Journal
JOURNAL OF CONSUMER RESEARCH
Volume 35, Issue 3, Pages 406-422Publisher
OXFORD UNIV PRESS INC
DOI: 10.1086/587631
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This article illustrates how the compromise effect alters consumers' selection of soft drinks. Using three within-subject studies, we show that extremeness aversion and price insensitivity cause consumers to increase their consumption when the smallest drink size is dropped or when a larger drink size is added to a set. As a result rational firms find it best to drop the smaller sizes and add a larger size, thus increasing overall consumption. After estimating each individual's demand as a function of price and drink size availability, policy experiments demonstrate how it is possible to reduce soft drink consumption without additional taxation.
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