Consumer - Decision-Making

Question 1

What is the difference between “maximising” and “satisficing”?

Answer 1

maximising - pursuing the “best” option
satisficing - pursuing the “good” option

…maximisers channel surf, always looking for the best possible option

Question 2

Schwartz et al. (2002) reported that maximisers were more likely to…

Answer 2

1. take longer to decide
2. engage in social comparisons
3. engage in product comparisons
4. engage in counterfactual thinking (after the fact…what would it have been like if I bought…”
5. have greater regret
6. have less happiness

Question 3

Despite the negativity associated with maximisers, lyengar et al. (2006) examined who made better decisions.

Maximisers have greater object ________, ______ reliance on information from _______ sources, _______ job market performance, _____ starting salary. Yet, they have a much ______ negative affect when job searching (could detract from the positive benefits of getting the “best” option).

Answer 3

fixation
greater
external
improved
higher
greater

Question 4

Priming a maximising mindset

Goldsmith, Roux and Ma (2018) randomly allocated people to the maximising or control condition. They found that ______ a maximising mindset led to people being ______ satisfied with their decisions, but that they had ______ decision outcomes.

The maximising mindset also activates cognitions related to ________ (it’s hard to get the best, and the best outcomes are ______). Scarcity promotes:

• self-________ behaviour
• increased tendency to _______ for monetary gain
• _______behaviour when that behaviour is for _______ _____.

Answer 4

priming
less
improved

scarcity
scarce
interested
cheat
immoral
personal gain

Question 5

Scarcity and immoral behaviour

Describe the Goldsmith, Roux and Ma (2018) study with Chinese participants and housing subsidies.

Answer 5

• hard for people to buy a house in China
• government is providing subsidies to people who do not yet own their own home
• however, you can lie about this to get the subsidy
• they primed the maximising mindset in some participants with questions such as “which city is best to live?”
• also measured their levels on the scarcity index
• found that, compared to the neutral mindset, the participants in the maximising condition reported
• -> HIGHER levels on the scarcity index
• -> GREATER willingness to engage in immoral behaviour
• concluded that cognitions related to scarcity mediated the relationship between the maximising mindset and willingness to engage in immoral behaviour (so the maximising mindset activates cognitions related to scarcity, which lead people to be more WILLING to engage in immoral bx - they did not actually measure the bx)

Question 6

The WRAP process is a tool to help you make better decisions. What do these stand for?

Answer 6

Widen your options
Reality-test your assumptions
Attain distance before deciding
Prepare to be wrong

Question 7

The WRAP tool

Eg: Scott wants to know if we should buy this Audi

What should he consider for “W”?

Answer 7

Widen your options

• we often have a narrow frame, so we need to generate other options.
• Instead of asking “should I buy it or not?”, ask “what is the best way I can spend my money to solve my transport problem?”
• vanishing options test…if the Audi wasn’t an option, what would I do?
• what have others’ done? “…how do you get to work?”
• consider options in parallel (multi-tracking)
• ensure options are viable (not just “what about BMW? Prius? You need genuinely have options with DIFFERENT transport types)

Question 8

The WRAP tool

Eg: Scott wants to know if we should buy this Audi

What should he consider for “A”?

Answer 8

Attain distance before deciding

• we often have strong short-term emotions related to a decision.
• we can consider how we will feel in 10 mins, 10 months and 10 years from now
• we can also ask ourselves what would we tell a friend in this situation
• beware of status-quo bias (prefer to do things that are familiar)
• be true to our core values (something intrinsic about the decision tugs at you)

Question 9

The WRAP tool

Eg: Scott wants to know if we should buy this Audi

What should he consider for “R”?

Answer 9

Reality Test your Assumptions

• to counteract confirmation bias
• play devil’s advocate
• ask creative questions that will disconfirm (eg: work/life balance…how many times have you eaten at home with your partner in the last week?)
• take the INSIDE and OUTSIDE view…your specific situation is that you’re an excellent cook, great spot lined up for the Mexican restaurant…BUT find out how many restaurants fail in the first 5 years…is Mexican food the trend right now?
• run small experiments (eg: test the car-sharing out for a bit)

Question 10

The WRAP tool

Eg: Scott wants to know if we should buy this Audi

What should he consider for “P”?

Answer 10

Prepare to be wrong

• we are often over-confident in the future
• anticipate both good and bad outcomes (what is the best and worst outcome of opening a mexican restaurant?)
• set a tripwire alert to re-evaluate the decision in a set time period (eg: kodak and digital technologies)