A Study on Compromise, Similarity, and Market-Average Effects

Abstract

Abstract This research focuses on consumers’ choosing behavior in two-attribute choice set. In previous research, it is found that consumers’ evaluation is affected not only by characteristics of alternative but also by other alternatives. To explain the choosing behavior, scholars proposed the compromise effect which demonstrates middle option is viewed as the least extreme, compromise option. However, another viewpoint formed in last year. This is the concept of attribute-balance effect. Attribute-balance effect proposes that an option with equal attribute rating will be perceived as the compromise even if it is not the middle option. In this article, another effect that might influence consumers’ choice behavior is proposed. The effect is called market average effect. It demonstrates if market average information is presented, alternative adjacent to market average will be more compromise. There are two experiments in the research. One verifies compromise effect and similarity hypothesis in 100-point rating scale information and the other examines the market average effect. Theoretical implications of the findings are discussed.