Dominance Effects in the Wild

79 Pages Posted: 28 Mar 2022 Last revised: 8 Nov 2023

See all articles by Ariel Fridman

Ariel Fridman

ESADE Business School

On Amir

University of California, San Diego (UCSD) - Rady School of Management

Karsten Hansen

University of California, San Diego (UCSD)

Date Written: August 31, 2023

Abstract

In real-world marketplaces, one may encounter an alternative that is inferior to another one in the assortment. While the presence of such seemingly irrelevant inferior alternatives should ostensibly have no influence on consumers' decisions, an extensive literature using stylized lab experiments has found that, surprisingly, their presence matters. Specifically, the dominance effect suggests that the presence of an inferior alternative shifts consumer's preferences toward the alternative made to be superior. However, null results in some recent lab studies and a lack of real-world evidence call into question whether, when, and how the effect exists. In this work, we find clear evidence that dominance matters in the wild. We also identify an important moderator for the dominance effect – preference uncertainty – and test it in both a real-world marketplace for digital freelance services and a lab experiment. Further, we find evidence for additional moderators that help explain how the effect works, including the count of dominated alternatives and the magnitude of dominance, consistent with a perceptual mechanism. This work is the first to use consequential field data to shed light on when and why the dominance effects occurs, with implications for marketers, choice architects, user interface designers, and policymakers.

Keywords: Dominance Effects, Preference Uncertainty, Field Data, Context Effects

Suggested Citation

Fridman, Ariel and Amir, On and Hansen, Karsten, Dominance Effects in the Wild (August 31, 2023). Available at SSRN: https://ssrn.com/abstract=4049144 or http://dx.doi.org/10.2139/ssrn.4049144

Ariel Fridman (Contact Author)

ESADE Business School ( email )

Av. de Pedralbes, 60-62
Barcelona, 08034
Spain

On Amir

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States
858-534-2023 (Phone)
858-534-0745 (Fax)

HOME PAGE: http://management.ucsd.edu/faculty/directory/amir/

Karsten Hansen

University of California, San Diego (UCSD) ( email )

9500 Gilman Drive
Mail Code 0502
La Jolla, CA 92093-0112
United States

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