Choice architecture Flashcards
What is nudging?
• Nudges aim to influence the choices we make, but without taking away the power to choose. • Examples: o (1) default rules o (2) simplification o (3) use of social norms o (4) increases in ease and convenience o (5) disclosure o (6) warnings, graphic or otherwise o (7) pre-commitment strategies o (8) reminders o (9) eliciting implementation intentions; and o (10) informing people of the nature and consequences of their own past choices
Please explain “Priming”?
• What intuitions arise can be altered by specific cues and affect behavior
• “Priming” is the subconscious process of activating related intuitions:
o Semantic/associative priming: After reading the word “Lamp” people recognize the word “Light” faster
o Goal priming: Cues related to “Health” or “Diet” increases the likelihood that you pick the healthier food.
What is framing?
Framing a question or offering it a different way often generates a new response by changing the comparison set it is viewed in.
Explain Status quo bias?
• Because of people’s reference dependence, they tend to rely on the status quo, or pre-set default, and consider any deviation from these reference points as a loss. Subsequently, due to their loss aversion, consumers prefer maintaining the current or pre-set state (i.e., default), rather than switching away from the default.
What is Endowment effect?
- Consumers’ asymmetric responses to losses versus gains also lead to the endowment effect – an inclination to value more highly and pay more for an item that is already in one’s possession than items that one does not yet own.
- Recent research has taken a step further and shown that a mere pereived ownership can lead to the endowment effect and increase consumers’ WTP for products.
- Based on these effects, one could predict that providing consumers with opportunities to try the products before they make a decision, or presenting the attractive products first before showing the price and surcharge, can lead to an endowment effect and increase valuations of products.
What is Mental accounting?
• Another key finding in BE that influences consumer research is mental accounting – a type of cognitive bookkeeping that individuals use to keep track of financial activities and to control consumption
What is Sunk-cost effect?
- the sunk- cost fallacy refers to people’s irrational behaviour to recover from expenditure that has already occurred (e.g. people will still go skiing even if it rains because they have already paid for it)
- In general, the more recent the payment is, the higher the sunk-cost effect will be, and the sunk-cost effect will decrease as the distance between payment and consumption increases.
What is Availability heuristics?
- As consumers are cognitive misers (Fiske & Taylor, 1991), they often do not process information extensively in an analytical way, and instead rely on simple rules to make judgements and decisions, such as the availability and representativeness heuristics
- Availability bias refers to people’s simple inferences based on information that is easily accessed in their mind
What is Salience heuristics?
• Related to the representativeness heuristic. The representativeness heuristic involves making a decision by comparing the present situation to the most representative mental prototype. When you are trying to decide if someone is trustworthy, you might compare aspects of the individual to other mental examples you hold. A sweet older woman might remind you of your grandmother, so you might immediately assume that she is kind, gentle and trustworthy.
What is Affect heuristics?
• The affect heuristic involves making choices that are influenced by the emotions that an individual is experiencing at that moment. For example, research has shown that people are more likely to see decisions as having benefits and lower risks when they are in a positive mood.
What is Anchoring effect?
- Another heuristic is the anchoring effect, whereby people make estimates by anchoring on an arbitrary reference value in the decision context, such as a phone number, social security number or other random number generated by a wheel, and they indicate higher WTP when those random numbers are higher. Early questions set a standard to which later questions are compared
- Careful with mentioning numbers and figures in earlier questions – these might then be used as an anchor
- Careful with knowledge questions – they might be viewed as an anchor to judge related aspects such as ‘interest in the subject’
What is The power of simplicity?
• One of the key nudging strategies to elicit positive behaviour is simplification because people are intimidated by large amount of information or effort that is required to reach a goal
Explain The effect of contextual factors
- One of the early observations in this realm is the theory of channel forces, defined as small situational factors that facilitate a specific desired behaviour (e.g playing French music in order to nudge consumers into buying French wines)
- exposure to physical warmth has been shown to activate the concept of emotional warmth, which elicits positive reactions and increases product valuation
- On the other hand, cold temperature can activate the need for warmth and increase consumers’ liking of warm products such as a romantic movie
- individuals exposed to a disorganized environment are more likely to exhibit self-regulatory failure compared with exposure to an organized environment
Explain carry over effect?
- Thoughts about earlier questions are carried over to subsequent questions
- Happens when respondents perceive two questions as related and therefore use similar considerations when answering the second
- Careful with questions about happiness and satisfaction
- Always ask general question first
- Ask specific question afterwards
• A carryover effect is an effect of being tested in one condition on participants’ behavior in later conditions, types of carryover effect:
o Practice effect –> where participants perform a task better in later conditions because they have had a chance to practice it.
o Fatigue effect –> where participants perform a task worse in later conditions because they become tired or bored
o Context effect –> Being tested in one condition can also change how participants perceive stimuli or interpret their task in later conditions
Explain subtraction?
- Considerations used in answering earlier questions are purposely left out of later judgements
- Might happen when the second question is perceived to be separate from the first when in fact they are related
