Context Dependence

Context dependence describes how the same option can be more or less attractive depending on what else is in the choice set. It can further be distinguished into:

Compromise Effect

The middle option in a set is preferred because it avoids the feeling of choosing an “extreme.”

NoteExample

Coffee menu sizes

Adding a “Large” option (€7.00) to a café menu that previously had only Small (€3.00) and Medium (€4.50) makes the Medium feel like the sensible middle ground and increases its sales.

Starbucks coffee sizes and prices: It seems reasonable to go for the Tall option, since it’s near the middle, right?

Attraction Effect

Adding a “dummy” option that no one would pick, to make another option more attractive.

NoteExample

Subscription offers

A newspaper offers: (a) Web-only €59, (b) Print-only €125, (c) Web + Print €125. No one would choose Print-only over Web + Print at the same price; it’s a decoy that makes option (c) look like a better deal.

Similarity Effect

Adding a similar option to a competitor’s offering splits the share (e.g. votes or market share) they would receive.

NoteExample

Election candidates

A second progressive candidate entering a municipal election will lead to a split of the progressive votes between them, increasing thus the chances of their opponents.

Also relates to: Frame Dependence · Anchoring and Adjustment · Reference Dependence · Narrow Framing