He’s been called a spoiler and a political gadfly as often as he’s been called a visionary and a consumer advocate, but no matter what your opinion is on his political views, one thing is for certain: Ralph Nader had a deep impact on the 2000 presidential election. Analysts acknowledge that if he had left the race, Nader-backers would have thrown their support behind Al Gore, who would likely have then won the contest.

According to new research by Allan Chen, professor of marketing at Texas A&M University’s Mays Business School, this “Nader effect” is highly relevant in marketing as well as politics. In a soon-to-be-published paper, Chen and co-authors argue that the introduction of a third option that later becomes unavailable (called a “phantom decoy” or “phantom alternative”) has a surprising and consistent effect on consumer behavior.

Chen
Chen

Chen’s findings are relatively new, as many researchers have considered the implication of how the introduction of a third option affects consumer choice, but no one else has focused how the removal of that option impacts the original choice set.

Here’s an example: a consumer wants to purchase a new car and has narrowed the field to two models. Car A gets better gas mileage, but car B has more horsepower. The customer must grapple with the choice to determine which of the two factors is a higher priority. Now a third option is introduced: car C, which gets better gas mileage but has similar horsepower as A. As you might assume, research says the customer will most often go for this dominating option.

What’s interesting is what happens when that third alternative disappears — in the instance of the cars, say the third option is out of stock. The researchers found that the entrance and exit of the third option causes a shift in the consumer’s preferences. Since car C got better gas mileage than either car, when that option is removed, the mileage has become the dominant factor, and the consumer will most likely select car A, which performs better on mileage. Also, car A is more similar to car C, the consumer’s car of choice, so that also increases it’s likelihood of being chosen over car B. With car C out of the picture, consumers often pick the option that is similar to their original choice, even though it means picking the one that was dominated.

In fact, Chen says that, if the numbers in his research can be generalized, the phantom decoy car could make option A 10-20 percent more attractive in the eyes of the consumer. That kind of increase is huge in the political arena, where elections are often determined by very tight margins.

In politics, this phenomenon can be seen when a candidate pulls out of a race and his or her followers must choose a new contender to support. Chen’s take on “the Nader Effect” is that if Nader had quit his presidential bid before the final election in 2000, his followers would have been left with a decision between Gore and Bush. Most would then have selected Gore, as he was the candidate whose platform more closely aligned with Nader’s.

This research is significant in today’s political mêlée as well, as Nader is once again on the ballot. Chen says that if Nader drops out before election time, it will benefit the democratic candidate more than if Nader had not run at all because of this psychological effect.

For more information

For further details, watch for Chen’s paper “Could Ralph Nader’s entrance and exit have helped Al Gore? The impact of decoy dynamics on consumer choice” in an upcoming issue of the Journal of Marketing Research. The paper was authored with Bill Hedgcock and Akshay Rao, both of the University of Minnesota.