Lecture 5: Decision Making 2 Flashcards
what are the 3 perspectives of making decisions
rational perspective
behavioural perspective
experimental perspective
describe the rational perspective
o High involvement
o Affected by brexit
o Careful and logical integration of info about product
o Arriving at a satisfactory decision
describe the behavioural perspective
o Decisions are a learnt response to environmental cues 9eg buying an offer
o Decisions influenced by cues such as bright colours, ease of visual search etc
o Low involvement
o Doesn’t feel like making an effort
describe the experimental perspective
o Selection made when highly involved but not easily explained rationally
what does the elaboration likelihood model of purchasing as persuasion show
Info about product coming in which we try to understand
Peripheral route= low involvement
Central route = high involvement
what happened in Petty, Cacioppo & Goldman (1981) study
- Students told that the University was instituting a comprehensive examination which must be passed to allow them to graduate.
o High-involvement group – told this would happen before they graduated
o Low-involvement group – told this would happen in 10 years’ time
what were the 4 group variables in petty et al 1981
o High-involvement group – told this would happen before they graduated
o Low-involvement group – told this would happen in 10 years’ time
high and low quality argument
how did the quality of the argument inn petty et al 1981 differ
o The quality of the arguments: strong vs weak (affect attitudes of high-involvement group?)
High quality – eg told that iy would show that their uni is superior, low quality- eg told that its good for them to say they’ve done it
o Expertise of the ‘source’: from within the University vs outside the University (affect attitudes of low-involvement group?)
what do the graphs in pettyet al show
Graph 1: telling people about it and looking at peoples attitudes towards the examination when strong arguments= large differences between the groups, not much effect on those who wouldn’t have to bother with exam. With weak arguments, those who had to sit the exam had weak attitudes towards the exam. (green = don’t have to sit exam, orange= have to)
Graph 2: not personally relevant (not sitting exam) more influenced by these cues, if within uni saw as more credible
Those highly involved= look at quality , those not highly involved= look at superficial cues to shape attitudes
what are the 2 cognitive approaches to decision making
system 1 and system 2
describe system 1 of the cognitive approach to decision making
- System 1 – Fast
o Automatic
o Unconscious
o Used constantly
o Uses heuristics
o Links cognitive ease to illusions of truth, pleasant feelings, appeal
o Most of what we do happens fast and automatically don’t have to think about what we are doing
o Implies heuristics which are used to reduce cognitive load cognitive ease
describe system 2 of the cognitive approach to decision making
- System 2 - Slow o Takes effort o Conscious o Used less frequently - effort o Calculates o ‘Logical’ o Evaluation of alternatives approach - These two processes always occur to guide our processes
which system of cog decision making is ‘evaluation of alternatives’
system 2
what are the ways of evaluating the alternative
- 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 all
how do we evaluate the ‘evaluation of alternatives/ system 2’
the multi attribution model
what happens in the evaluation of alternatives stage
o The product alternatives a person considers comprise their evoked set.
o Members of the evoked set usually share some characteristics; we categorize them similarly.
o The way a person mentally groups or categorises products influences which alternatives they will consider.
o Usually we associate some brands more strongly within these categories.
what are the strategic implications of product grouping according to the evaluation of alternatives
product positioning
identifying competitors
exemplar producers
locating products
what is a heuristic according to 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 methods
how do heuristics reduce effort
o Using fewer cues o Simplifying the weighting of cues o Integrating less information o Examining fewer alternatives o Shah & Oppenheimer (2008)
define processing fluency according to alter and oppenheimer 2009
Processing fluency, the ease with which people process information, reliably influences people’s judgements across a broad range of dimensions. … Because every cognition falls along a continuum from effortless to demanding it generates a corresponding fluency experience
define recognition heuristics
- RH= something that has been seen before a repeated experience
o Different types of heuristics occur at different times - Recognition heuristic:-
o 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
o Gigerenzer & Gaissmaier (2011)
Give higher values to the heuristic that you have seen before as feels familiar, less effortful to process
how do recognition heuristics affect our view of a brand
Give higher values to the heuristic that you have seen before as feels familiar, less effortful to process
describe what happened and the results in - Hoyer & Brown (1990)
o In a blind test, most people preferred a high quality peanut butter in preference to 2 alternative, lower quality, jars.
o When the brand label of the high quality peanut butter was changed to another jar, most now preferred the ‘branded’ jar.
Taste test
If introduce/ remove brand labels on jars, have a change of preference
• Even though same product
Brand familiar with = thing you will tend to buy
Perception of taste changes
• SENSATION TRANSFERENCE
Idea of what is underpinning the heuristics which are shaping peoples heuristics
Ease= ‘good’ ‘appealing’
what did Hoyer & Brown (1990) research
recognition heuristics- ease of processing
how do celebrity endorsements link to heuristics
Can link to celeb endorsement primed ideas need to be positive
Help to typify the brand message aim to get a feel good factor about what this person typifies
They feel familiar
Through the feeling of appeal of celeb the product will become appealing too
Use celeb endorser to typify ideas and brand
according to hauser et al 2009 what predicted consumer choices well
o Found that sequential heuristics predict consumer choices well.
when are heuristic decision rules most likely to occur
o there are more products
o Heuristic decision rules more likely when more products had to use them as lots of different products to choose from, harder decision?
o there are more features to be evaluated
o quantifiable features are more salient
definite about what is good and what isn’t good
o there is more time pressure
o the consumer is in an early phase of the decision process
o the effort required to make a decision is more salient
driven to apply heuristics and become more salient
o the above are combined forming a complex choice.
who came up with the term choice architectire
Thaler & Sunstein (2008)
what are the choices for architecture tools 2 categories
Tools used in structuring the choice task
Tools used in describing the choice options
what is Jacobson et al 2012s description of choice architecture
Claim there is no neutral architecture (allowing free, unfettered, choice)
All choice presentations have a (usually implicit) default
name the key ways to structure choice
number of alternatives Technology & decision aids defaults Choice over time Task structure affects the search process
what is the number of alternatives method of structuring choice
o ‘Tyranny of choice’ ‘Choice overload’
o Need to balance 2 criteria
More options create greater cognitive burden
• More choices =More likely to find an option that they will prefer, but too many increases a cognitive burden
• Need sufficient choice without overloading someone
• Help by narrowing down in some way
More options increase the chances of offering a preference match
o Increasingly the choice decisions we are faced with
what is the Technology & decision aids method of structuring choice
o How to reduce cognitive choice when making decisions
o Search engines Product recommendation systems Interactive decision aids
o ‘Help us to identify attractive choice alternatives … and to filter out ones that are not of interest.’
o Whilst beneficial these systems can manipulate choice:-
Making some product attributes more salient, e.g. Booking.com
Filters are designed to be helpful & can shape choice
Manipulating the set of alternatives offered (creating a default)
o example of how to do this
o ‘boooked 26 times in the last 24 hours’ give sense of urgency, fear of missing out , translate you into heuristic processing
o Shaping that choice using choice architecture
what is the defaults method of structuring choice
o One of the most powerful and popular choices
Default settings – determine initial encounters with products
Choice option default – use of pre-checked boxes
Persistent defaults – where past choices are remembered
Reverting defaults – where past choices are ‘forgotten’/deleted
o There are obvious ethical risks associated with defaults.
o We tend towards defaults
o ‘opt out VS opt in’ example of organ donation
France default option= opt in (in unless you say you opt out)- 100%, in UK default option = opt out- 17%
France creates a default setting for you to choose
o Another example= unclicking a button creating a default
what is the Choice over timemethod of structuring choice
o 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)
Over optimism about the future … assume we will accomplish more than we actually do. Tools that translate choice into immediate salient outcomes are more successful.
Ethical issues thinking of choices which will be ‘good enough’ how to ethically influence choice, (not well researched in literature)
Satisficing – make choices ‘good enough’ rather than ‘ideal’
• Generate more ‘patient’ choices (Weber et al., 2007)
• Provide options considering second-best outcomes (Shu, 2008
what is the Task structure affects the search process method of structuring choice
o Task structure determines how individuals, as decision-makers, explore options available.
o Simple choices – one from a small set of alternatives
o Large choice sets – need to consider the role of search costs
o Search costs can be reduced by: filtering and other tools to reduce search complexity and emphasise positive immediate outcomes.
what are the 3 ways of ‘choice over time’ in structuring choice
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)
Over optimism about the future … assume we will accomplish more than we actually do. Tools that translate choice into immediate salient outcomes are more successful.
what are the 2 ways to structure choice options
Partitioning options and attributes
Partitioning options and attributes & Designing attributes
define ‘Partitioning options and attributes’ as a way of describing choice options
o Partitioning a shopping cart: reserving more for fruit and vegetables increases healthy choices (Fox et al., 2005)
describe ‘Partitioning options and attributes & Designing attributes’ as a way of describing choice options
o Partitioning a shopping cart: reserving more for fruit and vegetables increases healthy choices (Fox et al., 2005)
o Partitioning can nudge investment choices to favoured options (Langer & Fox, 2005)
How partition and design attributes of what selling becomes particularly easy on websites
