Compromise Effect

Single-attribute choices – such as choosing the apartment with the lowest rent – are relatively simple. However, most of the decisions consumers make are based on multiple attributes which complicates the decision-making process. The compromise effect states that a consumer is more likely to choose the middle option of a set of products over more extreme options.

Concept Overview

The Compromise Effect, also known as the Attractiveness Effect or the Goldilocks Principle, is a psychological phenomenon observed in consumer behavior and decision-making. It suggests that consumers tend to prefer and select the middle or intermediate option when presented with a choice that includes multiple options with varying degrees of quality or price. This effect occurs because the middle option appears as a balanced compromise between extremes and is perceived as the most reasonable choice.

Key Principles

The Compromise Effect is guided by several key principles:

1. Contextual Influence: The choice context plays a crucial role; it’s more likely to occur when consumers perceive a trade-off between quality and price.
2. Anchoring: The extreme options (high and low) serve as anchors that influence perception.
3. Cognitive Ease: The middle option is often viewed as cognitively easier to justify and less risky.
4. Perceived Fairness: It aligns with the concept of fairness and is perceived as a balanced choice.
5. Decision Simplicity: It simplifies decision-making by avoiding extreme options.

Examples

Examples of the Compromise Effect can be seen in various contexts:

1. Pricing: In a restaurant menu, the middle-priced dish may be the most popular choice.
2. Consumer Products: When choosing a smartphone, consumers may opt for the mid-priced model.
3. Subscription Tiers: Many streaming services offer a basic, mid-tier, and premium plan, with the mid-tier being the most chosen option.
4. Real Estate: In housing markets, properties priced in the middle range may attract more buyers.

Implications for Business

Businesses can leverage the Compromise Effect in the following ways:

1. Pricing Strategies: Positioning a mid-priced option in product lines can increase sales of that option.
2. Menu Design: In restaurants and cafes, highlighting a moderately priced dish can boost its popularity.
3. Subscription Models: Offering a balanced mid-tier subscription tier can attract a significant number of customers.
4. Product Bundles: Including a moderate package in bundles can make the overall offer more appealing.

参考：https://fourweekmba.com/compromise-effect/