Monday, August 11, 2008
New research from the University of Minnesota examines consumer choice in changing markets
U.S. Senator Hillary Clinton may do more for U.S. Senator Barack Obama than Ralph Nader did for Al Gore: she could give him an unintended boost.
Clinton sought the presidency and then, unlike Nader, exited the race. New research from the University of Minnesota's Carlson School of Management demonstrates that when an option enters and then leaves a market, the most similar remaining option -- in this case Obama -- stands to benefit. Whether it is political candidates or beer, health care plans or automobiles, when one attractive option becomes unavailable, people gravitate toward the most similar remaining option.
In their paper "Could Ralph Nader's Entrance and Exit have helped Al Gore? The Impact of Decoy Dynamics on Consumer Choice," forthcoming in the Journal of Marketing Research, the University of Minnesota's Akshay Rao and co-authors William Hedgcock and Haipeng (Allan) Chen (both Carlson School alumni) show that the disappearance of an option from a choice set can increase the appeal of the remaining selection that is most similar to the now-absent option. This happens, they write, because consumers and voters attach greater importance to those issues or attributes on which the two similar options competed.
"We found that the entrance and exit of a third option -- the 'Nader effect' -- can profoundly impact consumers' preference," said Rao. "The presence of the third alternative shifts the focus of the customer.
Read the rest here...
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