Effect Propensity: The Distribution of Switchers' Choices in the Reference State as a Determinant of the Direction of Effects on Choice

Stanford GSB Working Paper No. 1788

53 Pages Posted: 12 Jun 2020

See all articles by Itamar Simonson

Itamar Simonson

Stanford University; Stanford Graduate School of Business

Thomas Kramer

CUNY Baruch College

Maia J. Young

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

Date Written: October 2003

Abstract

In a choice between two options, decision makers can often be divided into three segments: those who strongly prefer the first option, those who strongly prefer the second option, and those who might choose either option depending on the particular conditions ("Switchers"). In any reference state, such as the experimental control, most Switchers are likely to favor one of the two options. Thus, the limited growth potential of the option favored by Switchers in the reference state creates "effect propensity" in the opposite direction, whereby any condition or manipulation applied to the reference state is more likely to increase the share of the other option. We test this proposition in a series of studies in the context of choices between safe and risky options and between lower-price/quality and higher-price/quality options. The results indicate that a large majority of conceptually unrelated manipulations tend to increase the choice share of risky and higher-price/quality options. This effect propensity can be reversed when the risky and higher-price/quality options are the status quo alternatives or asymmetrically dominating in the reference state. Alternative explanations for effect propensity are examined. We discuss the implications of effect propensity for the interpretation of research findings, the selection of controls, and theory tests.

Keywords: choice, decision making, direction of effects, control

Suggested Citation

Simonson, Itamar and Kramer, Thomas and Young, Maia J., Effect Propensity: The Distribution of Switchers' Choices in the Reference State as a Determinant of the Direction of Effects on Choice (October 2003). Stanford GSB Working Paper No. 1788, Available at SSRN: https://ssrn.com/abstract=383342 or http://dx.doi.org/10.2139/ssrn.383342

Itamar Simonson (Contact Author)

Stanford University ( email )

Stanford, CA 94305
United States

Stanford Graduate School of Business ( email )

655 Knight Center
Stanford, CA 94305-5015
United States

Thomas Kramer

CUNY Baruch College ( email )

17 Lexington Avenue
New York, NY 10021
United States
(646) 312-3296 (Phone)
(646) 312-3271 (Fax)

Maia J. Young

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

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

HOME PAGE: http://www.anderson.ucla.edu/x5157.xml

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