UCL School of Management is delighted to welcome Jeff Dotson, BYU, to host a research seminar discussing ‘Increasing purchase conversion by minimizing choice deferral: An examination of the impact of choice set design on preference for the no-choice alternative.’
Given fixed margins, high search volume, and an intensely competitive environment, Internet marketplaces like Priceline, Amazon, and Orbitz are primarily interested in maximizing purchase conversion. Alternatively expressed, these types of marketplaces are most successful when they are able to minimize choice deferral. In this paper, we develop a random utility model that is able to account for the effect of choice set design on preference for the no-choice alternative. Our model is derived from psychological models of evidence accumulation and choice. We validate our model using conjoint data collected to study the influence of sort-order on preference. We further demonstrate the value of our model by applying it to market data provided by a large online travel agency and show that optimizing hotel sort order using our model leads to an average increase of purchase conversion of 5%.