Non Standard Decision Making - Inattention- Hossain, Tanjim, and Morgan (Ebay) 2006

Question 1

What is bounded rationality?

Answer 1

That since choosing our optimal choice requires the digestion of a lot of information, we may not be bothered to digest all of it so we instead choose an option that isn’t optimal, but we believe is good enough (satisficing).

Question 2

What are Heuristics?

Answer 2

“Rules of thumb” that we use so we can make decisions quickly without having to think iin depth over a long time.

E.g I’ll buy the thing that looks the cheapest

Question 3

Inattention?

Answer 3

We may not pay attention to important details when making a decision, i.e. not paying attention to shipping costs

Question 4

What did Hossain and Morgan test in their paper?

Answer 4

They wanted to measure the level of inattention to shipping costs so for 2 groups they charged them $4 overall but for one group the item cost $3.99 and delivery fee $0.01

Question 5

What were the main results?

Answer 5

But for the other group price of good was $0.01 + $3.99 for delivery. Sellers received 35% more revenue from group 2, showing inattention to delivery costs