Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1215: The (Un)compromise Effect

Mathias Ekström ()
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Mathias Ekström: Department of Economics, NHH – Norwegian School of Economics, Postal: and Research Institute of Industrial Economics (IFN), Stockholm

Abstract: The current study provides the first experimental test of the compromise effect, i.e. the tendency to choose middle options, in a naturally occurring setting. Simultaneously, I propose and evaluate a novel nudge intended to stimulate active choice—the (un)compromise effect—a compromise effect without an explicit middle option. 63,494 recipients of a mail fundraiser were randomly assigned to one of three sets of suggested donations: [$10, $50, $100, $__ ]; [$10, $50, $100, $250, $500, $__ ]; or [$10, $500, $__ ]. The results support both the compromise effect and the (un)compromise effect: extending the range increased the fraction donating $100 as well as the average donation—independent of whether the middle suggested donations were present or not. Hence, by only providing informative end points, organizations can affect decision-making and at the same time promote individuality through active choice. The results also shed light on why suggested alternatives affect choice in general: they reduce the cognitive cost of figuring out what actions are appropriate.

Keywords: Choice architecture; Compromise effect; Consumer choice; Field experiment; Philanthropy

JEL-codes: C93; D03; D64

24 pages, May 7, 2018

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