Price Range Effect on Extremeness Aversion and Compromise Effect

Recent decision research has discovered the presence of the extremeness aversion and compromise effect in choice. The extremeness aversion and compromise effect extend the principle of loss aversion. Based on the inference that a loss will not be possibly prominent when the price range for alternatives in a choice set was narrower, the present research pointed out that the prices difference for alternatives in the choice set, via different psychological mechanisms, loss aversion versus cost-effectiveness, affects a consumer's choice. Two studies demonstrated that the level of extremeness aversion (Study 1) and compromise effect (Study 2) in the case of a wider price range will be higher than that in the case of a narrower price range. Theoretical and practical implications of the finding were discussed.