Consumers Undervalue Multi-Option Alternatives

Abstract Initial choices often lead to downstream choices. Initial choices among restaurants lead to downstream choices among entrées, and initial choices among resorts lead to downstream choices among activities. How do the options available for downstream choices (e.g., entrées, activities) affect initial choices among multi-option alternatives (e.g., restaurants, resorts)? Forward-looking consumers should be able to identify their most-preferred downstream choice options (e.g., favorite entrée, favorite activity) and select an initial alternative accordingly. Less-preferred downstream choice options may therefore be disregarded. Yet 15 studies across four domains (three consumer goods and risky gambles) indicate this is not how consumers choose. Instead, adding a less-preferred option to an otherwise-attractive set of downstream choice options decreases the choice share of the corresponding multi-option alternative. The effect size increases as the difference in value between the more-preferred and less-preferred options increases. Mouse-tracking reveals that participants who attend more to a less-preferred downstream choice option (e.g., entrée, activity) are less likely to choose the corresponding multi-option alternative (e.g., restaurant, resort). A manipulation of attention to the downstream choice options provides causal evidence for this mechanism. This work enhances our understanding of multi-option decision-making and how decision-makers assess the overall value of choice sets.