PUB - Publikationen an der Universität Bielefeld

The 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 their respective risk profile. Regarding our second research question, we do not find evidence that adding another decoy to the choice set boosts the asymmetric dominance effect. Our results carry important implications as choice architects and practitioners alike benefit from this research in order to tailor their marketing strategies to different segments of the target population or to construct choice structures that attract many more customers in the desired way.