAL.
    8. Balbontin, Camila & Hensher, David A. & Collins, Andrew T., 2019. "How to better represent preferences in choice models: The contributions to preference heterogeneity attributable to the presence of process heterogeneity," Transportation Research Part B: Methodological, Elsevier, vol. 122(C), pages 218-248.
    9. Borah, Abhinash & Garg, Raghvi, 2023. "Reference-dependent self-control: Menu effects and behavioral choices," Journal of Economic Behavior & Organization, Elsevier, vol. 211(C), pages 129-145.
    10. Lin Boldt & Neeraj Arora, 2017. "Dyadic Compromise Effect," Marketing Science, INFORMS, vol. 36(3), pages 436-452, May.
    11. Raphael Thomadsen & Robert P. Rooderkerk & On Amir & Neeraj Arora & Bryan Bollinger & Karsten Hansen & Leslie John & Wendy Liu & Aner Sela & Vishal Singh & K. Sudhir & Wendy Wood, 2018. "How Context Affects Choice," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 5(1), pages 3-14, March.
    12. Tserenjigmid, Gerelt, 2019. "Choosing with the worst in mind: A reference-dependent model," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 631-652.
    13. Shilpa Madan & Gita Venkataramani Johar & Jonah Berger & Pierre Chandon & Rajesh Chandy & Rebecca Hamilton & Leslie K. John & Aparna A. Labroo & Peggy J. Liu & John G. Lynch & Nina Mazar & Nicole L. M, 2023. "Reaching for rigor and relevance: better marketing research for a better world," Marketing Letters, Springer, vol. 34(1), pages 1-12, March.
    14. David R. Just & Brian Wansink, 2014. "One Man'S Tall Is Another Man'S Small: How The Framing Of Portion Size Influences Food Choice," Health Economics, John Wiley & Sons, Ltd., vol. 23(7), pages 776-791, July.
    15. Li, Feng & Du, Timon C. & Wei, Ying, 2020. "Enhancing supply chain decisions with consumers’ behavioral factors: An illustration of decoy effect," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 144(C).
    16. Peggy J. Liu & Kelly L. Haws & Cait Lamberton & Troy H. Campbell & Gavan J. Fitzsimons, 2015. "Vice-Virtue Bundles," Management Science, INFORMS, vol. 61(1), pages 204-228, January.
    17. Lichters, Marcel & Müller, Holger & Sarstedt, Marko & Vogt, Bodo, 2016. "How durable are compromise effects?," Journal of Business Research, Elsevier, vol. 69(10), pages 4056-4064.
    18. Heydari, Pedram, 2021. "Luce arbitrates: Stochastic resolution of inner conflicts," Games and Economic Behavior, Elsevier, vol. 126(C), pages 33-74.

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