Week 8 Flashcards
2 views of decision making and their difference
Rational - Optimizing and maximizing decision making
Heuristic - just good enough decision making (majority of life decisions, using rules of thumb)
What influences the choice of Rational or Heuristic decision making
- Motivation (is product important for customer)
- Opportuinity (does customer have resources (info, time))
- Ability (does customer have ability (emotional, cognitive, financial) to make informed decision)
Compensatory vs noncompensatory decisions
Compensatory - weak performance on one dimension can be offset by strong performance on other dimensions
Noncompensatory - weak performance on one dimension cannot be offset by other strong performances and is a deal breaker
Lexicographic strategy of decisionmaking
Comparing products on the most important dimension, if tie, then moving on to secondary importance
It is NONcompensatory
Elimination by aspects of decision making
Eliminate brands that do not meet cutoff on most important dimensions.
It is NONcompensatory
Conjunctive model of decision making
Comparing by brand. Set up MINIMUM cutoff for each attribute, eliminate brand that does not meet cutoff on all attributes
It is NONcompensatory
Disjunctive model of decision making
Comparing by brand. Set up a HIGH standard for most important attributes, keep brands that meet it.
It is NONcompensatory
Multi-attribute model of decision making
Compare by brand. For each attribute multiply evaluation with importance weight and sum over all attributes
It is compensatory
Additive difference model of decision making
Compare by attribute. Compute difference-score in evaluations, then sum difference
score
Often used, when there are 2 options with really minimal difference. It is compensatory
Endowment effect
Losing has a stronger effect than Gaining something
Assymetric dominance effect
Introducing third, silly, but easily comparable option to make 2nd option look better as its easily comparable and definitively better than 3rd one, even though second can be similar value to first one
Compromise effect
When you introduce another radical option, you take the middle point more often as a compromise
Variety seeking effect
When making simultaneous choices people seek variety
Availability heuristic effect
The easier for consumer to retrieve positive info about product, the more favorible its perceived
