Marketing actions that influence estimates of others also shape identity

Consumers’ social identities stem from comparisons between themselves and others. These identities help determine consumption decisions. Unfortunately, perceptions of comparative traits and characteristics are frequently biased, which can lead to similarly biased consumption decisions. Five studies show that two incidental but commonplace marketing decisions can influence consumers’ estimates of their relative standing and thus their social identities by influencing estimates of how other consumers are distributed.Peer Reviewedhttps://deepblue.lib.umich.edu/bitstream/2027.42/142090/1/jcpy495.pd

Choice Satisfaction Can Be the Luck of the Draw

We explore how consumers justify successful and unsuccessful choice outcomes that are made by the self or by expert others. Two experiments show that satisfaction with the same outcome is not only due to the outcome itself or to who has made the choice. Satisfaction depends on how consumers explain the outcome. When consumers justify the outcome with the decision maker's ability to find the best choice, perceived good (poor) ability generates more (less) satisfaction; however, when outcomes are justified by factors external to the decision maker's ability, there are no differences in satisfaction between personally and expert-chosen outcomes

Social Comparison and Confidence: When Thinking You’re Better than Average Predicts Overconfidence

A common social comparison bias—the better-than-average-effect—is frequently described as psychologically equivalent to the individual judgment bias known as overconfidence. However, research has found “hard-easy” effects for each bias that yield a seemingly paradoxical reversal: Hard tasks tend to produce overconfidence but worse-than-average perceptions, whereas easy tasks tend to produce underconfidence and better-than-average effects. We argue that the two biases are in fact positively related because they share a common psychological basis in subjective feelings of competence, but that the “hard-easy” reversal is both empirically possible and logically necessary under specifiable conditions. Two studies are presented to support these arguments. We find little support for personality differences in these biases, and conclude that domain-specific feelings of competence account best for their relationship to each other.http://deepblue.lib.umich.edu/bitstream/2027.42/41218/1/1016.pd

Skilled or Unskilled, but Still Unaware of It: How Perceptions of Difficulty Drive Miscalibration in Relative Comparisons

People are inaccurate judges of how their abilities compare to others’. Kruger and Dunning (1999; 2002) argue that most inaccuracy is attributable to unskilled performers’ lack of metacognitive skill to evaluate their performance. They overestimate their standing, whereas skilled performers accurately predict theirs. Consequently, the majority of people believe they are above average. However, not all tasks show this bias. In a series of ten tasks across three studies, we show that moderately difficult tasks produce little overall bias and little difference in accuracy between best and worst performers, and that more difficult tasks produce a negative bias, making the worst performers appear more accurate in their judgments. This pattern suggests that judges at all skill levels are subject to similar degrees of inaccuracy and bias. Although differences in metacognitive ability may play a role in the accuracy of interpersonal comparisons, our results indicate that, for the most part, the skilled and the unskilled are equally unaware of how their performances compare to those of others.http://deepblue.lib.umich.edu/bitstream/2027.42/39168/1/956.pd

Judgments of Performance: The Relative, the Absolute, and the In-between

People often evaluate how their abilities or their achievements compare to those of others. Such judgments tend to show asymmetric weighting: They are more influenced by impressions of one’s own performance than by impressions of the comparison group. We challenge interpretations of this effect as an egocentric focus. We show that asymmetry is much smaller when predicting concrete performance measures rather than general skill level and when the judge has experienced the task in question. We attribute this to a tendency to understand poorly-specified performance scales as implicitly relative. Moreover, judges’ modest tendency toward asymmetrical weighting may be adaptive, because judges often know more about their own performance than about their peers’. This does not mean, though, that judges are sensitive to optimality: We find that they are insensitive to the effects that objective feedback has on the optimal weighting of estimates of one’s own and others’ performance.http://deepblue.lib.umich.edu/bitstream/2027.42/41219/1/1015.pd

The intermediate alternative effect: Considering a small tradeoff increases subsequent willingness to make large tradeoffs

Prior research has consistently demonstrated that people are reluctant to trade a good they own for an alternative good, particularly when the alternative (or “target”) represents a substantial departure from the “endowment”. We demonstrate that the endowment effect can be reduced by first making participants consider trading their endowment for an intermediate alternative (which shares some characteristics of the endowment and some characteristics of the target). We find that this “intermediate alternative effect” operates primarily by shifting one’s reference point in the direction of the target alternative. Even when the intermediate alternative is not adopted, the extent to which one’s endowment is treated as a reference point is weakened, which can also facilitate subsequent trading.Peer Reviewedhttps://deepblue.lib.umich.edu/bitstream/2027.42/141910/1/jcpy384.pd

Six of one, half dozen of the other: Expanding and contracting numerical dimensions produces preference reversals

ABSTRACT-The scales used to describe the attributes of different choice options are usually open to alternative expressions, such as inches versus feet or minutes versus hours. More generally, a ratio scale can be multiplied by an arbitrary factor (e.g., 12) while preserving all of the information it conveys about different choice alternatives. We propose that expanded scales (e.g., price per year) lead decision makers to discriminate between choice options more than do contracted scales (e.g., price per month) because they exaggerate the difference between options on the expanded attribute. Two studies show that simply increasing the size of an attribute's scale systematically changes its weight in both multiattribute preferences and willingness to pay: Expanding scales for one attribute shifts preferences to alternatives favored on that attribute. In the cult classic This Is Spinal Tap, Nigel points out to the director that the dials on the band's amplifiers are numbered all the way to 11: ''You see, most blokes will be playing at 10. You're on 10, all the way up, all the way up. . . . Where can you go from there? Nowhere. What we do, is if we need that extra push over the cliff. . . . Eleven. One louder.'' The director asks, ''Why don't you just make 10 louder and make 10 be the top number, and make that a little louder?'' Nigel thinks for a bit and replies, ''These go to 11.'' This arbitrary use of scales is not limited to comedy. Consumer Reports rates cars along six attributes. Most attributes are described on 5-point scales, but the overall test score is expressed on a 100-point scale. Will this difference in scales affect which car consumers prefer? It should not. After all, a 5-point scale can easily be converted to a 100-point scale, and vice versa (a fact that Nigel misses). More generally, a scale with ratio properties can be converted from one scale to another by multiplying the original values by some constant factor without changing the information provided by the scale. Thus, a product that is superior to another by 20 points on a 100-point scale is still superior by the same proportion if the information is expressed as a 1-point difference on a 5-point scale. Nevertheless, this trivial transformation seems psychologically consequential. The expanded scale highlights the difference between the two choice options, making it potentially easier to discriminate between them. In contrast, the contracted scale minimizes the difference. Consider a recent demonstration of currency effects. Our argument parallels past findings on risk and ratio judgments. For example, Yamagishi (1997) has shown that people judge ratios expressed with large numerators and denominators (1,286/10,000) as riskier than larger ratios expressed with small numerators and denominators (24.14/100). Stone, Yates, and Parker (1997) were able to exaggerate such effects by putting the 1074 Volume 20-Number 9 Copyright r 2009 Association for Psychological Science information in graphs that made differences in numerators even more salient. Similarly, We believe that previous research on denominator neglect STUDY 1: PREFERENCES AND CHOICE In Study 1, we used a choice paradigm to test participants' preference for options that entail trade-offs across attributes. We predicted that participants would more strongly prefer the option that dominates on an attribute that is expanded. We created two choice sets. The first scenario presented cell-phone plans that varied in cost and number of dropped calls. This scenario contained a strong manipulation such that, when one attribute was expanded, the other was contracted. The second scenario presented movie-rental plans, in which we manipulated the expansion of one attribute (new movies per period of time) while leaving the other attribute (cost) untouched. We predicted that, in both scenarios, preference would increase for the option that was superior on an expanded attribute, causing preference reversal to arise between conditions. Method One hundred six University of Michigan undergraduates completed this study as part of a course requirement. The first scenario (cell-phone plans) asked participants to evaluate cellular phone plan options described in terms of number of dropped calls and cost. Number of dropped calls was either on an expanded scale (dropped calls per 1,000 calls) or a contracted scale (dropped calls per 100 calls). Price was also described either on an expanded scale (price per year) or a contracted scale (price per month). When one attribute was presented as expanded, the other was presented as contracted, thus creating two conditions (see The second scenario (movie rentals) tested discriminability by varying the expansion of only one attribute. Participants evaluated two movie-rental plans that were described in terms of new movie availability and price (see For both scenarios, participants indicated their preference for Plan A versus Plan B on a 7-point scale (1 5 strongly prefer plan A, 4 5 indifferent, 7 5 strongly prefer plan B). Note. Participants evaluated cell-phone plans described in terms of number of dropped calls and cost. Number of dropped calls was either on an expanded scale (dropped calls per 1,000 calls) or on a contracted scale (dropped calls per 100 calls). Price was also described either on an expanded scale (price per year) or on a contracted scale (price per month). In Condition 1, the number of dropped calls was presented on a contracted scale, and price was given on an expanded scale. In Condition 2, the number of dropped calls was presented on an expanded scale, and price was given on a contracted scale. Volume 20-Number 9 1075 Katherine A. Burson, Richard P. Larrick, and John G. Lynch, Jr. Results and Discussion An independent-samples t test showed a significant shift in plan preference based on attribute expansion for both scenarios. For the first scenario, preferences favored Plan B (the plan that was superior on price) when price was expanded and the number of dropped calls was contracted (M 5 4.45). However, preferences favored Plan A (the plan that was superior on the number of dropped calls) when the number of dropped calls was expanded and price was contracted (M 5 3.08), t(104) 5 À3.60, p < .001, d 5 0.706. We converted these data to choice proportions to test for preference reversals. Plan B was preferred when it was described as having a lower price per year but more dropped calls per 100 than Plan A (53% vs. 31%, respectively). 1 However, Plan A was preferred when it was described as having fewer dropped calls per 1,000 but a higher price per month than Plan B (69% vs. 23%, respectively); w 2 (1, N 5 106) 5 13.93, p < .001, j c 5 .363 for the linear contrast of the ordinal choice categories between conditions. For the second scenario, participants favored the superior plan for new movies (Plan B) more when new movies were expanded (M 5 4.33) than when they were contracted (M 5 3.38), t(104) 5 2.16, p 5 .033, d 5 0.424. A test of choice proportions showed that 56% of participants preferred Plan B when number of new movies was expanded to a yearly scale, compared to 38% who preferred Plan A. Contracting number of new movies to a weekly scale resulted in 33% preferring Plan B and 57% preferring Plan A, a significant reversal for the linear contrast of the ordinal choice categories, w The results of Study 1 show that attribute expansion increases preference for the alternative favored on an expanded attribute, despite the fact that the relative differences between alternatives remained the same. STUDY 2: PRICING In this experiment, we modified the second scenario of Study 1 to create a matching paradigm in order to determine participants' valuation of options that entail a trade-off across attributes (e.g., We manipulated both attribute expansion and product valence. Valence was manipulated by presenting the product as either better or worse than the average plan. We predicted that valence would interact with attribute expansion: The difference in willingness to pay for the above-average plan versus the below-average plan would be greater when framed as movies per year (expanded) rather than movies per week (contracted). Method Sixty-three University of Michigan students completed this 2 (attribute expansion: expanded vs. contracted) Â 2 (product valence: above vs. below average) design study in combination with other materials and were paid $8 for their participation. Participants were asked to evaluate two movie-rental plans, as in the second scenario in Study 1. One plan was labeled the average plan and the other was the target plan. Price was provided only for the average plan. Half of the participants evaluated the two movie-rental plans described in terms of new movies per week (i.e., the contracted attribute). The other participants evaluated the two plans described in terms of new movies per year (i.e., the expanded attribute). These plans are presented i

Consumer-Product Skill Matching: The Effects of Difficulty on Relative Self-Assessment and Choice

Consumers infer their best product choice from comparative information about themselves and products (Prelec, Wernerfelt, and Zettelmeyer). Though common, this "matching" process leads to unstable preferences when perceived product ranks change due to product array manipulations. This article proposes that another variable, task difficulty, also leads to inconsistent choices through the matching process. Accuracy resulting from matching is also assessed by exploring domains where comparative standing is based on measurable, objective skill. The present studies show that people rely heavily on their relative self-assessments in product choice, but these estimates are often inaccurate and thus lead to unintended and inconsistent choices. (c) 2007 by JOURNAL OF CONSUMER RESEARCH, Inc..

Knowing Where They Stand: The Role of Inferred Distributions of Others in Misestimates of Relative Standing

People often estimate how they compare to other consumers when they make purchase decisions. Unfortunately, they tend to err in this task, and this can lead to negative consequences in their choices. Previous literature has largely argued that these errors in estimates of relative standing are due to underweighting or ignoring the reference group. Using a novel measure of people’s perception of the reference group, we show that consumers do attend to that information but err in their estimates of relative standing because they tend to overestimate the dispersion of others’ performances and attributes. Three studies support this argument and provide insights that enable marketers to alter consumers’ relative assessment process in formerly discounted ways. We demonstrate straightforward tools that can change consumers’ impressions of others and thus change relative assessments and purchase decisions.