The Asymmetric Dominance Effect: Reexamination and Extension in Risky Choice - An Experimental Study

Publication date: Available online 8 June 2019Source: Journal of Economic PsychologyAuthor(s): Oktay Sürücü, Behnud Mir Djawadi, Sonja ReckerAbstractThe asymmetric dominance effect refers to the phenomenon according to which the choice probability of a baseline alternative increases when an inferior alternative -the decoy- is included into the choice set. Even though the asymmetric dominance effect has been extensively studied and replicated many times, there is almost no research that investigates how the effect is related to individual preferences between the target and the competitor, and how the size of the effect is influenced when a secondary decoy is added to the choice set. In this experimental study, we examine in the domain of risky choice (a) the relationship between individual preferences and the asymmetric dominance effect, and, (b) to what extent its size can be increased if the choice set gets further manipulated by the introduction of secondary decoy. We elicit individual risk preferences in order to measure the extent by which our participating student subjects favor one lottery over the other. Consistent with our theoretical conjectures, the asymmetric dominance effect decreases with the strength of preferences for one of the two baseline lotteries. Furthermore, the asymmetric dominance effect for subjects who are not indifferent between the target and the competitor only emerges if the decoy targets the baseline lottery that subjects prefer according to ...
Source: Journal of Economic Psychology - Category: Psychiatry & Psychology Source Type: research