Decision Making 2

Question 1

Perspectives on decision making: A Rational perspective

Answer 1

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

Question 2

Perspectives on decision making: Behavioural influence perspective

Answer 2

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

Question 3

Perspectives on decision making: Experiential perspective

Answer 3

Selection made when highly involved but not easily explained rationally.

Question 4

Elaboration Likelihood Model

Petty & Cacioppo (1986)

Answer 4

Low & high processing

Systematic processing: Strength of argument, largely verbal.

Heuristic processing: Cue-based, Largely non-verbal.

Question 5

Petty & Cacioppo (1981) Study

Answer 5

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.

Question 6

Kahneman (2011) System 1:

Answer 6

System 1 - Fast

Automatic
Unconscious
Use heuristics (reduce cognitive load)
Links cognitive ease to illusions of truth, pleasant feelings, appeal

Question 7

Kahneman (2011) System 2

Answer 7

Takes effort
Conscious
Calculated
Logical

Evaluation of alternative approaches

Question 8

Evaluation of Alternatives

Answer 8

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

Question 9

Use of heuristics: Gigerenzer & Gaissmaier (2011)

Answer 9

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

Question 10

Heuristics rely on reducing effort by:

Answer 10

Using fewer cues
Simplifying cues
Integrating less information
Examining fewer alternatives

Question 11

Use of heuristics - Processing Fluency

Alter & Oppenheimer (2009)

Answer 11

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.

Question 12

Recognition heuristic: Gigerenzer & Gaissmaier (2011)

Answer 12

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

Question 13

Coates et al (2004)

Answer 13

Priming a familiar brand increases the probability it will be considered for purchase

Question 14

Hoyer & Brown (1990)

Answer 14

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

Question 15

Heuristic decision rules more likely when:

Hauser et al (2009)

Answer 15

More products
More features
Time pressure
Effort required to make is more salient
The above are combined forming a complex choice

Question 16

Johnson et al (2012)

Answer 16

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

Question 17

Number of Alternatives

Answer 17

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

Question 18

Technology & Decision Aids

Answer 18

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

Question 19

Defaults

Answer 19

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

Question 20

Choice over time

Answer 20

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

Question 21

Smidts (2002)

Hubert (2010)

Answer 21

Coined the term ‘Neuromarketing’

Credited with initial use of the term ‘consumer neuroscience’

Question 22

Consumer Neuroscience

Reimann 2011

Answer 22

Study of neutral conditions and processes that underlie consumption, their psychological meaning and their behavioural consequences.

Question 23

Schaefer & Rotte (2007)

Answer 23

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.

Question 24

Solanis et al (2013)

Answer 24

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

Question 25

McClure et al (2004)

Answer 25

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

Question 26

Koenigs & Tranel (2007) Leison Study

Answer 26

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