Categorization Effects in Value Judgments: Averaging Bias in Evaluating Combinations of Vices and Virtues

Abstract

How do consumers evaluate combinations of items representing conflicting goals? In this research, the authors examine how consumers form value judgments of combinations of options representing health and indulgence goals, focusing on how people estimate the calorie content of such options. The authors show that when evaluating combinations of healthy (virtue) and indulgent (vice) options, consumers tend to systematically underestimate the combined calorie content, such that they end up averaging rather than adding the calories contained in the vice and the virtue. The authors attribute this bias to the qualitative nature of people's information processing, which stems from their tendency to categorize food items according to a good/bad dichotomy into virtues and vices. The authors document this averaging bias in a series of four empirical studies that investigate the underlying mechanism and identify boundary conditions.