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Range‐Dependent Attribute Weighting in Consumer Choice: An Experimental Test

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  • Jason Somerville

Abstract

This paper investigates whether the range of an attribute's outcomes in the choice set alters its relative importance. I derive distinguishing predictions of two prominent theories of range‐dependent attribute weighting: the focusing model of Kőszegi and Szeidl (2013) and the relative thinking model of Bushong, Rabin, and Schwartzstein (2021). I test these predictions in a laboratory experiment in which I vary the prices of high‐ and low‐quality variants of multiple products. The data provide clear evidence of choice‐set dependence consistent with relative thinking: price increases that expand the range of prices in the choice set lead to more purchases. Structural estimates imply economically meaningful effect sizes: the average participant was willing to pay around 17% more when a seemingly irrelevant option is added to their choice set.

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  • Jason Somerville, 2022. "Range‐Dependent Attribute Weighting in Consumer Choice: An Experimental Test," Econometrica, Econometric Society, vol. 90(2), pages 799-830, March.
    • Handle: RePEc:wly:emetrp:v:90:y:2022:i:2:p:799-830
    DOI: 10.3982/ECTA18412
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    References listed on IDEAS

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    Cited by:

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    2. Zhuo Chen & Russell Golman & Jason Somerville, 2024. "Menu-dependent risk attitudes: Theory and evidence," Journal of Risk and Uncertainty, Springer, vol. 68(1), pages 77-105, February.
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    4. McGowan, Féidhlim P. & Denny, Eleanor & Lunn, Peter D., 2023. "Looking beyond time preference: Testing potential causes of low willingness to pay for fuel economy improvements," Resource and Energy Economics, Elsevier, vol. 75(C).
    5. Changkuk Im, 2023. "Accurate Quality Elicitation in a Multi-Attribute Choice Setting," Papers 2309.00114, arXiv.org, revised Dec 2023.

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