Preference Reversals Induced by Screening: The Biasing Effects of a Two-Stage Decision Process

1. Preference Reversals Induced by Screening:The Biasing Effects of a Two-Stage Decision Process Amitav Chakravarti, New York UniversityChris Janiszewski, University of FloridaGülden Ülkümen, New York University

2. Screening Is Beneficial • There is ample evidence for two-stage decision process (e.g., Beach and Mitchell 1987; Bettman and Park 1980; Payne 1976) • There is general agreement that prechoice screening is beneficial (e.g., Alba et al. 1997; Haubl and Trifts 1999; Lynch and Ariely 2000; Roberts and Nedungadi 1995) • Reduces information overload • Facilitates choice of the optimal alternative • It is assumed that prechoice screening does not have any detrimental consequences. Why?

3. Two-Stage Process is Used in Complex Information Environments

4. Phased Decision Making: Stage 1a Screening; Noncompensatory

5. Phased Decision Making: Stage 1b Screening; Noncompensatory

6. Phased Decision Making: Stage 2 Choosing; Compensatory

7. Can Screening Be Detrimental? • Yes, if Stage 1 (prescreening) information is differentiating • AND if people choose to deemphasize the prescreening information • AND prescreening and postscreening information are not positively correlated.

8. Why Might People Deemphasize Prescreening Information? • Explanation 1: People may not shift to a compensatory strategy in Stage 2. • Reconsidering prescreening information requires effort (Wright and Barbour 1977). • Explanation 2: People may shift to a compensatory strategy in Stage 2, but may ignore or deemphasize prescreening information. • The prescreening information has been “used” already (van Zee, Paluchowski, and Beach 1992). • Explanation 3: People may shift to a compensatory strategy in Stage 2, but the act of screening may alter perceptions of prescreening information. • The literature on perceptual categorization suggests the act of categorization makes categorized items appear more similar (Goldstone, Lippa, and Shiffrin 2001).

9. Study 1 • 120 participants chose between six microwave popcorn brands (A, B, C, D, E, F) • Each brand described by six attributes • Four prescreening attributes • Two postscreening attributes

10. Study 1: Stimulus Set Properties Prescreening Attributes Postscreening Attributes

11. Study 1: Stimulus Set Properties Prescreening Attributes -Most Influential -A > C > E > > > > > > > > > > < < Postscreening Attributes -Less Influential -A < C < E < <

12. Study 1 Design • Three between-subject groups. • Control Group 1: Free Choice Group • Control Group 2: Partitioned Choice Group • Treatment Group: Screening Group

13. Screening Stage Final Choice Stage Study 1: Procedures Choose one brand All information • (6 brands, 6 attributes) Rank Attributes Free Choice Group Review information Screening information • (6 brands, 4 attributes) Choose one brand All information (6 brands, 6 attributes) Partitioned Choice Group Rank Attributes Shortlist 3 brands Screening information (6 brands, 4 attributes) Choose one brand All information (6 brands, 6 attributes) Rank Attributes Screening Group

14. Study 1: All Groups

15. Study 1: Screening Group

16. Study 1: Screening Group

17. Study 1: Partitioned Choice Group

18. Study 1: Partitioned Choice Group

19. Study 1: Free Choice Group

20. Study 1: Choice Shares C E A C E C E A A

21. Screening Effect • Participants who did not screen preferred the brand that performed best on the most important attributes (Brand A). • Screening shifted market share to the brand that performed best on postscreening attributes (Brand E) • What is the source of the screening effect?

22. Study 2: Source of Screening Effect • Explanation 1: People may not shift to a compensatory strategy in Stage 2. • Reconsidering prescreening information requires effort (Wright and Barbour 1977). • Explanation 2: People may shift to a compensatory strategy in Stage 2, but may ignore or deemphasize prescreening information. • The prescreening information has been “used” already (van Zee, Paluchowski, and Beach 1992). • Explanation 3: People may shift to a compensatory strategy in Stage 2, but the act of screening may alter perceptions of prescreening information. • The literature on perceptual categorization suggests categorization makes categorized items appear more similar (Goldstone, Lippa, and Shiffrin 2001).

23. Study 2: Key Manipulation Vary the hedonic dispersion of the postscreening information. • Explanation 1 (continued noncompensatory processing): • No influence of increases hedonic dispersion. • If the screening effect is a consequence of the continued use of a noncompensatory process at Stage 2, then increasing the advantage of E > A should not matter. • Explanation 2 (deemphasize prescreening information): • Screening advantage increases with increased dispersion. • Postscreeing information receives more weight.

24. Study 2: Low Hedonic Dispersion

25. Study 2: High Hedonic Dispersion

26. Study 2: Aggregate Choice Shares C E C E C E A A A

27. [58.3-13.1]-[36.8-35] = 43.4% [51.4-20]-[19.4-58.2] = 70.2% Study 2: Choice Shares Low Hedonic Dispersion High Hedonic Dispersion A C E A C E A C E A C E

28. Study 2: Results • The size of the screening effect increases with increased variation in postscreening attribute desirability • People are indeed placing more emphasis on the postscreening information.

29. Why Might People Deemphasize Prescreening Information? • Explanation 1: People may not shift to a compensatory strategy in Stage 2. • Reconsidering prescreening information requires effort (Wright and Barbour 1977). • Explanation 2: People may shift to a compensatory strategy in Stage 2, but may ignore or deemphasize prescreening information. • The prescreening information has been “used” already (van Zee, Paluchowski, and Beack 1992). • Explanation 3: People may shift to a compensatory strategy in Stage 2, but the act of screening may alter perceptions of prescreening information. • The literature on perceptual categorization suggests categorization makes categorized items appear more similar (Goldstone, Lippa, and Shiffrin 2001).

30. Two Goals of Study 3 • Further Investigate Explanation 2: Why do people ignore or deemphasize prescreening information. • Reason 1: The prescreening information has been considered at Stage 1. • Reason 2: The prescreening information has been used to select a set of options at Stage 1. • Study 3 adds a passive screening condition: People rate alternatives and then an agent (computer) screens alternatives using these ratings. • If Reason 1 (consideration) is correct, passive screening should result in a screening effect. • If Reason 2 (using to select) is correct, passive screening should NOT result in a screening effect. People are not using the prescreening information to actively select a consideration set.

31. Two Goals of Study 3 • Further Investigate Explanation 3: The act of screening may alter perceptions of prescreening information. • Reason 3: Categorizing items makes within-category items appear to be more similar. • Study 3 adds a condition that allows us to assess the influence of screening on the perception of prescreening information: People are asked to screen and rate alternatives. • If Reason 3 (increased homogeneity of prescreening information) is correct, the ratings of retained alternatives should be more homogeneous after screening than before screening.

32. Choose one brand See all information (6 brands, 6 attributes) Choice Group Review information Screening information (6 brands, 4 attributes) Choose one brand See all information (6 brands, 6 attributes) Partitioned Choice Group Shortlist 3 brands Screening information • (6 brands, 4 attributes) Choose one brand See all information (6 brands, 6 attributes) Screening Group Shortlist 3 brands Screening information • (6 brands, 4 attributes) Rate all brands Screening information • (6 brands, 4 attributes) Choose one brand See all information (6 brands, 6 attributes) Screening & Rating Group Study 3: Procedures First Stage Final Choice Stage Choose one of three highest rated brands See all information (6 brands, 6 attributes) Rate all brands Screening information • (6 brands, 4 attributes) Rating Group

33. Study 3: Choice Shares A C E A C E A C E A C E A C E

34. Study 3: Choice Shares A C E A C E A C E A C E A C E

35. First Conclusion of Study 3 • Why do people ignore or deemphasize prescreening information? • Reason 1: The prescreening information has been considered at Stage 1. • Reason 2: The prescreening information has been used to select a set of options at Stage 1.

36. Study 3: Ratings Homogeneity • Computed the mean variance of the ratings of the consideration set brands in the • Rating Group = 3.04 • Screening and Rating Group = 1.61 • Significantly different (F(1, 80) = 7.32, p < .05)

37. Second Conclusion of Study 3 • Further Investigate Explanation 3: The act of screening may alter perceptions of prescreening information. • Reason 3: Categorizing items makes within-category items appear to be more similar.

38. Study 3: Choice Shares A C E A C E A C E A C E A C E

39. Third Conclusion of Study 3 • Why do people ignore or deemphasize prescreening information? • Reason 1: The prescreening information has been considered at Stage 1. • Reason 2: The prescreening information has been used to select a set of options at Stage 1. • Solution: People can be encouraged to reconsider used information if it is made salient again, as we did with our rating task (screening and rating condition). • Implication: Screening influences the perceived homogeneity, and the relative weight, of the prescreening information.

40. Goal of Study 4 • Study 3 shows that active screening alters the perception and use of prescreening information. Why? • Reason 1: “Active screening” occurs because decision makers use a noncompensatory process in Stage 1. Using the noncompensatory process at Stage 1 encourages a person to both discount prescreening information and see it as more homogeneous. • Reason 2: “Active screening” occurs because of decision makers categorize (i.e., put alternatives into a consideration set) at Stage 1. Categorizing items makes within-category items appear to be more similar, hence less useful for making a choice. • Study 4 adds a screen-by-rejection group • In contrast to the screening group, the screen-by-rejection group excludes alternatives from the choice set.

41. Goal of Study 4 • Study 3 shows that active screening alters the perception and use of prescreening information. Why? • Reason 1: “Active screening” occurs because decision makers use a noncompensatory process in Stage 1. Using the noncompensatory process at Stage 1 encourages a person to both discount prescreening information and see it as more homogeneous. YES • Reason 2: “Active screening” occurs because of decision makers categorize (i.e., put alternatives into a consideration set) at Stage 1. Categorizing items makes within-category items appear to be more similar, hence less useful for making a choice. NO • Study 4 adds a screen-by-rejection group. Screening Effect? • In contrast to the screening group, the screen-by-rejection group excludes alternatives from the choice set.

42. Choose one brand See all information (6 brands, 6 attributes) Choice Group Study 4: Procedures First Stage Final Choice Stage Review information Screening information (6 brands, 4 attributes) Choose one brand See all information (6 brands, 6 attributes) Partitioned Choice Group Shortlist 3 brands Screening information • (6 brands, 4 attributes) Choose one brand See all information (6 brands, 6 attributes) Screening Group Reject 3 brands Screening information • (6 brands, 4 attributes) Choose one brand See all information (6 brands, 6 attributes) Screen-by-Rejection Group

43. Study 4: Procedure • Screening Instruction. • After you have gone through these descriptions to your satisfaction, as a first step towards picking a brand of your choice, please shortlist three brands that you would consider more seriously for purchase. We will provide you with more information on these three brands on the next screen. Please do not make up your mind about your final choice yet; simply select (i.e., shortlist) three brands that you think warrant further attention by clicking on the appropriate buttons below.” • Screen-by-rejection Instruction • “After you have gone through these descriptions to your satisfaction, as a first step towards picking a brand of your choice, please reject three brands that you would not consider more seriously for purchase. We will provide you with more information on the three surviving brands on the next screen. Please do not make up your mind about your final choice yet; simply reject (i.e., throw away) three brands that you think do not warrant further attention by clicking on the appropriate buttons below.”.

44. Study 4: Choice Shares A C E A C E A C E A C E A C E

45. Conclusion of Study 4 • Why does active screening alter the perception and use of prescreening information. • Reason 1: “Active screening” occurs because decision makers use a noncompensatory process in Stage 1. Using the noncompensatory process at Stage 1 encourages a person to both discount prescreening information and see it as more homogeneous. • Reason 2: “Active screening” occurs because of decision makers categorize (i.e., put alternatives into a consideration set) at Stage 1. Categorizing items makes within-category items appear to be more similar, hence less useful for making a choice.

46. Summary of Studies

47. Conclusions • Screening can alter decision making when prescreening and postscreening information is negatively correlated. • Screening appears to influence the perceived homogeneity of prescreening information and the relative importance of this information (as compared to postscreening information). • Inclusionary, as opposed to exclusionary, screening is responsible for the screening effect.

48. General Discussion • Implications of creating a consideration set via screening (and increasing the perceived homogeneity of prescreening attributes) • Increased price sensitivity if price is not a screening attribute (e.g., Diehl et al. 2003). • Delay decision to purchase (e.g., Dhar 1997). • Desire to search for additional, less important information (e.g., Moorthy, Ratchford, and Talukdar). • Issues • Why does classification reduce differentiation on the classification variables? • When do people engage in inclusionary, as opposed to exclusionary, screening?