Range-Dependent Attribute Weighting in Consumer Choice: An Experimental Test

This paper investigates whether the range of an attribute’s outcomes in the choice set alters its relative importance. I derive distinguishing predictions of two prominent theories of range-dependent attribute weighting: the focusing model of Koszegi and Szeidl (2013) and the relative-thinking model of Bushong, Rabin, and Schwartzstein (2020). I test these predictions in a laboratory experiment in which I vary the prices of high- and low-quality variants of multiple products. The data provide clear evidence of choice-set dependence consistent with relative thinking: price increases that expand the range of prices in the choice set lead to more purchases. Structural estimates imply economically meaningful effect sizes: the average participant was willing to pay around 17% more when a seemingly irrelevant option is added to their choice set.