Dyadic Compromise Effect

Abstract

The exclusive focus of existing research on the compromise effect has been on the individual. This paper investigates compromise effects in a dyadic choice setting. We investigate whether dyads exhibit compromise effects, factors that may moderate this effect and strategies that could be used mitigate it. We build a statistical model of dyadic choice that incorporates individual preference and influence and accounts for compromise effects-individual and dyadic-by transforming context-independent utility into a more concave context-dependent utility. We conducted two studies to test our proposed models empirically. Study 1 begins with an investigation of individual compromise effect (ICE) and its moderators. In Study 2 we test for the presence of dyadic compromise effect (DCE) in which married couples are asked to make retirement investment choices. We find strong empirical evidence in support of DCE-models incorporating DCE provide better fit than models that do not. We find that ICE tendency of a group member with a greater stake in the decision results in greater DCE. Our findings suggest that choice sets with fewer options mitigate DCE. Further, education of segments most vulnerable to compromise effects (e.g. women in the context of retirement planning) could be effective to mitigate DCE.

Men and the Middle: Gender Differences in Dyadic Compromise Effects

“…Second, we contribute to recent studies of dyadic context effects (Boldt and Aurora 2015;de Clippel and Eliaz 2012). Importantly, our findings diverge from those made by theoretical economists (de Clippel and Eliaz 2012) who work under the assumption that compromise behaviors should be identical in joint as opposed to individual decisions (Boldt and Aurora 2015). Our findings suggest that this assumption may hold in any dyad that contains a female; however, it is questionable when two males make decisions together.…”

“…Because work in individual compromise choice tendencies had reported no gender effects, this finding enriches our understanding of this classic bias. Second, we contribute to recent studies of dyadic context effects (Boldt and Aurora 2015;de Clippel and Eliaz 2012). Importantly, our findings diverge from those made by theoretical economists (de Clippel and Eliaz 2012) who work under the assumption that compromise behaviors should be identical in joint as opposed to individual decisions (Boldt and Aurora 2015).…”

How More Options Decrease the Compromise Effect: Investigating Boundary Conditions for the Compromise Effect in Travel Decisions

“…Kim 2017); when alternatives should be rejected (vs. chosen) (J. Kim et al 2019); or when there is a dyadic (v. individual) choice context (Boldt and Arora 2017). Previous research also has documented that the compromise effect is stronger for those with prevention- (vs. promotion-) focused goals (Mourali, Bockenholt, and Laroche 2007; Ryu et al 2014); for those choosing for others rather than for themselves (Chang et al 2012); and for maximizers, who strongly seek an optimal decision (vs. for satisficers; Mao 2016).…”

How Context Affects Choice

“…In the domain of choice set composition effects, Zeithammer et al [91] argue that even when models of context dependence may differ, they should all attempt to control for heterogeneity of the context-independent part of preference while simultaneously investigating the heterogeneity in context-dependent adaptation of these preferences. The model introduced by Boldt and Arora [9] to study dyadic compromise effects is one of the few examples that does both.…”

“…We feel that the existing literature on choice designs has much to offer when designing studies to uncover context effects. Future research should develop procedures for optimizing the design of choice sets that allow for the efficient estimation of among other compromise effects ( [9]). Failure to use an efficient design may result in a researcher concluding that a context effect is absent when, in reality, it is present.…”