Within-Participant Nested Choice Architecture

In Simple Words

Think of testing a car with new features by starting with the base model, then adding power windows, then adding automatic steering. By having the same driver evaluate each step as features are progressively added without losing previous options, researchers can pinpoint exactly which feature causes the driver to pay more.

Research question

Disentangling the individual marginal contributions of complex multi-feature financial products is difficult when consumers evaluate bundled features all at once.

Participants

N = 501 Filipino migrant workers in Rome participating in a 1,000 € prize allocation game.

Study Design

Within-subject experimental design presenting 4 nested, randomized choice cases (Basic, Labeling, Direct Payment, Direct Payment + Monitoring) to isolate incremental feature effects.

Results

Isolating features revealed that soft labeling accounted for a 15% increase (93.66 €) over the basic remittance baseline of 614.6 €, while adding direct payment added only an incremental 2.2% (13.74 €), demonstrating diminishing marginal returns for hard commitment features.

Takeaway

Design financial product experiments using nested choice structures where options accumulate monotonically to isolate the true marginal value of individual product features.

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