Opportunity Cost Neglect Attenuates the Effect of Choices on Preferences

22 Pages Posted: 5 Sep 2015

See all articles by Adam Eric Greenberg

Adam Eric Greenberg

Bocconi University - Department of Marketing

Stephen A. Spiller

University of California, Los Angeles (UCLA) - Anderson School of Management

Date Written: September 4, 2015

Abstract

The idea that choices alter preferences has been widely studied in psychology, yet prior research has primarily focused on choices for which all alternatives were salient at the time of choice. Opportunity costs capture the value of the best forgone alternative and should be considered as part of any decision process, yet people often neglect them. How does the salience of opportunity costs at the time of choice influence subsequent evaluations of chosen and forgone options? Three experiments show that when opportunity costs are explicit at the time of choice, the post-choice spread between evaluations of focal options and opportunity costs is larger than when opportunity costs remain implicit.

Keywords: Opportunity costs, choices, preferences

Suggested Citation

Greenberg, Adam Eric and Spiller, Stephen A., Opportunity Cost Neglect Attenuates the Effect of Choices on Preferences (September 4, 2015). Psychological Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2656240

Adam Eric Greenberg (Contact Author)

Bocconi University - Department of Marketing

Via Roentgen, 1 (4th floor)
Milan, MI 20136
Italy

Stephen A. Spiller

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

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