What drives preference for the compromise option? Disentangling position-based versus attribute-based effects

Abstract

The compromise effect exists where consumers show a disproportional preference for the option with intermediate attribute levels in a choice set. The effect has been widely observed in the literature. Other research has demonstrated the benefits of a product physically occupying a middle position, regardless of relative attribute levels. Both streams of research thus show that consumers' preferences are influenced by the display format of the choice set, with benefits accruing to the middle option. This research demonstrates that the compromise effect comprises both an attribute-based and a position-based component by disentangling these two effects. We demonstrate the coexistence of both components in a series of five experiments, including a field experiment, that systematically vary an option's position based on relative attribute levels and in terms of position. Existing literature on the compromise effect only to a limited extent accounts for this possibility, even though it has significant theoretical and practical relevance. While brands largely determine attribute levels, marketers/retailers can often determine a brand's display position. We also establish the moderating role of time pressure and find that the position component becomes more prominent when time is constrained while the attribute effect becomes more prominent when time is unconstrained.