Hyperchoice and high prices: an unfair combination

Abstract

Purpose The purpose of the paper is to investigate the effect of the number of choices on judged fairness and willingness to purchase. Design/methodology/approach A survey‐based study was conducted with a between‐subject, two×five design having two levels of price ranges (high/low) and five levels of complexity (1, 3, 7, 11, and 21 choices). A total of 519 surveys were completed with a minimum of 42 respondents per cell. Findings Greater choice initially has a positive effect on consumers' likelihood of purchase and their judgments of the fairness of the price. But too much choice has a negative effect, thereby creating an inverted “U” response curve. The effect of choice set size, however, is only triggered when combined with a high price. When the price is low, the number of choices has no effect on the judged fairness of the price and likelihood of purchase. Practical implications The practical implication is that, although consumers like to have choices, there is no increased benefit to increasing the number of choices as long as the price is low. And there is a declining benefit from increasing the number when the price is high. Since there is a managerial cost to providing choices, it appears prudent to only provide between three and seven. Originality/value The value of the paper is in demonstrating that, although some choice is beneficial in overcoming the negative impact of a higher price, too many choices can be detrimental in causing confusion.

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