Week 6

Question 1

theory of rationality:

Answer 1

-Derived from economics.
-Assumes individuals make decisions to maximize utility.
-Focuses on logical, rational behavior.
-Applied in behavioral economics for individual consumers.
-Assumes decisions are made in economic best interest, like companies.
-Contrasts with real-world behavior influenced by emotions and biases.

Question 2

assumptions underlying rational choice:

Answer 2

-objective criteria exist to distinguish rational from irrational decisions.
-Consumer behavior is based on consciously considered and rational factors.
-Consumers aim to maximize utility, considering risks.
-Choices are made from a stable set of preferences.
-Satisfaction is easy to assess and directly linked to information provision.
-The differences between individual and organizational behaviour are negligible.

Question 3

problem framing:

Answer 3

-Framing Effect: People’s decisions are influenced by how an issue is presented (the “frame”), even when the risk or outcome is the same.
-Impact of Framing: The framing effect alters how a problem is perceived, making people more focused on potential losses or gains rather than the final result.
-Risk Preferences: Individuals may exhibit different risk preferences based on how information is framed, despite identical risks.

Question 4

‘bounded’ rationality:

Answer 4

-Bounded Rationality: Decision-making model combining satisficing behaviour (seeking satisfactory solutions) with learning and adaptation through feedback.
-Dynamic Aspiration Adjustment: A person’s goals evolve based on past decisions and outcomes.
-Linear Response Model: Represents decision-maker’s beliefs about the relationship between actions and their results (objective function). (Wall, 1989)

Question 5

experiential models:

Answer 5

-Experiential View: Critiques the rational, information-processing model of consumer behavior, highlighting the importance of emotions, fantasies, sensory pleasures, and esthetic enjoyment.
-Consumption: Seen as a dynamic flow of feelings and experiences, focusing on the symbolic and hedonic nature of consumption (Holbrook & Hirschman, 1982).
-Focus Shift: Acknowledges that consumption is not just rational, but also involves emotional and pleasurable aspects.

Question 6

experiential view:

Answer 6

-The Experiential View focuses on consumption as a subjective experience shaped by emotions, fantasies, and sensory responses.
-It highlights the symbolic, hedonic, and esthetic aspects of consumption.
-In contrast to the rational information-processing model, this view emphasizes that experience plays a central role in consumer behavior, acknowledging that people often make decisions driven by feelings and enjoyment rather than purely rational considerations.

Question 7

experience economy:

Answer 7

-Focuses on creating memorable, emotional, and immersive experiences for consumers.
-Goes beyond product/service to engage senses, emotions, and personal involvement.
-Businesses craft experiences to foster long-term loyalty and connection.
-Shifts from functional value to experiential value.
-Consumers increasingly seek meaningful, personalized experiences.

Question 8

characteristics of experiences:

Answer 8

-Engagement: Active participation by the consumer.
-Personalization: Tailored to individual preferences and needs.
-Memorability: Focuses on creating lasting memories.
-Multi-sensory: Stimulates multiple senses (sight, sound, touch, etc.).
-Emotional Connection: Elicits strong emotions, making the experience meaningful.
-Transformation: Often leads to a change in consumer behavior, attitudes, or perceptions.
-Authenticity: Genuine and true to the brand or product