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The irrelevant-menu affect on valuation

Published online by Cambridge University Press:  14 March 2025

Doron Sonsino*
Affiliation:
School of Business Administration, The College of Management, 7 Rabin Blvd., P.O.B. 9017, Rishon LeZion 75190, Israel

Abstract

Three experiments are designed to test if the level of irrelevant prizes in the menu has a positive (assimilation) or negative (contrast) effect on the perceived valuation of target objects. Familiar field prizes and binary lotteries over such prizes are placed within “more-expensive” and “less-expensive” menus. Subjects fill-in a sequence of binary choice problems to reveal their preference between given cash and a designated prize from the menu. Between-subject comparisons reveal that the prize-level in the menu positively affects perceived valuations in spite of procedural attempts to rule out menu-dependent preferences and prohibit experimenter bias. The effect also shows within-subject in auction experiments: the price that subjects are willing to pay for given monetary lotteries significantly increases with the average payoff in the irrelevant-menu. The bias finally manifests even when subjects are led to choose the target lottery, independently, from the underlying menu.

Type
Research Article
Copyright
Copyright © Economic Science Association 2010

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Footnotes

Electronic supplementary material The online version of this article (doi: 10.1007/s10683-010-9243-7) contains supplementary material, which is available to authorized users.

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