Using extremeness aversion to fight obesity: Policy implications of context dependent demand

This article illustrates how the compromise effect alters consumers' selection of soft drinks. Using three within-subject studies, we show that extremeness aversion and price insensitivity cause consumers to increase their consumption when the smallest drink size Is dropped or when a larger drink size Is added to a set. As a result rational firms find It best to drop the smaller sizes and add a larger size, thus increasing overall consumption. After estimating each individual's demand as a function of price and drink size availability, policy experiments demonstrate how It Is possible to reduce soft drink consumption without additional taxation. © 2008 by JOURNAL OF CONSUMER RESEARCH, Inc.

Duke Scholars

Author Richard Staelin Fuqua School of Business

Author Joel C. Huber Fuqua School of Business