The Compromise Effect

What it is

The effect describes how the set on offer changes the appeal of each option in it. In Simonson's 1989 studies, 372 students chose among televisions, apartments, calculators, mouthwash and other products, and the sets were arranged so that the same brand sometimes sat at an extreme and sometimes in the middle. In nine of eleven tests, a brand took a significantly larger share once it became the compromise.

Simonson's account was about reasons. When people are unsure what they want, they pick the option they can defend.

In 1992 Simonson and Amos Tversky offered one group of 106 people a Minolta X-370 at $169.99 and a Maxxum 3000i at $239.99, and the group split evenly. A second group of 115 saw a Maxxum 7000i at $469.99 as well. Now 57 per cent chose the 3000i, 22 per cent the cheapest model and 21 per cent the new flagship. The authors called the tendency behind this extremeness aversion.

In effect

Sellers use the compromise effect when they add a top tier so that the old premium option reads as the sensible middle. A 2008 study of fast-food drink sizes, run with Duke University students, found that dropping a 12-ounce cup and adding a 44-ounce one shifted choices upwards; in the authors' simulation, the average drink rose from 17.7 to 20.6 ounces.

A 2016 meta-analysis by Nico Neumann, Ulf Böckenholt and Ashish Sinha pooled 142 experimental observations and found middle options chosen significantly more often than the others.

What it does not say

It does not say the effect is the same size everywhere. The 2016 meta-analysis found its size varied by up to three times its average depending on study design, and that price-against-quality choices and non-durable goods tended to weaken it. A 2012 study in Marketing Letters found the effect in both hypothetical and binding choices between real brands, but weaker when people paid real money.

Nor does it support every story told in its name. A 2021 analysis of 470 wine lists from 235 London restaurants found that the second-cheapest bottle had a significantly lower markup than the four wines above it, and called the idea that it is an especially bad buy an urban myth. And a 2025 paper in the Journal of Consumer Research found that when several options cluster at the extremes, people become relatively more likely to choose an extreme one.

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