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Decoy alternatives in policy choices: Asymmetric domination and compromise effects
EuropeanJournalof POLITICAL ELSEVIER
European Journal of Political Economy Vol. 13 (1997) 575-589
ECONOMY
Decoy alternatives in policy choices: Asymmetric domination and compromise effects Kaisa Herne
*
Department of Political Science, University of Turku, FIN-20014 Turku, Finland Received 1 August 1996; revised 1 December 1996; accepted 1 January 1997
Abstract A decoy is an option which causes preference reversals between two other options in a choice set. Introducing a decoy increases the popularity of a target option and decreases the popularity of a competitor. This phenomenon contradicts standard economic models of individual choice which assume preferences to be independent of irrelevant alternatives. Decoy effects include a set of phenomena in which particular types of decoys have been observed to influence choice. This paper focuses on two effects: the asymmetric domination and compromise effect. Earlier studies on decoy effects have concentrated on consumer choice. The aim of this paper is to investigate the possibility of observing the same effects in a political context. This question is studied by presenting choice problems over various policy issues to a group of respondents. The results show that the outcomes of a political decision making process can be affected by alternatives which should be irrelevant according to the standard approach. © 1997 Elsevier Science B.V. JEL classification: D72 Keywords: Asymmetric dominance; Compromise; Decoy effect; Individual choice; Policy choice
I. Introduction A n u m b e r o f important studies on group choice are based on an assumption o f individual rationality. Studies on voting systems and the majority rule (beginning
* Tel.: -~ 358-2-3336154; fax: +358-2-3335090; e-mail: [email protected]. 0176-2680/97/$17.00 © 1997 Elsevier Science B.V. All rights reserved. PII S0176-2680(97)00020-7
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from Condorcet, 1785 and Dodgson (reported in Black, 1958) Black, 1958; and followed by Plott, 1967; McKelvey, 1976; Schofield, 1980 and many others), the famous voting paradox (Downs, 1957) as well as studies on strategic voting and agenda control (Farquharson, 1969; Gibbard, 1973; Satterthwaite, 1975; Plott and Levine, 1978) all arise from the presumption that individuals are rational. Here, individual rationality is defined as consistency with the axioms of the standard choice theory 1. The application of the so-called rational choice approach in the study of politics has often been criticized on the grounds that people have different motivations when acting as political agents than when acting as economic ones (e.g. Brennan and Lomasky, 1985). According to this view, the role of self interest is not so important in political choice, which is rather influenced by ideological and altruistic concerns. However, there is also a far less discussed problem relating to the application of the rational choice approach in the study of politics. This problem arises from numerous studies in experimental economics which have challenged the view that individuals follow the postulates of standard choice theory (for a review see Camerer, 1995). In spite of these results, there has been little research on standard choice theory and political choice, although the theory is widely applied in studies of politics (see, however, Pan et al., 1995; Quattrone and Tversky, 1988). The purpose of this study is to investigate whether people choose in accordance with the standard model in a set of choice tasks concerning various political issues. The focus is on decoy alternatives which have been observed to cause preference reversals between other two options in a choice set. Introducing a decoy favours one of the options (target) in the choice set but not the others (competitors). This contradicts the standard model which assumes binary preferences to be independent of irrelevant third options. The term decoy effect is used here with reference to a set of phenomena in which particular types of decoys have been observed to influence individual choice in a systematic manner. I concentrate on the asymmetric domination and compromise effects. The first means that introducing a new option, asymmetrically dominated by one of the original options, increases the probability of choosing the dominating option. The latter is a related phenomenon in which the decoy makes the target a compromise. Decoy effects were originally observed in studies on consumer choice where alternatives were defined as consumer products. My aim is to investigate the possibility of observing these effects in a political choice context. For this purpose a group of respondents was presented hypothetical choice tasks concerning various policy issues. The paper is organized as follows. Section 2 introduces the postulates of the standard theory which are violated if a decoy influences individual choice. Section 3 represents the decoy effects studied in this paper. Section 4 describes the
i The term 'standard choice theory' is used here with reference to the standard theory of consumer choice or (subjective) expected utility theory.
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empirical study which was used to explore the effects in a political choice context. Section 5 contains concluding remarks.
2. Regularity and proportionality Independence of irrelevant alternatives (IIA) is one of the basic assumptions of standard models of individual choice. IIA states that preference between two options should be independent of other options in the choice set. Suppose that R and S are two choice sets and that R = { x , y} and S = { x , y, z}. Also let C ( R ) = x denote the choice of an alternative x from set R. IIA implies that if C ( R ) = x it cannot be that C ( S ) = y. If all individuals in a certain group satisfy IIA, a very weak property, called regularity, is also satisfied. Regularity states that the choice share of an option cannot be increased by enlarging the choice set. Let P ( x , R ) be the proportion of people for whom C ( R ) = x. The regularity principle is defined as follows: P(x,R)>P(x,S),
x~RcS.
Regularity indicates that x ' s share of choices is at least as large in choice set R as in choice set S, when R is a subset of S. It is noteworthy that regularity is a weaker principle than IIA; even though regularity holds at the aggregate level, individual preferences can violate IIA. For this reason it is useful to see if it is possible to define a stronger condition which applies to aggregate data and would allow no violations of IIA. Let us first consider the proportionality principle which states that a new option should take share from the existing options in proportion to their original shares. Proportionality is not, however, an adequate test of IIA because it can be violated even though individual preferences satisfy IIA. To see this, consider three political parties whose positions can be arranged along a single issue dimension. Call these parties l (the left wing party), c (the centre party) and r (the right wing party) according to their locations. Let us assume that there are two distinct votes with choice sets R = {1, c} and S = {l, c, r} as well as an electorate consisting of five voters. In both votes there are two voters with preference ordering 1 > c > r and three voters with preference ordering r > c > I. Now, when R is the choice set / receives two votes and c three votes, which makes c as the winner. On the other hand, when S is the choice set 1 receives two votes, r three votes and c no votes at all. Consequently, l's choice share relative to c rises from 40 to 100% when r is added to the choice set. Party l gains relative to party c because c loses votes to r whereas 1 does not. Hence, proportionality is violated although IIA holds at the individual level. The previous example shows that instead of proportionality we need a weaker principle, which allows violations of proportionality so long as individual preferences satisfy IIA. For this purpose Tversky and Simonson (1993) define a
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condition which they call betweenness inequality. In order to understand betweenness inequality consider a set of three alternatives {x, y, z} and let x i denote the value of alternative x on the ith dimension (the value is assumed to increase monotonically and separately on each dimension). Now, y lies between x and z whenever either xi < Yi ~ 7.i or x i > Yi >- zi holds for each dimension i. Next, consider two choice sets R = {x, y} and S = {x, y, z}. Tversky and Simonson show that if y is between x and z, P(y, R ) > P(y, S ) / ( P ( y , S ) + P(x, S)) unless either IIA or a certain ranking condition is violated. In order to define the latter denote the proportion of people with a certain preference order, say z > y > x, by P ( z > y > x). The ranking condition states that whenever y is between x and z, P ( z > y > x ) / P ( z > x > y ) > P ( y , S ) / P ( x , S). In other words, those preference orders which have the middle option between the two extreme options should be relatively more common than those where one of the extreme options immediately succeeds the other. This seems to be a plausible assumption. Betweenness inequality entails that either IIA or the ranking condition is violated if an extreme option loses more share to another extreme option than the middle option does. Hence, whether violations of betweenness inequality are seen as evidence of deviations from IIA depends on the plausibility of the ranking condition. Tversky and Simonson observed no violations of the ranking condition in several studies which tested this postulate.
3. Decoy effects Empirical evidence on consumer choice indicates that the regularity principle is often violated. An important observation reveals that introducing a new brand, asymmetrically dominated by one of the original brands, increases the probability of choosing the dominating brand (Huber et al., 1982). This phenomenon, called the asymmetric domination effect (ADE), is illustrated in Fig. 1. Alternatives T (target) and C (competitor) are the two core alternatives defined on two dimensions. The dimensions are assumed to increase in value and neither of the core alternatives is assumed to dominate the other. Thus, T is better than C along dimension 1 and C is better than T along dimension 2. D~ (decoy) is located so that T dominates it (T is better than DI along both dimensions) whereas C does not. ADE indicates that adding D~ to the choice set increases T's share of choices. A decoy which is nearly dominated by the target (a relatively inferior decoy) can also increase the popularity of the target (Huber and Puto, 1983; D 2 in Fig. 1). In Huber and Puto's study some of the subjects reported that they chose the target because it was a compromise. Simonson (1989) found that target's choice share can indeed be increased by locating the decoy so that it makes the target a compromise. Simonson called this the compromise effect (CE, D 3 in Fig. 1). Hence, introducing decoys which are either asymmetrically dominated, rela-
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C
Dimension 2
T . . . . . . .
Q
D1 ............... D.
D2 '..
D~
-O ........ ~l
Dimension I
Fig. 1. An illustration o f d e c o y effects.
tively inferior, or which make the target a compromise, all increase the popularity of the target. Empirical evidence gives support to the view that decoy effects are relatively general. They seem to be sensitive neither to the number of options or dimensions in the choice set (Huber and Puto, 1983) nor to the exact locations of the decoys (Huber et al., 1982; Huber and Puto, 1983). Evidence for decoy effects comes mainly from consumer choice but ADE has also been observed in choice among monetary gambles (Wedell, 1991, Herne, 1996a), political candidates (Pan et al., 1995) and job candidates (Highhouse, 1996). The majority of studies on decoy effects use hypothetical choices but Simonson and Tversky (1992) used real items in certain choice tasks. Also, in Herne (1996a), where I used gambles similar to Wedell (1991), decoy effects were observed despite the use of real payoffs. There is a great deal of speculation as to what underlies decoy effects (for a review see Herne, 1996b). Proposed explanations have basically followed two lines. On the one hand, it has been suggested that decoys influence choice by altering people's perceptions of the given stimuli (Huber et al., 1982; Huber and Puto, 1983; Simonson and Tversky, 1992; Tversky and Simonson, 1993). For instance, an asymmetrically dominated decoy stretches the dimension where the target is weaker than the competitor. This may reduce the experienced distance between the target and the competitor on this dimension and hence make the target look more attractive. On the other hand, it has also been argued that the use of heuristical strategies could explain the influence of decoys (Huber et al., 1982; Simonson, 1989; Wedell, 1991). For instance, a simple rule of thumb which suggests that one should select a compromise option (whenever there is one) could explain CE.
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Both ADE and CE have been observed to cause violations of regularity, which of course implies violations of proportionality as well. In the case of ADE there should be no differences between the absolute and relative choice shares of the target because the dominated decoy should not gain support. In contrast with dominated decoys, decoys which make the target a compromise are chosen relatively often, which means that violations of regularity are not necessarily as frequent as with dominated decoys. As far as violations of proportionality are concerned, the betweenness inequality condition applies to CE because in the case of compromise T lies between C and D on both dimensions. An apparent implication of decoy effects is that decoys can be deliberately added to a choice set in order to enhance the chances of a target alternative. With regard to consumer choice, it has been argued that introducing decoy brands can be used as a marketing strategy to promote the purchases of a target brand. For example, Simonson and Tversky (1992) suggest that asymmetric dominance can provide an additional explanation for the effects of sales. They argue that a brand on sale dominates the same brand when not on sale and that this increases the attractiveness of the brand relative to other brands. In this case the decoy is a phantom alternative (the term is from Farquhar and Pratkanis, 1987) which is described (the old price or the percentage of the reduction is usually shown) but which is not available for choice. Politics involves marketing as well. Politicians have to 'sell their products' (candidates and policy proposals) to the electorate as well as to other political actors. The introduction of decoy options is a way to advance the chances of a target option. Here decoys are not simply added to the agenda. There is also promotion of the target, which is compared with the decoy and the nature of the target as the dominating or compromise option is emphasized. Consider now an example of a dominated decoy in real world politics. In Herne (1994), I studied arguments for and against nuclear power in Finland 2. The discussion took place before a parliamentary vote on building a new nuclear power station, in September, 1993. An analysis of the arguments reveals that the supporters of nuclear power used coal as a decoy option to make nuclear power look more appealing. This conclusion is based on the following observations. The supporters of nuclear power used coal as the main point of comparison for nuclear power, whereas the opponents of nuclear power did not normally consider coal as one of the alternatives. The majority of opponents favoured a decentralized energy
2 A total of 143 arguments were put forward, 88 against and 55 for nuclear power. The data consisted of different types of arguments (letters to the editor, leaders, individual and organizational opinions, statements to the Economic Committee's report). The analysis involved counting the number of alternatives and dimensions mentioned in each individual argument. The nature (positive or negative) of an alternative with regards to the mentioned dimensions was also evaluated.
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C = Coal DM = Decentralized Model NP = Nuclear Power DM
Environment
NP
C
|
Reliability Fig. 2. An illustration of asymmetric dominance in the nuclear power debate.
production model which includes relatively small power plants using mainly so-called alternative energy production techniques (e.g. wind and solar energy, wood- and peat burning power plants). The supporters of nuclear power in turn argued for centralized energy production and claimed that nuclear power and coal are the only possible alternatives for Finland. Coal was used as a point of comparison for nuclear power to make nuclear power environmentally more appealing. Environmental issues loomed large in the discussion, and objections to nuclear power emphasized problems related to the disposal of nuclear waste and the possibility of a nuclear catastrophe. Coal, which is very problematic in terms of the environment, was a useful point of comparison when the supporters of nuclear power wanted to emphasize that nuclear energy does not produce acid rain and does not add to the greenhouse effect. A common argument was that nuclear power and coal are the only reliable energy production techniques 3, and that nuclear power should be favoured over coal because unlike coal it is environmental friendly. Consequently, nuclear power dominates coal, because it is better in terms of the environment and at least as good in terms of reliability 4. The decentralized model, on the other hand, is usually considered as weaker than
3 The reliability dimension included arguments relating to the stability of energy production and to the price of energy. 4 The reliability and environment dimensions were by no means the only relevant dimensions in the discussion. The national economy was also frequently mentioned in the supporters' arguments. However, these arguments almost solely related to nuclear power, which means that the rest of the alternatives cannot be arranged along the economy dimension on the basis of these arguments.
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nuclear power and coal in terms of reliability, but as better in terms of the environment. Fig. 2 illustrates asymmetric dominance in the nuclear power debate.
4. ADE and CE with political alternatives The above real world example of a dominated decoy is reminiscent of earlier observations of the influence of decoys in consumer choice. It is of interest to establish whether decoys influence choice in an equivalent manner when alternatives are defined as political issues. In order to answer this question, a group of respondents was asked to complete hypothetical policy choice problems over different subjects. The design deviates from a controlled laboratory experiment in two respects. Firstly, control over information is not complete because respondents can take into account dimensions not mentioned in the description of the alternatives. Secondly, respondents are not given real incentives. Hence, it is possible to claim that deviations from the standard theory occur only because subjects did not have incentives to think carefully enough about the choices they were to make. The role of incentives in experimental research is, however, an unresolved question dividing economists and psychologists. The former usually argue that real
CHOICE TASK 6. Country i does not belong to an economic union but its parliament has decided to join one of the unions T, C or D. The table below presents predictions about the rate of inflation and economic growth in i if it joins T, C or D alternatively. These predictions are made by an impartial group of experts. If i joins T the rate of inflation is supposed to be 1 % and economic growth 2.1%. Ifi joins C the rate of inflation is supposed to be 2.2 % and economic growth 3.9 %. I f i joins D the rate of inflation is supposed to be 1.5 % and economic growth 2 %. Inflation (%)
Economic growth (GNP, %)
T
1
2.1
C
2.2
[
3.9
D
1.5
I
2
As a member of parliament you have to choose one of the options T, C or D. Which one would you choose? Indicate your choice by writing T, C or D in the box.
Fig. 3. An illustration of a typical choice task.
K_ Herne / European Journal of Political Economy 13 (1997) 575-589 Table 1 Alternatives
Attribute 1
Attribute 2
(a) Alternatives used to test the asymmetric domination effect (I) Economic unions
Economic growth (GNP, %)
Independence a (%)
T C
65 97
D
5 2.5 4.5
(2) Economic policies
Unemployment (%)
Inflation (%)
T C D
17 15 18
1.5 4 2
(3) Models for contributing social benefits for families with children
Reductions in taxation (% of the monthly income)
Child benefit (for one child per month, Fn~k b)
T C D
6 2.5 5.5
500 700 450
(4) Taxation policies
Rise in income tax (Fmk per month)
Rise in VAT (%)
T
150
1.5
C D
100 170
2.5 2
(5) Programs fnr cleaning a lake
Cost (millions of Fmk)
Reduction in pollution (%)
T (7 D
1.7 2.5 1.85
20 3O 17
(6) Economic unions
Inflation (%)
Economic growth (GNP, %)
T C D
1 2.2 1.5
2.1 3.9 2
60
(b) Alternatives used to test the compromise effect (7) Social benefits fi,~r students
Income support (Fmk per month)
Subsidize for the price of a student meal (Fmk per meal)
T C D
1500 1600 1400
5 0 9.5
583
584
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Table 1 (continued) Alternatives
Attribute 1
Attribute 2
(b) Alternatives used to test the compromise effect (8) Programs for financing budget deficit in a local council
Rise in the local tax rate (%)
Health care center payment (Fmk per visit)
T C D
1 2 0
50 0 100
(9) Programs for reducing unemployment in a city
Rise in the local tax rate (%)
Unemployment (%)
T C D
1.5 2.5 0.5
15 13 17
(10) Programs for reducing budget deficit in the parliament
Share covered by increasing taxation (%)
Share covered by increasing payments for public services (%)
T C D
40 20 65
60 80 35
(11) Programs for covering budget deficit in the parliament
Reduction in the public health care expenditure (milliards of Fmk)
Reduction in the public education expenditure (milliards of Fmk
T C D
10 7 11
15 18 14
(12) Models for organizing the welfare state
Average taxation rate (%)
Welfare state services
T C
25 35
D
17
basic services for all social benefits which maintain the existing income level income support for only those who are the worst off
a Independence is defined as a percentage of legislation which comes from the individual state and not from the union. b 1.0 Finnmark (Fmk) is worth about $0.22.
p a y o f f s s h o u l d b e used, w h e r e a s the latter are o f t e n c o n t e n t w i t h h y p o t h e t i c a l choices. Studies o n the i m p a c t o f i n c e n t i v e s h a v e f a i l e d to r e s o l v e t h e conflict. E v i d e n c e s u p p o r t s e i t h e r v i e w , d e p e n d i n g o n the e x p e r i m e n t (see e.g. Carnerer, 1995; S m i t h , 1991). S i n c e d e c o y effects h a v e b e e n o b s e r v e d in e x p e r i m e n t s w i t h real i n c e n t i v e s ( S i m o n s o n a n d T v e r s k y , 1992; H e r n e , 1996a), a n d s i n c e p a y i n g
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Table 2 The choice shares of T and C in choice sets {T, C} and {T, C, D} when D is asymmetrically dominated by T T
C
Row totals
{T, C} {T, C, D}
323 (53%) 415 (63%)
286 (47%) 242 (37%)
609 657
Totals
738
528
1266
subjects according to their choices is problematic in the case of political alternatives 5, I used hypothetical choices. The following hypothesis was tested in the study: H0: The target's choice share (absolute or relative) is not increased when a decoy option is added to the choice set. HI: The target's choice share (absolute a n d / o r relative) is larger when the choice set contains a decoy option which makes the target asymmetrically dominating or a compromise, than when the choice set contains only the core alternatives. 4.1. Procedure
A total of 219 respondents took part in the study which was run in three separate sessions. Two of these were conducted during the fall semester 1995 (at the University of Turku (n = 113) and at the University of Tampere (n = 62)) and one at the beginning of 1996 (at the Turku School of Economics and Business Administration (n = 44)). In the first two sessions respondents were students enrolled in introductory political science courses and in the third session respondents were enrolled in a research methodology course. The age of the participants varied between 18 to 40 and a majority were female (67 percent). All sessions were conducted during regular class meetings and the respondents had about 45 minutes to complete a booklet which consisted of 12 choice tasks 6. Each choice task consisted of two or three alternatives. Fig. 3 illustrates a typical choice problem with two core options T and C and an asymmetrically dominated decoy D (letters T, C and D were not used in the booklets). The respondents were instructed to choose one and only one of the offered alternatives. It was emphasized that there were no correct answers and that everyone should choose an alternative which he/she regards as the best one in each choice task. The order of
5 Here, subjects cannot be given the options they choose. Induced preferences could not be used because the research hypothesis is based on the presumption that preferences are not stable and well defined. 6 At the University of Tampere there were four additional choice problems, which should not, however, have influenced the evaluation of the options in those choice tasks which are of interest here.
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Table 3 T
C+ D
C
Row totals
(a) The choice shares of T and C ( + D) in choice sets {T, C} and {T, C, D} when D makes T a compromise {T, C} 393 (64%) 219 (36%) 612 {T, C, D/ 369 (53%) 331 (47%) 700 Totals
762
550
1312
(b) The choice shares of T and C in choice sets {T, C} and {T, C, D} when D makes T a compromise {T, C} 393 (64%) 219 (36%) 612 {T, C, D} 369 (75%) 124 (25%) 493 Totals
762
343
1105
the choice tasks and the order of the alternatives within a choice task were randomized. The hypothesis was tested as 'a between subject' study by assigning subjects randomly to two groups (separately in each session). One of the groups made choices from choice sets which consisted of the two core alternatives, whereas the other group made choices from choice sets which consisted of the same core alternatives plus a decoy. Half of the decoys were asymmetrically dominated by the target and the other half made the target a compromise.
4.2. C h o i c e sets
The alternatives were imaginary policy proposals concerning various topics from everyday politics (such as economic conditions, social security, taxation, environmental questions). Respondents were asked to make their choices as a member of parliament, as a member of the local council, as a voter in a referendum, etc. 7. All the alternatives were defined on two attributes selected to be familiar to anyone following the mass media. Also, people evaluate similar stimuli when they make voting decisions or answer to opinion poll surveys. An attempt was made to define the stimuli in a meaningful way (e.g. the rate of unemployment, the degree of inflation, the rate of taxation). Artificial scales (e.g. quality scales from 1 to 10) were not used because the meaning of such scales can be ambiguous which in turn might increase the probability of observing decoy effects (see e.g. Ratneshwar et al., 1987). Table la and b represent the alternatives and their values on the considered attributes. Here, unlike in Fig. 1, T is not necessarily better than C on the first attribute and worse on the second.
7 This could provide opportunities for strategic considerations. However, it was assumed that strategic behaviorwould not occur because participantsdid not have informationabout the preferences of other voters or about the decision makingrules.
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4.3. Results
Let us first consider ADE which is illustrated in Table 2. The data in Table 2 is summarized across the six choice tasks which were meant to test ADE. Table 2 represents the choice shares of T and C in choice sets {T, C} and {T, C, D}. Choices of decoy options are excluded from this Table 2. However, it is noteworthy that decoys were chosen in 6% of all the choice tasks where D was available, although dominated decoys should not be chosen (or should be chosen only by mistake). The selection of dominated options in this experiment can reflect the complexity of political issues. For instance, it is likely that subjects who selected decoys took notice of dimensions not mentioned in the descriptions of the alternatives and so did not consider decoys as dominated. Table 2 shows that T's choice share relative to C increased from 53 to 63% ( X 2 = 13.3, p < 0.01) when D was introduced 8 Let us next shift our attention to CE which is illustrated in Table 3a and b. Table 3a shows that on average the regularity principle was not violated in the case of CE. Actually, T lost share in absolute terms when D was introduced. However, Table 3b shows that, though losing in absolute terms, T gained relative to C. On an average, T's relative choice share increased by 11 points ( X 2 = 14.4, p < 0.01) indicating a violation of the betweenness inequality condition.
5. Concluding remarks The purpose of this paper has been to report on decoy effects in a political choice context. A real world example showed how decoys could arise. The example provided background for an experimental study. As expected, the results reveal the presence of decoy effects in policy choices. The outcomes confirm earlier findings on decoy effects. What are the implications of decoy effects in the study of political decisions? First, by influencing individual choice, decoys influence social choice and thereby political outcomes. In addition to voting outcomes, decoy effects can also be relevant for opinion polls. Numerous studies have indicated that polls can be manipulated (see e.g. Schumann and Scott, 1987): adding decoy options is one example of the possible manipulation strategies. Also while individuals are often supposed to act rationally, many studies report preferences deviating from standard choice theory. These studies have also given rise to new choice models as alternatives to the standard theory (for a review see Camerer, 1995) 9. Yet experimental evidence which contradicts standard choice
8 In absolute terms, T's support increased from 53 to 59% ( X 2 = 4.9, p < 0.05). 9 There is also an alternative choice model which accounts for decoy effects (Tversky and Simonson, 1993).
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theory does not necessarily m e a n that the standard approach should be replaced. Alternative theories account for only a limited range o f irrational action and standard theory can still be the best available approximation. It is also possible that certain tendencies add to the applicability o f the standard approach to group choice. Irrational b e h a v i o r c o u l d nonetheless have important implications. As this paper has emphasized, d e c o y effects can in particular influence political decision making. D e c o y s can deliberately be introduced to influence p e o p l e s ' opinions and thereby the choices they make.
Acknowledgements An earlier version o f this paper was presented at the E u r o p e a n Public C h o i c e Society Meetings, Bar-Ilan University and Tiberias, Israel, M a r c h 1 0 - 1 3 1996. I a m grateful to H a n n u Nurmi, Arthur S c h r a m and two a n o n y m o u s referees for helpful c o m m e n t s on earlier drafts o f this paper.
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Plott, C.R., 1967. A notion of equilibrium and its possibility under majority rule. American Economic Review 57, 787-806. Plott, C.R., Levine, M.E., 1978. A model of agenda influence on committee decisions. American Economic Review 68, 146-160. Quattrone, G.A., Tversky, A., 1988. Contrasting rational and psychological analyses of political choice. American Political Science Review 82, 719-736. Ratneshwar, S., Shocker, A.D., Stewart, D.W., 1987. Toward understanding the attraction effect: The implications of product stimulus meaningfulness and familiarity. Journal of Consumer Research 13, 520-533. Satterthwaite, M., 1975. Strategy proofness and Arrow's conditions. Journal of Economic Theory 10, 187-217. Schofield, N.. 1980. Formal political theory. Quality and Quantity 14, 249-275. Schumann, H., Scott, J., 1987. Problems in the use of survey questions to measure public opinion. Science 236, 957-959. Simonson, 1., 1989. Choice based on reasons: The case of attraction and compromise effects. Journal of Consumer Research 16, 158-174. Simonson, I., Tversky, A., 1992. Choice in context: Tradeoff contrast and extremeness aversion. Journal of Marketing Research 29, 281-295. Smith, V.L., 1991. Rational choice: The contrast between economics and psychology. Journal of Political Economy 99, 877-897. Tversky, A., Simonson, I., 1993. Context-dependent preferences. Management Science 39, 1179-1189. Wedell, D.H, 1991. Distinguishing among models of contextually induced preference reversals. Journal of Experimental Psychology: Learning, Memory~ and Cognition 17, 767-778.
European Journal of Political Economy Vol. 13 (1997) 575-589
ECONOMY
Decoy alternatives in policy choices: Asymmetric domination and compromise effects Kaisa Herne
*
Department of Political Science, University of Turku, FIN-20014 Turku, Finland Received 1 August 1996; revised 1 December 1996; accepted 1 January 1997
Abstract A decoy is an option which causes preference reversals between two other options in a choice set. Introducing a decoy increases the popularity of a target option and decreases the popularity of a competitor. This phenomenon contradicts standard economic models of individual choice which assume preferences to be independent of irrelevant alternatives. Decoy effects include a set of phenomena in which particular types of decoys have been observed to influence choice. This paper focuses on two effects: the asymmetric domination and compromise effect. Earlier studies on decoy effects have concentrated on consumer choice. The aim of this paper is to investigate the possibility of observing the same effects in a political context. This question is studied by presenting choice problems over various policy issues to a group of respondents. The results show that the outcomes of a political decision making process can be affected by alternatives which should be irrelevant according to the standard approach. © 1997 Elsevier Science B.V. JEL classification: D72 Keywords: Asymmetric dominance; Compromise; Decoy effect; Individual choice; Policy choice
I. Introduction A n u m b e r o f important studies on group choice are based on an assumption o f individual rationality. Studies on voting systems and the majority rule (beginning
* Tel.: -~ 358-2-3336154; fax: +358-2-3335090; e-mail: [email protected]. 0176-2680/97/$17.00 © 1997 Elsevier Science B.V. All rights reserved. PII S0176-2680(97)00020-7
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from Condorcet, 1785 and Dodgson (reported in Black, 1958) Black, 1958; and followed by Plott, 1967; McKelvey, 1976; Schofield, 1980 and many others), the famous voting paradox (Downs, 1957) as well as studies on strategic voting and agenda control (Farquharson, 1969; Gibbard, 1973; Satterthwaite, 1975; Plott and Levine, 1978) all arise from the presumption that individuals are rational. Here, individual rationality is defined as consistency with the axioms of the standard choice theory 1. The application of the so-called rational choice approach in the study of politics has often been criticized on the grounds that people have different motivations when acting as political agents than when acting as economic ones (e.g. Brennan and Lomasky, 1985). According to this view, the role of self interest is not so important in political choice, which is rather influenced by ideological and altruistic concerns. However, there is also a far less discussed problem relating to the application of the rational choice approach in the study of politics. This problem arises from numerous studies in experimental economics which have challenged the view that individuals follow the postulates of standard choice theory (for a review see Camerer, 1995). In spite of these results, there has been little research on standard choice theory and political choice, although the theory is widely applied in studies of politics (see, however, Pan et al., 1995; Quattrone and Tversky, 1988). The purpose of this study is to investigate whether people choose in accordance with the standard model in a set of choice tasks concerning various political issues. The focus is on decoy alternatives which have been observed to cause preference reversals between other two options in a choice set. Introducing a decoy favours one of the options (target) in the choice set but not the others (competitors). This contradicts the standard model which assumes binary preferences to be independent of irrelevant third options. The term decoy effect is used here with reference to a set of phenomena in which particular types of decoys have been observed to influence individual choice in a systematic manner. I concentrate on the asymmetric domination and compromise effects. The first means that introducing a new option, asymmetrically dominated by one of the original options, increases the probability of choosing the dominating option. The latter is a related phenomenon in which the decoy makes the target a compromise. Decoy effects were originally observed in studies on consumer choice where alternatives were defined as consumer products. My aim is to investigate the possibility of observing these effects in a political choice context. For this purpose a group of respondents was presented hypothetical choice tasks concerning various policy issues. The paper is organized as follows. Section 2 introduces the postulates of the standard theory which are violated if a decoy influences individual choice. Section 3 represents the decoy effects studied in this paper. Section 4 describes the
i The term 'standard choice theory' is used here with reference to the standard theory of consumer choice or (subjective) expected utility theory.
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empirical study which was used to explore the effects in a political choice context. Section 5 contains concluding remarks.
2. Regularity and proportionality Independence of irrelevant alternatives (IIA) is one of the basic assumptions of standard models of individual choice. IIA states that preference between two options should be independent of other options in the choice set. Suppose that R and S are two choice sets and that R = { x , y} and S = { x , y, z}. Also let C ( R ) = x denote the choice of an alternative x from set R. IIA implies that if C ( R ) = x it cannot be that C ( S ) = y. If all individuals in a certain group satisfy IIA, a very weak property, called regularity, is also satisfied. Regularity states that the choice share of an option cannot be increased by enlarging the choice set. Let P ( x , R ) be the proportion of people for whom C ( R ) = x. The regularity principle is defined as follows: P(x,R)>P(x,S),
x~RcS.
Regularity indicates that x ' s share of choices is at least as large in choice set R as in choice set S, when R is a subset of S. It is noteworthy that regularity is a weaker principle than IIA; even though regularity holds at the aggregate level, individual preferences can violate IIA. For this reason it is useful to see if it is possible to define a stronger condition which applies to aggregate data and would allow no violations of IIA. Let us first consider the proportionality principle which states that a new option should take share from the existing options in proportion to their original shares. Proportionality is not, however, an adequate test of IIA because it can be violated even though individual preferences satisfy IIA. To see this, consider three political parties whose positions can be arranged along a single issue dimension. Call these parties l (the left wing party), c (the centre party) and r (the right wing party) according to their locations. Let us assume that there are two distinct votes with choice sets R = {1, c} and S = {l, c, r} as well as an electorate consisting of five voters. In both votes there are two voters with preference ordering 1 > c > r and three voters with preference ordering r > c > I. Now, when R is the choice set / receives two votes and c three votes, which makes c as the winner. On the other hand, when S is the choice set 1 receives two votes, r three votes and c no votes at all. Consequently, l's choice share relative to c rises from 40 to 100% when r is added to the choice set. Party l gains relative to party c because c loses votes to r whereas 1 does not. Hence, proportionality is violated although IIA holds at the individual level. The previous example shows that instead of proportionality we need a weaker principle, which allows violations of proportionality so long as individual preferences satisfy IIA. For this purpose Tversky and Simonson (1993) define a
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condition which they call betweenness inequality. In order to understand betweenness inequality consider a set of three alternatives {x, y, z} and let x i denote the value of alternative x on the ith dimension (the value is assumed to increase monotonically and separately on each dimension). Now, y lies between x and z whenever either xi < Yi ~ 7.i or x i > Yi >- zi holds for each dimension i. Next, consider two choice sets R = {x, y} and S = {x, y, z}. Tversky and Simonson show that if y is between x and z, P(y, R ) > P(y, S ) / ( P ( y , S ) + P(x, S)) unless either IIA or a certain ranking condition is violated. In order to define the latter denote the proportion of people with a certain preference order, say z > y > x, by P ( z > y > x). The ranking condition states that whenever y is between x and z, P ( z > y > x ) / P ( z > x > y ) > P ( y , S ) / P ( x , S). In other words, those preference orders which have the middle option between the two extreme options should be relatively more common than those where one of the extreme options immediately succeeds the other. This seems to be a plausible assumption. Betweenness inequality entails that either IIA or the ranking condition is violated if an extreme option loses more share to another extreme option than the middle option does. Hence, whether violations of betweenness inequality are seen as evidence of deviations from IIA depends on the plausibility of the ranking condition. Tversky and Simonson observed no violations of the ranking condition in several studies which tested this postulate.
3. Decoy effects Empirical evidence on consumer choice indicates that the regularity principle is often violated. An important observation reveals that introducing a new brand, asymmetrically dominated by one of the original brands, increases the probability of choosing the dominating brand (Huber et al., 1982). This phenomenon, called the asymmetric domination effect (ADE), is illustrated in Fig. 1. Alternatives T (target) and C (competitor) are the two core alternatives defined on two dimensions. The dimensions are assumed to increase in value and neither of the core alternatives is assumed to dominate the other. Thus, T is better than C along dimension 1 and C is better than T along dimension 2. D~ (decoy) is located so that T dominates it (T is better than DI along both dimensions) whereas C does not. ADE indicates that adding D~ to the choice set increases T's share of choices. A decoy which is nearly dominated by the target (a relatively inferior decoy) can also increase the popularity of the target (Huber and Puto, 1983; D 2 in Fig. 1). In Huber and Puto's study some of the subjects reported that they chose the target because it was a compromise. Simonson (1989) found that target's choice share can indeed be increased by locating the decoy so that it makes the target a compromise. Simonson called this the compromise effect (CE, D 3 in Fig. 1). Hence, introducing decoys which are either asymmetrically dominated, rela-
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C
Dimension 2
T . . . . . . .
Q
D1 ............... D.
D2 '..
D~
-O ........ ~l
Dimension I
Fig. 1. An illustration o f d e c o y effects.
tively inferior, or which make the target a compromise, all increase the popularity of the target. Empirical evidence gives support to the view that decoy effects are relatively general. They seem to be sensitive neither to the number of options or dimensions in the choice set (Huber and Puto, 1983) nor to the exact locations of the decoys (Huber et al., 1982; Huber and Puto, 1983). Evidence for decoy effects comes mainly from consumer choice but ADE has also been observed in choice among monetary gambles (Wedell, 1991, Herne, 1996a), political candidates (Pan et al., 1995) and job candidates (Highhouse, 1996). The majority of studies on decoy effects use hypothetical choices but Simonson and Tversky (1992) used real items in certain choice tasks. Also, in Herne (1996a), where I used gambles similar to Wedell (1991), decoy effects were observed despite the use of real payoffs. There is a great deal of speculation as to what underlies decoy effects (for a review see Herne, 1996b). Proposed explanations have basically followed two lines. On the one hand, it has been suggested that decoys influence choice by altering people's perceptions of the given stimuli (Huber et al., 1982; Huber and Puto, 1983; Simonson and Tversky, 1992; Tversky and Simonson, 1993). For instance, an asymmetrically dominated decoy stretches the dimension where the target is weaker than the competitor. This may reduce the experienced distance between the target and the competitor on this dimension and hence make the target look more attractive. On the other hand, it has also been argued that the use of heuristical strategies could explain the influence of decoys (Huber et al., 1982; Simonson, 1989; Wedell, 1991). For instance, a simple rule of thumb which suggests that one should select a compromise option (whenever there is one) could explain CE.
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Both ADE and CE have been observed to cause violations of regularity, which of course implies violations of proportionality as well. In the case of ADE there should be no differences between the absolute and relative choice shares of the target because the dominated decoy should not gain support. In contrast with dominated decoys, decoys which make the target a compromise are chosen relatively often, which means that violations of regularity are not necessarily as frequent as with dominated decoys. As far as violations of proportionality are concerned, the betweenness inequality condition applies to CE because in the case of compromise T lies between C and D on both dimensions. An apparent implication of decoy effects is that decoys can be deliberately added to a choice set in order to enhance the chances of a target alternative. With regard to consumer choice, it has been argued that introducing decoy brands can be used as a marketing strategy to promote the purchases of a target brand. For example, Simonson and Tversky (1992) suggest that asymmetric dominance can provide an additional explanation for the effects of sales. They argue that a brand on sale dominates the same brand when not on sale and that this increases the attractiveness of the brand relative to other brands. In this case the decoy is a phantom alternative (the term is from Farquhar and Pratkanis, 1987) which is described (the old price or the percentage of the reduction is usually shown) but which is not available for choice. Politics involves marketing as well. Politicians have to 'sell their products' (candidates and policy proposals) to the electorate as well as to other political actors. The introduction of decoy options is a way to advance the chances of a target option. Here decoys are not simply added to the agenda. There is also promotion of the target, which is compared with the decoy and the nature of the target as the dominating or compromise option is emphasized. Consider now an example of a dominated decoy in real world politics. In Herne (1994), I studied arguments for and against nuclear power in Finland 2. The discussion took place before a parliamentary vote on building a new nuclear power station, in September, 1993. An analysis of the arguments reveals that the supporters of nuclear power used coal as a decoy option to make nuclear power look more appealing. This conclusion is based on the following observations. The supporters of nuclear power used coal as the main point of comparison for nuclear power, whereas the opponents of nuclear power did not normally consider coal as one of the alternatives. The majority of opponents favoured a decentralized energy
2 A total of 143 arguments were put forward, 88 against and 55 for nuclear power. The data consisted of different types of arguments (letters to the editor, leaders, individual and organizational opinions, statements to the Economic Committee's report). The analysis involved counting the number of alternatives and dimensions mentioned in each individual argument. The nature (positive or negative) of an alternative with regards to the mentioned dimensions was also evaluated.
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C = Coal DM = Decentralized Model NP = Nuclear Power DM
Environment
NP
C
|
Reliability Fig. 2. An illustration of asymmetric dominance in the nuclear power debate.
production model which includes relatively small power plants using mainly so-called alternative energy production techniques (e.g. wind and solar energy, wood- and peat burning power plants). The supporters of nuclear power in turn argued for centralized energy production and claimed that nuclear power and coal are the only possible alternatives for Finland. Coal was used as a point of comparison for nuclear power to make nuclear power environmentally more appealing. Environmental issues loomed large in the discussion, and objections to nuclear power emphasized problems related to the disposal of nuclear waste and the possibility of a nuclear catastrophe. Coal, which is very problematic in terms of the environment, was a useful point of comparison when the supporters of nuclear power wanted to emphasize that nuclear energy does not produce acid rain and does not add to the greenhouse effect. A common argument was that nuclear power and coal are the only reliable energy production techniques 3, and that nuclear power should be favoured over coal because unlike coal it is environmental friendly. Consequently, nuclear power dominates coal, because it is better in terms of the environment and at least as good in terms of reliability 4. The decentralized model, on the other hand, is usually considered as weaker than
3 The reliability dimension included arguments relating to the stability of energy production and to the price of energy. 4 The reliability and environment dimensions were by no means the only relevant dimensions in the discussion. The national economy was also frequently mentioned in the supporters' arguments. However, these arguments almost solely related to nuclear power, which means that the rest of the alternatives cannot be arranged along the economy dimension on the basis of these arguments.
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nuclear power and coal in terms of reliability, but as better in terms of the environment. Fig. 2 illustrates asymmetric dominance in the nuclear power debate.
4. ADE and CE with political alternatives The above real world example of a dominated decoy is reminiscent of earlier observations of the influence of decoys in consumer choice. It is of interest to establish whether decoys influence choice in an equivalent manner when alternatives are defined as political issues. In order to answer this question, a group of respondents was asked to complete hypothetical policy choice problems over different subjects. The design deviates from a controlled laboratory experiment in two respects. Firstly, control over information is not complete because respondents can take into account dimensions not mentioned in the description of the alternatives. Secondly, respondents are not given real incentives. Hence, it is possible to claim that deviations from the standard theory occur only because subjects did not have incentives to think carefully enough about the choices they were to make. The role of incentives in experimental research is, however, an unresolved question dividing economists and psychologists. The former usually argue that real
CHOICE TASK 6. Country i does not belong to an economic union but its parliament has decided to join one of the unions T, C or D. The table below presents predictions about the rate of inflation and economic growth in i if it joins T, C or D alternatively. These predictions are made by an impartial group of experts. If i joins T the rate of inflation is supposed to be 1 % and economic growth 2.1%. Ifi joins C the rate of inflation is supposed to be 2.2 % and economic growth 3.9 %. I f i joins D the rate of inflation is supposed to be 1.5 % and economic growth 2 %. Inflation (%)
Economic growth (GNP, %)
T
1
2.1
C
2.2
[
3.9
D
1.5
I
2
As a member of parliament you have to choose one of the options T, C or D. Which one would you choose? Indicate your choice by writing T, C or D in the box.
Fig. 3. An illustration of a typical choice task.
K_ Herne / European Journal of Political Economy 13 (1997) 575-589 Table 1 Alternatives
Attribute 1
Attribute 2
(a) Alternatives used to test the asymmetric domination effect (I) Economic unions
Economic growth (GNP, %)
Independence a (%)
T C
65 97
D
5 2.5 4.5
(2) Economic policies
Unemployment (%)
Inflation (%)
T C D
17 15 18
1.5 4 2
(3) Models for contributing social benefits for families with children
Reductions in taxation (% of the monthly income)
Child benefit (for one child per month, Fn~k b)
T C D
6 2.5 5.5
500 700 450
(4) Taxation policies
Rise in income tax (Fmk per month)
Rise in VAT (%)
T
150
1.5
C D
100 170
2.5 2
(5) Programs fnr cleaning a lake
Cost (millions of Fmk)
Reduction in pollution (%)
T (7 D
1.7 2.5 1.85
20 3O 17
(6) Economic unions
Inflation (%)
Economic growth (GNP, %)
T C D
1 2.2 1.5
2.1 3.9 2
60
(b) Alternatives used to test the compromise effect (7) Social benefits fi,~r students
Income support (Fmk per month)
Subsidize for the price of a student meal (Fmk per meal)
T C D
1500 1600 1400
5 0 9.5
583
584
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Table 1 (continued) Alternatives
Attribute 1
Attribute 2
(b) Alternatives used to test the compromise effect (8) Programs for financing budget deficit in a local council
Rise in the local tax rate (%)
Health care center payment (Fmk per visit)
T C D
1 2 0
50 0 100
(9) Programs for reducing unemployment in a city
Rise in the local tax rate (%)
Unemployment (%)
T C D
1.5 2.5 0.5
15 13 17
(10) Programs for reducing budget deficit in the parliament
Share covered by increasing taxation (%)
Share covered by increasing payments for public services (%)
T C D
40 20 65
60 80 35
(11) Programs for covering budget deficit in the parliament
Reduction in the public health care expenditure (milliards of Fmk)
Reduction in the public education expenditure (milliards of Fmk
T C D
10 7 11
15 18 14
(12) Models for organizing the welfare state
Average taxation rate (%)
Welfare state services
T C
25 35
D
17
basic services for all social benefits which maintain the existing income level income support for only those who are the worst off
a Independence is defined as a percentage of legislation which comes from the individual state and not from the union. b 1.0 Finnmark (Fmk) is worth about $0.22.
p a y o f f s s h o u l d b e used, w h e r e a s the latter are o f t e n c o n t e n t w i t h h y p o t h e t i c a l choices. Studies o n the i m p a c t o f i n c e n t i v e s h a v e f a i l e d to r e s o l v e t h e conflict. E v i d e n c e s u p p o r t s e i t h e r v i e w , d e p e n d i n g o n the e x p e r i m e n t (see e.g. Carnerer, 1995; S m i t h , 1991). S i n c e d e c o y effects h a v e b e e n o b s e r v e d in e x p e r i m e n t s w i t h real i n c e n t i v e s ( S i m o n s o n a n d T v e r s k y , 1992; H e r n e , 1996a), a n d s i n c e p a y i n g
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Table 2 The choice shares of T and C in choice sets {T, C} and {T, C, D} when D is asymmetrically dominated by T T
C
Row totals
{T, C} {T, C, D}
323 (53%) 415 (63%)
286 (47%) 242 (37%)
609 657
Totals
738
528
1266
subjects according to their choices is problematic in the case of political alternatives 5, I used hypothetical choices. The following hypothesis was tested in the study: H0: The target's choice share (absolute or relative) is not increased when a decoy option is added to the choice set. HI: The target's choice share (absolute a n d / o r relative) is larger when the choice set contains a decoy option which makes the target asymmetrically dominating or a compromise, than when the choice set contains only the core alternatives. 4.1. Procedure
A total of 219 respondents took part in the study which was run in three separate sessions. Two of these were conducted during the fall semester 1995 (at the University of Turku (n = 113) and at the University of Tampere (n = 62)) and one at the beginning of 1996 (at the Turku School of Economics and Business Administration (n = 44)). In the first two sessions respondents were students enrolled in introductory political science courses and in the third session respondents were enrolled in a research methodology course. The age of the participants varied between 18 to 40 and a majority were female (67 percent). All sessions were conducted during regular class meetings and the respondents had about 45 minutes to complete a booklet which consisted of 12 choice tasks 6. Each choice task consisted of two or three alternatives. Fig. 3 illustrates a typical choice problem with two core options T and C and an asymmetrically dominated decoy D (letters T, C and D were not used in the booklets). The respondents were instructed to choose one and only one of the offered alternatives. It was emphasized that there were no correct answers and that everyone should choose an alternative which he/she regards as the best one in each choice task. The order of
5 Here, subjects cannot be given the options they choose. Induced preferences could not be used because the research hypothesis is based on the presumption that preferences are not stable and well defined. 6 At the University of Tampere there were four additional choice problems, which should not, however, have influenced the evaluation of the options in those choice tasks which are of interest here.
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Table 3 T
C+ D
C
Row totals
(a) The choice shares of T and C ( + D) in choice sets {T, C} and {T, C, D} when D makes T a compromise {T, C} 393 (64%) 219 (36%) 612 {T, C, D/ 369 (53%) 331 (47%) 700 Totals
762
550
1312
(b) The choice shares of T and C in choice sets {T, C} and {T, C, D} when D makes T a compromise {T, C} 393 (64%) 219 (36%) 612 {T, C, D} 369 (75%) 124 (25%) 493 Totals
762
343
1105
the choice tasks and the order of the alternatives within a choice task were randomized. The hypothesis was tested as 'a between subject' study by assigning subjects randomly to two groups (separately in each session). One of the groups made choices from choice sets which consisted of the two core alternatives, whereas the other group made choices from choice sets which consisted of the same core alternatives plus a decoy. Half of the decoys were asymmetrically dominated by the target and the other half made the target a compromise.
4.2. C h o i c e sets
The alternatives were imaginary policy proposals concerning various topics from everyday politics (such as economic conditions, social security, taxation, environmental questions). Respondents were asked to make their choices as a member of parliament, as a member of the local council, as a voter in a referendum, etc. 7. All the alternatives were defined on two attributes selected to be familiar to anyone following the mass media. Also, people evaluate similar stimuli when they make voting decisions or answer to opinion poll surveys. An attempt was made to define the stimuli in a meaningful way (e.g. the rate of unemployment, the degree of inflation, the rate of taxation). Artificial scales (e.g. quality scales from 1 to 10) were not used because the meaning of such scales can be ambiguous which in turn might increase the probability of observing decoy effects (see e.g. Ratneshwar et al., 1987). Table la and b represent the alternatives and their values on the considered attributes. Here, unlike in Fig. 1, T is not necessarily better than C on the first attribute and worse on the second.
7 This could provide opportunities for strategic considerations. However, it was assumed that strategic behaviorwould not occur because participantsdid not have informationabout the preferences of other voters or about the decision makingrules.
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4.3. Results
Let us first consider ADE which is illustrated in Table 2. The data in Table 2 is summarized across the six choice tasks which were meant to test ADE. Table 2 represents the choice shares of T and C in choice sets {T, C} and {T, C, D}. Choices of decoy options are excluded from this Table 2. However, it is noteworthy that decoys were chosen in 6% of all the choice tasks where D was available, although dominated decoys should not be chosen (or should be chosen only by mistake). The selection of dominated options in this experiment can reflect the complexity of political issues. For instance, it is likely that subjects who selected decoys took notice of dimensions not mentioned in the descriptions of the alternatives and so did not consider decoys as dominated. Table 2 shows that T's choice share relative to C increased from 53 to 63% ( X 2 = 13.3, p < 0.01) when D was introduced 8 Let us next shift our attention to CE which is illustrated in Table 3a and b. Table 3a shows that on average the regularity principle was not violated in the case of CE. Actually, T lost share in absolute terms when D was introduced. However, Table 3b shows that, though losing in absolute terms, T gained relative to C. On an average, T's relative choice share increased by 11 points ( X 2 = 14.4, p < 0.01) indicating a violation of the betweenness inequality condition.
5. Concluding remarks The purpose of this paper has been to report on decoy effects in a political choice context. A real world example showed how decoys could arise. The example provided background for an experimental study. As expected, the results reveal the presence of decoy effects in policy choices. The outcomes confirm earlier findings on decoy effects. What are the implications of decoy effects in the study of political decisions? First, by influencing individual choice, decoys influence social choice and thereby political outcomes. In addition to voting outcomes, decoy effects can also be relevant for opinion polls. Numerous studies have indicated that polls can be manipulated (see e.g. Schumann and Scott, 1987): adding decoy options is one example of the possible manipulation strategies. Also while individuals are often supposed to act rationally, many studies report preferences deviating from standard choice theory. These studies have also given rise to new choice models as alternatives to the standard theory (for a review see Camerer, 1995) 9. Yet experimental evidence which contradicts standard choice
8 In absolute terms, T's support increased from 53 to 59% ( X 2 = 4.9, p < 0.05). 9 There is also an alternative choice model which accounts for decoy effects (Tversky and Simonson, 1993).
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theory does not necessarily m e a n that the standard approach should be replaced. Alternative theories account for only a limited range o f irrational action and standard theory can still be the best available approximation. It is also possible that certain tendencies add to the applicability o f the standard approach to group choice. Irrational b e h a v i o r c o u l d nonetheless have important implications. As this paper has emphasized, d e c o y effects can in particular influence political decision making. D e c o y s can deliberately be introduced to influence p e o p l e s ' opinions and thereby the choices they make.
Acknowledgements An earlier version o f this paper was presented at the E u r o p e a n Public C h o i c e Society Meetings, Bar-Ilan University and Tiberias, Israel, M a r c h 1 0 - 1 3 1996. I a m grateful to H a n n u Nurmi, Arthur S c h r a m and two a n o n y m o u s referees for helpful c o m m e n t s on earlier drafts o f this paper.
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