The Attraction Effect in Digital Markets : Evidence from Four Experiments on Reward-Based Crowdfunding

In digital markets, people make billions of choices each day, often choosing options from predefined choice sets. An oft-discussed approach to influencing purchasing decisions is introducing an irrelevant option into a consumer's choice set—a decoy option—making another, often more valuable option, more attractive. Although the attraction effect has been studied for more than three decades, prior research has found mixed evidence for its occurrence in the real world, leading scholars to question its practical applicability. We note that prior research largely employed simplified attribute presentation—often with only numeric attributes such as prices and ratings—and hypothetical choices, which had no economic consequences. In this paper, we examine if the attraction effect might work in digital marketplaces where product attributes are both numerical (e.g., price) and nonnumerical (e.g., content of a product), and choices have economic consequences. We draw upon the salience theory and propose four hypotheses, suggesting that introducing an irrelevant decoy option in choice sets in digital markets, instantiated as reward-based crowdfunding (RBC), may lead backers to choose higher-priced options. We conduct four online experiments (N = 2,607 participants), with increasing levels of similarity with RBC. We provide robust support to the claim that the attraction effect has a powerful impact in digital markets. The attraction effect significantly shifted backers' preferences from a low-priced competitor option to a high-priced target option by approximately 25 percentage points. The results are robust across all the experiments and are independent of attribute presentation (i.e., numerical or nonnumerical attribute values) but depend modestly on the choice type (hypothetical or consequential choices). Given that researchers have expressed skepticism about the practical significance of the attraction effect, our results are particularly significant, as we show that the effect can impact choices not only in a controlled lab setting but also in digital markets