What is it about?
This paper develops a new laboratory test of the accuracy of consumers decision making. We call it the "Surplus Identification Task". It measures how good a product has to be relative to its price in order for consumers to be able to spot the good deal reliably. The task is demonstrated by showing how accuracy changes as more product attributes have to be taken into account.
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Why is it important?
Developing objective measures of the accuracy of consumers' decisions has proved very difficult. This is a new approach and it generates new findings. The experiments show that once three or four product attributes have to be traded off against each other consumers are very imprecise when judging how good a deal is. The experiments also reveal a systematic bias, whereby consumer overvalue products towards the top end of the range and undervalue those towards the bottom.
Perspectives
I think this new task has very many interesting applications. In this study we use it to show what happens when the number of product features is increased. But it can also be used to examine how the accuracy of consumer decision making is affected by the type of product attributes, how they relate to the overall product value, the familiarity of the attributes, the size and variation within the product range, and more. Thus, it can be used to test multiple models of consumer choice and to give insights for regulatory policy, especially in the area of consumer protection.
Peter Lunn
Economic and Social Research Institute
Read the Original
This page is a summary of: The surplus identification task and limits to multiattribute consumer choice., Journal of Experimental Psychology Applied, November 2019, American Psychological Association (APA),
DOI: 10.1037/xap0000252.
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