MANAGEMENT SCIENCE Articles in Advance, pp. 1–15 http://pubsonline.informs.org/journal/mnsc/ ISSN 0025-1909 (print), ISSN 1526-5501 (online) Translated Attributes as Choice Architecture: Aligning Objectives and Choices Through Decision Signposts Christoph Ungemach,a Adrian R. Camilleri,b Eric J. Johnson,c Richard P. Larrick,d Elke U. Webere a TUM School of Management, Technische Universität München, 80333 München, Germany; b RMIT University, Melbourne, Victoria 3000, Australia; c Columbia Business School, Columbia University, New York, New York 10027; d Fuqua School of Business, Duke University, Durham, North Carolina 27708; e Princeton University, Princeton, New Jersey 08544 Contact: [email protected] (CU); [email protected] (ARC); [email protected] (EJJ); [email protected] (RPL); [email protected] (EUW) Received: February 2, 2015 Abstract. Every attribute can be expressed in multiple ways. For example, car fuel econ- Accepted: August 23, 2016 omy can be expressed as fuel efficiency (“miles per gallon”), fuel cost in dollars, or tons of Published Online in Articles in Advance: greenhouse gases emitted. Each expression, or “translation,” highlights a different aspect March 23, 2017 of the same attribute. We describe a new mechanism whereby translated attributes can https://doi.org/10.1287/mnsc.2016.2703 serve as decision “signposts” because they (1) activate otherwise dormant objectives, such as proenvironmental values and goals, and (2) direct the person toward the option that Copyright: © 2017 INFORMS best achieves the activated objective. Across three experiments, we provide evidence for the occurrence of such signpost effects as well as the underlying psychological mech- anism. We demonstrate that expressing an attribute such as fuel economy in terms of multiple translations can increase preference for the option that is better aligned with objectives congruent with this attribute (e.g., the more fuel-efficient car for those with pro- environmental attitudes), even when the new information is derivable from other known attributes. We discuss how using translated attributes appropriately can help align a per- son’s choices with their personal objectives. History: Accepted by Yuval Rottenstreich, judgment and decision making. Funding: Financial support from the National Science Foundation [Grant SES 0951516] is gratefully acknowledged. The second author was supported by an Alcoa Foundation Fellowship (2787_2012) received from the American Australian Association. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2016.2703. Keywords: behavioral decision making • behavioral economics • consumer behavior • choice architecture • theory • government • regulations • applications • marketing • segmentation • translated attributes • proenvironmental behavior 1. Introduction overwhelm a person. On the other, less information Choice options typically vary on multiple attributes. could deprive a person of important facts. For example, a car’s attributes include price, fuel econ- Little may be gained by presenting one translated omy, safety rating, and type of navigation system. attribute instead of another because the two trans- In turn, each attribute can have multiple translations, lated attributes are often perfectly correlated. From that is, different ways the attribute can be expressed. a strictly rational point of view, translated attributes For instance, a car’s fuel economy can be expressed are completely redundant if the translation equiva- in different ways. Figure1 shows the U.S. Environ- lence is known. However, the theoretical perspective of bounded rationality (Simon 1982) and supporting mental Protection Agency (EPA) fuel economy and empirical evidence suggest that people tend to con- environment label, which expresses fuel economy in struct their preferences (Lichtenstein and Slovic 2006; terms of miles travelled per gallon of fuel, the esti- Payne et al. 1988, 1993; Ungemach et al. 2011) using mated annual fuel cost (AFC), and a 1-to-10 green- information about choice options at face value (e.g., house gas rating (GGR), among others. These differ- Downloaded from informs.org by [128.112.72.171] on 19 May 2017, at 12:21 . For personal use only, all rights reserved. the concreteness principle, Slovic 1972; or What You ent expressions, which we term “translated attributes,” See Is All There Is [WYSIATI], Kahneman 2011). Bond are closely related to each other and highly corre- et al. (2008) have shown that people often overlook lated. Nevertheless, each translation also highlights key personal objectives when making choices because different aspects of the same attribute. A fundamental they possess a myopic mental representation of the decision faced by policy makers is to determine how choice. Assuming that consideration of personal objec- much information should be presented to people to tives is beneficial to effective decision making (Keeney help them make better decisions for themselves and 1992), these findings imply that people often end up for society. On the one hand, more information could with suboptimal decision outcomes that are not fully 1 Ungemach et al.: Translated Attributes as Choice Architecture 2 Management Science, Articles in Advance, pp. 1–15, © 2017 INFORMS Figure 1. (Color online) The Current U.S. Environmental Protection Agency Fuel Economy and Environment Label for Gasoline Vehicles aligned with personal objectives. Bond et al. (2008) global attribute, we identify and test two different pro- have suggested that recognition of important per- cesses by which translated attributes affect decisions. sonal objectives may be assisted through guides that Specifically, we distinguish the established effects of describe additional features of products such as con- noncompensatory heuristics such as counting superi- sumer reports. We propose that translated attributes ority across attributes and using the majority rule (e.g., play a similar role in improving choice: they allow Alba and Marmorstein 1987, Russo and Dosher 1983, people to recognize important personal objectives that Zhang et al. 2006), and our own novel explanation: would otherwise be overlooked. Therefore, our gen- activation of relevant objectives and direction toward eral hypothesis is that translated attributes have the achieving them through decision signposts. potential to influence preferences because they serve as decision “signposts” helping people first recognize 1.1. Translated Attributes as Decision Signposts and then pursue options congruent with their personal On a roadside, a signpost has two important fea- objectives. tures: First, it indicates the presence of a destination Previous literature has shown that partitioning a that might be of personal relevance, such as a nearby global attribute into components can increase the town. Second, it points out how to reach the destina- weight accorded to that global attribute (Dawes 1979, tion by providing the actual direction and distance Fischhoff et al. 1978, Weber et al. 1988). For exam- to travel. Similarly, translated attributes possess both ple, the global attribute “job security” can be split into features. First, translated attributes can produce acti- component attributes such as “stability of the firm” vation of personally relevant objectives. This implies and “personal job security.” Although related to par- that a translated attribute will have the most impact titioning, the notion of translated attributes has three on those who have objectives matching those aspects features that distinguish it from this earlier literature. highlighted by the translated attribute. Second, a deci- First, translated attributes are monotone transforma- sion signpost conveys direction toward achieving those tions of each other and highly correlated, whereas com- objectives by explicitly describing the degree to which Downloaded from informs.org by [128.112.72.171] on 19 May 2017, at 12:21 . For personal use only, all rights reserved. ponents of a global attribute described in the attribute different options meet the person’s objectives. splitting literature may not be correlated at all. Sec- People have many objectives that can arise from dif- ond, translated attributes differ from derived attributes ferent sources, such as values and goals. Values are used in advertising, such as a car being described as stable dispositions that structure and guide specific “masculine,” because translated attributes all map onto beliefs, norms, and attitudes (Feather 1995, Rokeach actual physical properties of the object. Third, and 1973). Goals are motivational constructs directed to most importantly, whereas the attribute splitting lit- achieve a desirable end state (van Osselaer and erature demonstrates the phenomenon that the sum Janiszewski 2012). Goals direct movement that leads to of component attributes attracts more weight than the degrees of achievement allowing progress (and failure) Ungemach et al.: Translated Attributes as Choice Architecture Management Science, Articles in Advance, pp. 1–15, © 2017 INFORMS 3 to be gauged (Huang et al. 2012). Goals, such as loos- partitioning of options and attributes (Fox et al. 2005; ing 5 lbs over the summer, are typically more specific for reviews, see Johnson et al. 2012 and Camilleri and and temporary than values, such as living healthily. Larrick 2015). These interventions, sometimes referred Values can direct which goals are considered impor- to as “nudges,” often operate beneath conscious aware- tant, and