5. introduction Flashcards
the checker-shadow illusion
explained —> our brain makes the assumption that shade B must be lighter The checker-shadow illusion (
Rational model of decision making
model hoe je decisiosn maakt
Influencing factors on consumer decisions
4
situational factors = are related to the characteristics of buying task and the market offerings
personal factors = are individual characteristics and traits such as age, life stage, economic situation and personality
psychological factors = relate to the consumer’s motivation, learning, socialization, attitudes and beliefs
social factors = pertain to the influence of culture, social class, family, and reference groups
System 1 processes involve:
automatic thought processes (fast)
basic intuition —> automatic behavior
most of these decision require little cognitive effort because we are skilled
System 2 process:
is slower and more deliberative
is analytical and needs computation
exerts control over behavior
requires time and effort
judgement =
ognitive aspects of the decision-making process
bounded rationality = rationality of individuals is limited by
3
the information they have
the cognitive limitations of their minds
the finite amount of time they have to make a decision
heuristics =
mental shortcuts to help people make a quick and satisfactory decision
people learn from experience and develop many different heuristics over time
but sometimes, they might lead to
systematic erros
The representativeness heuristic
example
Steve is short, slim and like to read. Do you think Steve is a teacher or truck driver?
Conjunction fallacy
the conjunction or co-occurence of two events cannot be more likely than the probability of either event alone,
The availability heuristic
ease with which the instances can be ‘brought to mind’
easier to recall:
2
frequent actions
more familiar actions
the problem is that certain events tend to stand out in our minds more than others, due to:
3
excessive media coverage
novelty
drama (failed vs. successful sky dives)
biases from availability heuristics:
2
bias 1: ease of recall (based on vividness and recency)
bias 2: retrievability (based on memory structures)
study 3 - Tversky and Kahneman (1973) - task: consider the letter (K,L,N,R,V) is it more common to appear in the first position or third position, estimate the ratio of the frequency for each resullt
result: 105 out of 152 people judged the first position to be more likely for a majority of the letters. Median estimated ratio = 2:1, fact: all these letters are more frequent in the third position @
In marketing practice
representativeness heuristic, against a prototype:
2
how to use? similar packaging to established/premium brands > perceived quality
how to overcome? > Lenovo
availability heuristic,how to use and how to overcome?
2
how to use? imagine product use, word of mouth, social media posts
how to overcome? provide base rate information
Bandwagon effect
+ example
the tendency to do (or believe) things because many other people do (or believe) the same
a great example of this bias is fashion: many people being wearing a certain style of clothing as they see others adopt the same fashions
trace of others behaviors:
higher preference for scarce products due to excess demand
Scarcity effect + example
a phenomenon associated with an increase in value of goods when they are scarce (vs. abundant)
the effects of scarcity: increases desire (2 vs. 10 cookies in a jar, 2 rated more favorable), perceived as having higher value, polarizes preference —> the product that you like is scarce becomes even more liked and desired
why is scarcity so powerful? scarcity as heuristic cue: 3
objects of higher value typically harder to obtain
loss aversion —> FOMO
mostly effective under conditions of mindlessness
why is scarcity so powerful? systematic processing
commodity theory: proposing that the value of a product or service is related to its availability
enhances thinking about positive aspects
more extensive processing
Endowment effect + theory
the tendency for people to demand much more to give up an object that they already have than they would be willing to pay to acquire it
mug experimetn: how much will you pay for mug how much will you sell mug
The ‘I made it myself’ effect
the tendency for people to place a disproportionately high value on objects that they partially assembled themselves, regardless of the quality of the end product
Biases and their self-serving purpose
and why?
self-serving: sometimes even when we try to be objective, our desires still might have an effect on how we form judgements
why? protecting our self-esteem, confidence, our ego
blind spot bias
when we see others more biased than ourselves
Framing
Context effect:
our preferences are not stable
prospect theory by Kahneman and Tversky and how to use this in marketin g
behavioral model that shows how people decide between alternatives that involve risk and uncertainty (e.g. % likelihood of gains or losses)
it shows that people are loss averse —> loss is more powerful as a pleasure of gain
