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Asymmetric Dominance Effect

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Marco Carrasco Villanueva

on 20 May 2016

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Transcript of Asymmetric Dominance Effect

Definition and some previous studies
Of the effect and its neural correlates
Decision making process
= important topic in consumer
behavior research
economic
- price
- quality
What about
different types of decisions?




Q1: Is the asymmetric dominance ("decoy") effect stable among different types of decisions?
Q2: Are the neural correlates of the "decoy" effect the same among different types of decisions?
Theoretical Background
Motivation
Analyzes
Stability of the effect
(based on
Huber et al., 1982
)
Prob[T|{T, C, Dt}] > Prob[T|{T, C}]
Between-groups analyzes (ANOVA).
Test of the decoy effect by comparing the change in proportion of subjects choosing the target over the competitor.
Table of these proportions broken down by the 4 types of decisions (groups): CARS, TRAVELING C, TRAVELING D, DATING.

Stability of its neural correlates
(based on
Hu & Yu, 2014
)
Prob[T|{T, C, Dt}]-Prob[C|{T, C, Dt}] > Prob[T|{T, C}]-Prob[C|{T, C}]
Statistical analyzes with General Lineal Model.
Obtain the neurobiological account of the decoy effect: Choosing targets over competitors in the 3-item choices.
Graphics for each of the 4 types of decisions (groups): CARS, TRAVELING C, TRAVELING D, DATING.
Carrasco Villanueva, Marco & Schneider, Regina
DECISION UNDER RISK AND UNCERTAINTY
Method
Experiment Proposal
Robust effect? Differences in its neural correlates?
Potential Results
Asymmetric Dominance Effect:
Importance
Is the effect and its neural correlates the same among different types of decisions?
Carrasco Villanueva, Marco
Schneider, Regina
THANK YOU FOR YOUR ATTENTION!
Course: Decision under Risk and Uncertainty
M2 Economics & Psychology
Université Paris 1 Panthéon-Sorbonne & Université Paris Descartes
Is the effect and its neural correlates the same among different types of decisions?
Consider a choice set {X, Y} and two decoys: Dx, Dy.
Dx is similar but slightly inferior to X.
Dy is similar but slightly inferior to Y.
The decoy effect occurs when:
People show a stronger preference for X (Target) when it is presented along its decoy: Dx.
People show a stronger preference for Y (Target) when it is presented along its decoy: Dy.
By
Hu & Yu, 2014
: (implicitly)
Prob[X|{X, Y, Dx}]-Prob[Y|{X, Y, Dx}] > Prob[X|{X, Y}]-Prob[Y|{X, Y}]
Prob[Y|{X. Y. Dy}]-Prob[X|{X, Y, Dy}] > Prob[Y|{X, Y}]-Prob[X|{X, Y}]
Decoy effect
Some previous studies
Experiment Proposal:

By
Huber et al., 1982
: (implicitly)
Prob[X|{X, Y, Dx}] > Prob[X|{X, Y}]
Prob[Y|{X. Y. Dy}] > Prob[Y|{X, Y}]
By
Trueblood et al., 2013
: (explicitly)
Prob[X|{X, Y, Dx}] > Prob[X|{X, Y, Dy}]
Prob[Y|{X. Y. Dx}] < Prob[Y|{X, Y, Dy}]
Different formalizations of the decoy effect:
Width/Height
Height/Width
Probability/Amount
Amount/Probability
Price/Quality,
Ride/Mileage,
Time/Quality,
Amount/Probability,
Time/Fidelity,
Distortion/Reliability
Price/Quality, Ride/Mileage,
Time/Quality, Amount/Probability,
Time/Fidelity, Distortion/Reliability
TV set
Beer
Car
Restaurant
Gamble
Film
Huber et al., 1982
Trueblood et al., 2013
Hu & Yu, 2014
Rectangle
Which _______ would you prefer?
Which rectangle is bigger?
Which gamble would you prefer?
Gamble
=
<
<
<
<
References and Bibliography
Ariely, D. (2013). Choice Sets and Relativity [Video]. United States: Coursera. Retrieved from: www.coursera.org/course/behavioralecon
Doyle, J. R., O'Connor, D. J., Reynolds, G. M. & Bottomley, P. A. (1999). The Robustness of the Asymmetrically Dominated Effect: Buying Frames, Phantom Alternatives, and In-Store Purchases.
Psychology & Marketing
. Vol. 16, No. 3, 225-243.
Heath, T.B. & Chatterjee S. (1995). Asymmetric Decoy Effects on Lower-Quality versus Higher-Quality Brands: Meta-analytic and Experimental Evidence.
Journal of Consumer Research
,

Vol. 22, No. 3, 268-284.
Hedgcock, W. M., Crowe, D. A., Leuthold, A. C. & Georgopoulos, A. P. (2010). A magnetoencephalography study of choice bias.
Experimental Brain Research
, Vol. 202, No. 1, 121-127.
Hu, J., & Yu, R. (2014). The neural correlates of the decoy effect in decisions.
Frontiers in Behavioral Neuroscience
, Vol. 8, Article 271, 1-8.
Huber, J., Payne, J., & Puto, C. (1982). Adding Asymmetrically Dominated Alternatives: Violations of Regularity and Similarity Hypothesis.
The Journal of Consumer Research
, Vol. 9, No. 1, 90-98.
Josiam, B., & Perry Hobson, J. (1995). Consumer Choice in Context: The Decoy Effect in Travel and Tourism.
Journal of Travel Research
, Vol. 34, No. 1, 45-50.
Lewis, R. C. & Chambers, R. E. (1989).
Marketing Leadership in Hospitality.
New York: Van Nostrand Reinhold.
Sedikides, C., Ariely, D., & Olsen, N. (1999). Contextual and procedural determinants of partner selection: Of asymmetric dominance and prominence.
Social Cognition
, Vol. 17, No. 2, 118-139.
Shaw, M. (1992).
Ethics in Hospitality Management.
East Lansing, MI: American Hotel and Motel Association.
Trueblood, J., et al. (2013). Not just for consumers: Context effects are fundamental to decision-making.
Psychological Science
, Vol. 24, No. 6, 901-908.
Tversky, A. (2007). Elimination by Aspects: A Theory of Choice.
Psychological Review
, Vol. 79 (July), 281-299.
DATING
CARS
TRAVELING C
TRAVELING D
Price/Quality,
Attractiveness/Friendliness
Quality/Price,
Friendliness/Attractiveness
Based on
Sedikides, et al.,
1999
Based on
Hubert et al.,
1982
Based on
Josiam, et al.,
1995
Participants
120 volunteers who could participate in the experiment, while being scanned by fMRI (ideally, although fMRI use might be limited/expensive).
Participants would be familiarized with the decision-making task with practice trials, before the experiment.

Design
Participants would be shown either 2 or 3 item choice sets.
10 "Catch" choices must be included to guarantee that participants would be engaged during all trials of the experiment.
Participants would be randomly assigned to one of 4 categories: CARS, TRAVELING C, TRAVELING D, DATING.
Each category would include 110 trials: 50 of the 2-item condition, 50 of the 3-item condition, and 10 "catch" condition.
Participants would receive a base payment (perhaps around $10).






fMRI Data acquisition and pre-processing
Use the common procedures for fMRI analyzes: sensitivity to blood oxygenation level-dependent, equilibration effects, correction of head movements, use of linear and nonlinear transformations and smoothing with a Gaussian kernel, etc.
Particular details could be based on
Hu and Yu, 2014
.
Stability of the effect
(based on Huber et al., 1982)
Stability of its neural correlates
(based on Hu & Yu, 2014)
ASYMMETRIC DOMINANCE EFFECT:
Which
neural correlates

are activated during decision making process with
decoys?

emotional
- attractiveness
- friendliness
Example
First situation
vs.
7€
4€
Introduction of decoy







Second situation
7€
7€
4€
1.
Independence of irrelevant alternatives
X>Y
X>Y, even if Z is introduced
The finding of the
asymmetric dominance effect
violates 2 principles
2.
Regularity
Probability of choosing X or choosing Y
cannot increase
with the introduction of Z.
How can we explain the
asymmetric dominance effect?
Price
small
large
Perceptual framing
Evaluation process
different buying
frames
neural correlates
for

gambling
real
or
phantom
decoy
lower-/hig
her-quality
brands
What has been done until now?
Quality
Price
decision-making
time
But also, almost
no
research in neuro-science and the decoy effect
Locals' Friendliness
Attractiveness
Economic
decision?
Emotional

decision?
Prob[TI{T, C, Dt}]
>
Prob[TI{T, C}]
New Zealand
Australia
Dt
C
=Competitor,
T
=Target,
Dt
=Decoy (Target)
And which
neural correlates
are activated?
Q1: Is the asymmetric dominance ("decoy") effect
stable
among different types of decisions?
Hypothesis:
Yes, and the effect is even stronger for
emotional decisions.
DATING
CARS
TRAVELING C
TRAVELING D
Price/Quality,
Attractiveness/Friendliness
Quality/Price,
Friendliness/Attractiveness
Based on
Sedikides, et al.,
1999
Based on
Hubert et al.,
1982
Based on
Josiam, et al.,
1995
anterior insula
anterior cingulate cortex
amygdala
intuitive decision making

perceptual
salience
anterior insula
anterior cingulate cortex
rational cognitive functions & cognitive control during thinking
susceptibility
to the decoy
amygdala
processing of memory, decision-making & emotional reactions
absence
of
emotional
salience
anterior insula
amygdala
greater
intuitive decision making
greater
susceptibility to the decoy
presence
of emotional salience
anterior cingulate cortex
Prob[TI{T, C, Dt}]-Prob[CI{T,C,Dt}]
>
Prob[TI{T, C}]-Prob[CI{T, C}]
Q2: Are the neural correlates of the "decoy" effect
the
same
among different types of decisions?
emotional decisions
new empirical support to the asymmetric dominance effect
Research
Practice
marketing
product management
sales

Limitations
credibility of decoy options
information overload
ethical implications
Economics & Psychology
asymmetric dominance effect
- support for research in decision making
- support for neuroscience and neuroeconomics
Quality (size)
nature & city
2 weeks/€1000
nature & city
10 days/€700
JUST city
10 days/€700
It is difficult to always make just quality/price-decisions!
economic decisions
No, there is a
higher
activation in the anterior insula, a
lower
activation in the anterior cingulate cortex and an
activation
in the amygdala.
Individuals
decisions are made in different situations on the basis of different attributes
C
Dt
T
T
C
4€
7€
7€
violated
violated
Full transcript