Area	Marketing
	Faculty	Xing Zhang
	Journal	Journal of Business Research
	Title	Menu-Induced Preference Cannibalization: A Field Study on Designing Probabilistic Price Promotions

Abstract

An increasing number of companies adopt probabilistic price promotions, where consumer benefits depend on
chance. Given that consumers vary in their risk preferences, should firms offer both fixed and probabilistic
promotions in a menu to enhance self-selection, or stick with a single promotion type? This research examines
how promotion menus affect purchase and post-purchase consumption. Across two field experiments and one
preregistered online study, we find that offering a promotion menu reduces consumers’ purchase incidence
compared to a single promotion scheme. However, conditional on purchase, consumers selecting from the menu
demonstrate greater post-purchase consumption, indicating a stronger sunk cost effect. These findings indicate a
preference cannibalization effect, where the perceived value of each option is reduced by the presence of
alternative options. The results shed light on the design of price promotion strategies: while menus can reduce
initial purchase incidence, they are less likely to diminish post-purchase engagement.

For Further Information, please check the following link:
https://www.sciencedirect.com/science/article/pii/S0148296326001232

Keywords
Price discrimination, Probabilistic pricepromotion, A/B testing, Decision-making under risk and uncertainty, Sunk cost fallacy