International Choice Modelling Conference, International Choice Modelling Conference 2015

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Power and The Illusion of Control: Do Individual’s Correctly Anticipate How Much Influence They Have Within a Household Choice?
Matthew John Beck, John Mathew Rose

Last modified: 18 May 2015

Abstract


Abstract

 

Understanding the choices that people make are fundamental to our understanding of human behaviour; what product to purchase, what colour to order, which activity to engage in, which mode to use while travelling, which route to take while driving, what energy source to use and in what quantity, what food to consume, what hospital to visit, or which job to take are diverse examples where understanding these choices has real economic and social implications. Given the ubiquity of choices, researchers across a breadth of social sciences, be it marketers, transportation planners, energy forecasters, environmental scientists, or health and labour economists, have investigated this behaviour.

 

While our knowledge of these choices continues to grow and our suite of techniques for modelling these choices increases in sophistication, the overwhelming majority of studies have investigated the choices made by a single decision maker. Many decision, however, are not made by a single person alone. Arguably, some of the more important life decisions, many with a combination of long-term impacts and significant financial implications, are made by multiple people in concert. Within a household alone, where to live, what house to purchase, what employment to take, which school to send children, where to go for holiday, and what car to buy are small number of examples where, more often than not, multiple decision makers are involved acting with varying degree of influence and bargaining power.

 

The role of influence in group choices has been a matter of interest for many years. Coulson (1966) observed that other members of the family exert considerable influence on the housewife in making brand decisions. A decade later Wind (1976) emphasises that having identified members of the buying unit, one would ideally like to examine the dynamics of the purchase and consumption decision processes among all the relevant members of the unit, a decade after that Corfman and Lehmann (1987) investigated the process of conflict resolution in household purchase decisions and in an econometric framework Chiappori (1988) demonstrated that households act altruistically to make Pareto efficient choices, rather than engaging as unitary decision makers. Another decade later, a convergent stream of formalised models of household choices that sought to formally estimates degrees of influence within the random utility framework began to emerge.

 

Krishnamurthi (1998) proposed the first of the published two stage conjoint models that provide a framework over which influence can be measured. The first stage is to collect the preference of the individuals in the household pair, the second stage collecting the ultimate choice of the household. Other nascent examples that use a similar approach include Arora and Allenby (1999) who examine the choices of husbands and wives in the household choice of lawn-mowers and ovens; Brewer and Hensher (2000) who use a slightly different approach to examine choices between employers and employees; Aribarg et al. (2002) who investigate the choice between teenagers and their parents over computers and snack foods; and Dosman and Adamowicz (2002;  subsequently published in 2006) who investigated family recreation vacation choice using both stated and revealed preference data.

 

Extant in the literature are a growing number of subsequent examples that use a similar approach in a variety of choice contexts. While these studies seek to understand the role of influence in the household decision making process, there is scope for analysis to better understand how the individuals themselves perceive influence. Prior to the use of the two-stage random utility approach to estimate influence, researchers interested in the role of power and influence asked respondents what degree of influence they perceived them and their partners held. In examining these types of studies, Davis (1971) observed that past studies examining how often husbands and wives reported similar perceptions of influence and involvement in aspects of family decision making rarely exceeded 50 percent. Filiatrault and Ritchie (1980) found that husbands were perceived to exert the greater influence over the majority of the sub-decisions involved in household vacation decisions. Interestingly, this study also concluded that children had relatively little perceived influence over holiday choices but may still affect the outcome of the choice. Spiro (1983) found that perceptions of when a partner is attempting to exert influence are not in agreement. Foxman et al. (1989) find that household disagree over their perceptions of the influence of adolescents in household decisions, but that they are generally perceived to have some influence.

 

In this paper, we build on this largely dormant area of work in understanding the construction and perception of influence within a household choice. We use the two stage model approach to estimate the degree of influence each household member exerts over the household choice of an automobile. In the same study we also collected data on how much influence each individual perceived that they had and how much influence they perceived that their partner had. A comparison within these perceptions will be made to assess if perceptions of influence within a household over a motor vehicle are aligned or not, but additionally we will also compare the perceptions of influence to those revealed by the stated preference experiment, providing new evidence into the ability of people to assess their own influence in a negotiation process, the influence of another, and the sources of discrepancy that may exist and adding richer insights to the contextual understanding of group decisions.

 


 

References

 

Aribarg, A., N. Arora, and H. O. Bodur (2002). “Understanding the Role of Preference Revision and Concession in Group Decisions.” Journal of Marketing Research 39(3): 336-349.

 

Arora, N. and G. M. Allenby (1999). “Measuring the Influence of Individual Preference Structures in Group Decision Making.” Journal of Marketing Research 36(4): 476-487.

 

Brewer, A.M. and Hensher, D.A. (2000). “Distributed Work and Travel Behaviour: The Dynamics of Interactive Agency Choices Between Employers and Employees.” Transportation 27: 117-148.

 

Chiappori, P.A. (1988). “Rational Household Labor Supply.” Econometrica 56(1): 63-90.

 

Corfman, K. and D. Lehmann (1987). "Models of Cooperative Group Decision Making and Relative Influence: An Experimental Investigation of Family Purchase Decisions." Journal of Consumer Research 14(1): 1-13.

 

Coulson, J. S. (1966). “Buying Decisions Within the Family and the Consumption-Brand Relationship.” In J. W. Newman (Editor) On Knowing the Consumer, John Wiley and Sons, New York.

 

Davis, H.L. (1971) "Measurement of Husband-Wife Influence in Consumer Purchase Decisions." Journal of Marketing Research, 8 (3): 305-312.

 

Dosman, D and W.L. Adamowicz (2002). “Combining Stated And Revealed Preference Data To Construct An Empirical Examination Of Intrahousehold Bargaining.” Staff Paper Series 24084, Department of Resource Economics and Environmental Sociology, University of Alberta.

 

Dosman, D. and W.L. Adamowicz (2006). “Combining Stated and Revealed Preference Data to Construct an Empirical Examination of Intrahousehold Bargaining.” Review of Economics of the Household 4(1): 15-34.

 

Filiatrault, P. and J.R.B. Ritchie (1980). “Joint Purchasing Decisions: A Comparison of Influence Structure in Family and Couple Decision-Making Units.” Journal of Consumer Research 7(2): 131-140.

 

Foxman, E.R., P.S. Tansuhaj and K.M. Ekstrom (1989). “Family Members Perceptions of Adolescents’Influence in Family Decision Making.” Journal of Consumer Decision Making 15(4): 482-491.

 

Krishnamurthi, L. (1988). “Conjoint Models of Family Decision Making.” International Journal of Research in Marketing 5(3): 185-198.

 

Spiro, R.L. (1983). “Persuasion in Family Decision-Making.” Journal of Consumer Research 9(4): 393-402.

 

Wind, Y. (1976). “Preference of Relevant Others and Individual Choice Models.” Journal of Consumer Research 3(1): 50-57.


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