Consumers' ability to identify a surplus when returns to attributes are nonlinear
Previous research in multiple judgment domains has found that nonlinear functions are typically processed less accurately than linear ones. This empirical regularity has potential implications for consumer choice, given that nonlinear functions (e.g., diminishing returns) are commonplace. In two exp...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Cambridge University Press
2019-09-01
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| Series: | Judgment and Decision Making |
| Subjects: | |
| Online Access: | http://journal.sjdm.org/18/181126a/jdm181126a.pdf |
| _version_ | 1797717661547757568 |
|---|---|
| author | Peter D. Lunn Jason Somerville |
| author_facet | Peter D. Lunn Jason Somerville |
| author_sort | Peter D. Lunn |
| collection | DOAJ |
| description | Previous research
in multiple judgment domains has found that nonlinear functions are typically
processed less accurately than linear ones. This empirical regularity has
potential implications for consumer choice, given that nonlinear functions
(e.g., diminishing returns) are commonplace. In two experimental studies we
measured precision and bias in consumers' ability to identify surpluses when
returns to product attributes were nonlinear. We hypothesized that nonlinear
functions would reduce precision and induce bias toward linearization of
nonlinear relationships. Neither hypothesis was supported for monotonic
nonlinearities. However, precision was greatly reduced for products with
nonmonotonic attributes. Moreover, assessments of surplus were systematically
and strongly biased, regardless of the shape of returns and despite feedback
and incentives. The findings imply that consumers use a flexible but coarse
mechanism to compare attributes against prices, with implications for the
prevalence of costly mistakes. |
| first_indexed | 2024-03-12T08:39:36Z |
| format | Article |
| id | doaj.art-2b0db9af590448369aad4d77e1d18bff |
| institution | Directory Open Access Journal |
| issn | 1930-2975 |
| language | English |
| last_indexed | 2024-03-12T08:39:36Z |
| publishDate | 2019-09-01 |
| publisher | Cambridge University Press |
| record_format | Article |
| series | Judgment and Decision Making |
| spelling | doaj.art-2b0db9af590448369aad4d77e1d18bff2023-09-02T16:56:32ZengCambridge University PressJudgment and Decision Making1930-29752019-09-0116511861220Consumers' ability to identify a surplus when returns to attributes are nonlinearPeter D. LunnJason SomervillePrevious research in multiple judgment domains has found that nonlinear functions are typically processed less accurately than linear ones. This empirical regularity has potential implications for consumer choice, given that nonlinear functions (e.g., diminishing returns) are commonplace. In two experimental studies we measured precision and bias in consumers' ability to identify surpluses when returns to product attributes were nonlinear. We hypothesized that nonlinear functions would reduce precision and induce bias toward linearization of nonlinear relationships. Neither hypothesis was supported for monotonic nonlinearities. However, precision was greatly reduced for products with nonmonotonic attributes. Moreover, assessments of surplus were systematically and strongly biased, regardless of the shape of returns and despite feedback and incentives. The findings imply that consumers use a flexible but coarse mechanism to compare attributes against prices, with implications for the prevalence of costly mistakes.http://journal.sjdm.org/18/181126a/jdm181126a.pdfconsumer choice function learning multiattribute decision making nonlinear returnsnakeywords |
| spellingShingle | Peter D. Lunn Jason Somerville Consumers' ability to identify a surplus when returns to attributes are nonlinear Judgment and Decision Making consumer choice function learning multiattribute decision making nonlinear returnsnakeywords |
| title | Consumers' ability
to identify a surplus when returns to attributes are nonlinear |
| title_full | Consumers' ability
to identify a surplus when returns to attributes are nonlinear |
| title_fullStr | Consumers' ability
to identify a surplus when returns to attributes are nonlinear |
| title_full_unstemmed | Consumers' ability
to identify a surplus when returns to attributes are nonlinear |
| title_short | Consumers' ability
to identify a surplus when returns to attributes are nonlinear |
| title_sort | consumers ability to identify a surplus when returns to attributes are nonlinear |
| topic | consumer choice function learning multiattribute decision making nonlinear returnsnakeywords |
| url | http://journal.sjdm.org/18/181126a/jdm181126a.pdf |
| work_keys_str_mv | AT peterdlunn consumersabilitytoidentifyasurpluswhenreturnstoattributesarenonlinear AT jasonsomerville consumersabilitytoidentifyasurpluswhenreturnstoattributesarenonlinear |