slides that could be relevant 10

Question 1

2 views on decision making - heuristic

Answer 1

choice is based on heuristics, mental shortcuts, rules of thumb

implication: choice is context dependent

marketer controls the context –> choice architceture

Question 2

compensatory decision making rules

Answer 2

weak performance on one dimension can be offset by strong performance on other dimensions

Question 3

noncompensatory decision rules

Answer 3

weak performance on one dimension cannot be offset by strong performance on other dimensions

Question 4

lexicographic strategy (non-compensatory decision rules

Answer 4

compare on most important dimension
if tie,c ompare on 2nd most important decision

Question 5

elimination by aspects (noncompensatory decision rules)

Answer 5

eliminate brands that do not meet cutoff on most important dimension

eliminate brands that do not meet cutoff on 2nd most important dimension

continue until 1 brand remains

Question 6

conjunctive model non compensatory decision rules

Answer 6

compare by brand
set up minimum cutoff for each attribute (absolute lowest you would accept)
eliminate brand that does not meet cutoff on all attributes

Question 7

disjunctive model (noncompensatory decision rules)

Answer 7

Compare by brand
set up acceptable cutoff for each attribute (level that is most desirable)
keep brands that meet cutoff on all attributes

Question 8

multi-attribute model (compensatory decision rules)

Answer 8

compare by brand

for each attribute, multiply evaluation with importance weight and sum over all attributes

choose brand with highest sum

Question 9

additive difference model (compensatory decision rules)

Answer 9

Compare by attribute

For two brands, compute difference-score

superior brand stays “in the race”

Question 10

heuristic #1 stick with the default

Answer 10

especially when choices are difficult, people do not like to make a choice

–> stick with the default (keep preselected option)

doing nothing feels good = no thinking, no stress and responsibility

Related to status-quo bias: we like to keep things as they are

Question 11

Heuristic #2 variety seeking

Answer 11

sometimes, consumers buy one item at a time, just before each consumption situation (i.e. sequential choice and sequential consumption)

other times, consumers buy several items on one shopping trip and consume the items over several consumption occations (i.e. simultaneous choice and sequential consumption)

second situation is more complex, in a desire to simplify the decision, consumers choose more variety in the second situation

Question 12

Heuristic #3 availability heuristic

Answer 12

describes the mental shortcut where we make decisions based on emotional cues, familiar facts, and vivid images

People are inflluenced by the ease of information retrieval

Question 13

heuristic #4 anchoring and adjustment

Answer 13

people are influenced by reference points -anchoring and adjustment heuristic

when people make estimates they tend to start from an initial value and then adjust it

1) anchor; use of (irrelevant) anchor as a landmark for numeric judgements

2) Adjustment (insufficient) correction of the anchor when forming a judgement

Question 14

Endowment effect

Answer 14

people ascribe more value to things merely because they own them

In a nutshell: people will tend to pay more to retain something they own than to obtain something they do not own

Question 15

compromise effect

Answer 15

youll take the middle option as a compromise between 2 extremes

Question 16

asymmetric dominance

Answer 16

when one offering is dominated in both all or most aspects by another option

this option may or may not be better on one option than a third other option but better or worse on another