Decision Making 2 Flashcards
Perspectives on decision making: A Rational perspective
Careful and logical integration of information about a product
Weigh up the pluses and minuses of each alternative
Arriving at a satisfactory decision (?)
Highly involved
Perspectives on decision making: Behavioural influence perspective
Decisions are a learned response to environmental cues, e.g. buying a ‘special offer’ on impulse in a shop; buying chocolate at the checkout.
Decisions influenced by cues such as bright colours, effective packaging, easy of visual search
(Special Offers) choco/gum at checkout
Low Involvement
Perspectives on decision making: Experiential perspective
Selection made when highly involved but not easily explained rationally.
Elaboration Likelihood Model
Petty & Cacioppo (1986)
Low & high processing
Systematic processing: Strength of argument, largely verbal.
Heuristic processing: Cue-based, Largely non-verbal.
Petty & Cacioppo (1981) Study
Students told that the University was instituting a comprehensive examination which must be passed to allow them to graduate.
High-involvement group – told this would happen before they graduated
Low-involvement group – told this would happen in 10 years’ time
Varied:
The quality of the arguments: strong vs weak (affect attitudes of high-involvement group?)
Expertise of the ‘source’: from within the University vs outside the University
Weak arguments - very negative attitude towards taking the exam & for source credibility.
Kahneman (2011) System 1:
System 1 - Fast
Automatic
Unconscious
Use heuristics (reduce cognitive load)
Links cognitive ease to illusions of truth, pleasant feelings, appeal
Kahneman (2011) System 2
Takes effort
Conscious
Calculated
Logical
Evaluation of alternative approaches
Evaluation of Alternatives
Evoked set: the alternatives a consumer knows about
Consideration set: the ones actually considered
Inept set: ones a consumer knows about but would not consider buying
Inert set: those not under consideration at al
Use of heuristics: Gigerenzer & Gaissmaier (2011)
A heuristic is a strategy that ignores part of the information, with the goal of making decisions more quickly, frugally, and … [sometimes] … more accurately than complex method
Heuristics rely on reducing effort by:
Using fewer cues
Simplifying cues
Integrating less information
Examining fewer alternatives
Use of heuristics - Processing Fluency
Alter & Oppenheimer (2009)
Ease with which people process information, influences judgement across a broad range of dimensions.
Every cognitive falls along a continuum from effortless to demanding it generates a corresponding fluency experience.
Recognition heuristic: Gigerenzer & Gaissmaier (2011)
If one of two alternatives is recognised and the other is not, then infer that the recognised alternative has the higher values with respect to the criterion
Coates et al (2004)
Priming a familiar brand increases the probability it will be considered for purchase
Hoyer & Brown (1990)
In a blind test, most people preferred a high quality peanut butter in preference to 2 alternative, lower quality, jars.
When the brand label of the high quality peanut butter was changed to another jar, most now preferred the ‘branded’ jar
Heuristic decision rules more likely when:
Hauser et al (2009)
More products More features Time pressure Effort required to make is more salient The above are combined forming a complex choice
Johnson et al (2012)
Claim there is no neutral architecture (allowing free, unfettered, choice)
All choice presentations have a (usually implicit) default
Tools for choice architecture fall into two broad categories:-
Tools used in structuring the choice task
Tools used in describing the choice options
Number of Alternatives
Tyranny of choice’ ‘Choice overload’
Need to balance 2 criteria
More options increase the chances of offering a preference match
More options create greater cognitive burden
Technology & Decision Aids
Search engines Product recommendation systems Interactive decision aids
‘Help us to identify attractive choice alternatives … and to filter out ones that are not of interest.
’Whilst beneficial these systems can manipulate choice:-
Manipulating the set of alternatives offered (creating a default)
Making some product attributes more salient
Filters can be helpful or shape choice, e.g. personalisation vs choice shaping
Defaults
One of the most powerful and popular choices
Default settings – determine initial encounters with products
Re-use defaults - come into play with subsequent product uses
Choice option default – use of pre-checked boxes
Persistent defaults – where past choices are remembered
Reverting defaults – where past choices are ‘forgotten’/deleted
There are obvious ethical risks associated with default
Choice over time
Choices often unfold gradually over time rather instantaneously. This affects choice in 3 ways:-
Early positive outcomes are preferred … so we yield to immediate temptations/choices and heavily discount later outcomes
Uncertainty about the future …. tend to focus on salient or desirable future outcomes (we see a rosy future
Satisficing – make choices ‘good enough’ rather than ‘ideal’
Generate more ‘patient’ choices (Weber et al., 2007)
Provide options considering second-best outcomes (Shu, 200
Smidts (2002)
Hubert (2010)
Coined the term ‘Neuromarketing’
Credited with initial use of the term ‘consumer neuroscience’
Consumer Neuroscience
Reimann 2011
Study of neutral conditions and processes that underlie consumption, their psychological meaning and their behavioural consequences.
Schaefer & Rotte (2007)
Presented Logos of different car brands
Measured brain activity via fMRI.
Findings: those rated as favourite did indeed result in activations of the rewards circuit in the brain.
Solanis et al (2013)
The role of ventromedial prefrontal cortex (VMPFC)
Associated with processing of different alternatives & their perceived value
Converging evidence from a number of studies that this area is implicated in consumer decision making
McClure et al (2004)
In a blind tasting, 50% preferred Pepsi, 50% preferred Coke
The degree of the neuronal response in fMRI in the ventromedial prefrontal cortex correlated with rated liking of the drink
BUT ….
When brand information was given this changed behavioural and neural responses
Preferences were greater for labelled Coke cans in comparison to Pepsi
Differences in neural responding when labels given in:
Dorsolateral prefrontal cortex – neural responses reflect cognitive control; social norm compliance
Hippocampus – neural responses reflect consolidation & formation of memory representation
Koenigs & Tranel (2007) Leison Study
Examined the ‘Pepsi paradox’ with 3 groups of participants
Ventromedial prefrontal cortex lesions – i.e. individuals with damage to this area
Brain-damaged comparison group – but no damage to the VMPC
Typical population group – no brain damage
Findings
ALL groups preferred Pepsi in the blind taste test
BUT the VMPC group maintained their preference in the brand-cued taste test
Suggests that the VMPC is an important neural component in translating commercial images into brand preference
