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Lecture 9 Slides_Presentation

Lecture 9 Slides_Presentation - WRAPPING UP BEHAVIORAL...

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Unformatted text preview: WRAPPING UP BEHAVIORAL ANOMALIES The psychology of choice Bettman, James R, Mary Frances Luce and John W. Payne, Bettman, 1998. “Constructive Consumer Choice Processes,” Journal of Consumer Research: An Interdisciplinary Quarterly, University of Chicago Press, 25(3), 187-217 of The bottom line is that people use different choice strategies The depending on how quickly the choice must be made. Early hominids often had to decide fast or be dead! hominids AEM 414 Lecture 5 Studies ask subjects: “which car would you choose?” They then study the process used. QuickTime™ and a TIFF (LZW) decompressor are needed to see this picture. AEM 414 Professor Schulze Lecture 5 Psychologists, by examining the consumer decision task, have found several processes: The weighted adding strategy (linear utility) examines alternatives and is compensatory. Consumers pick the alternative which has the greatest sum of attributes times weights (values). It is accurate but high in cognitive effort­­the standard. Less accurate and less effort strategies include: The lexicographic strategy implies the consumer uses the most important single attribute and chooses based on that alone. Satisficing implies the consumer evaluates alternatives sequentially in order and rejects any that fail to meet minimum thresholds for any attribute and then go on to the next alternative, choosing the first that meets the minimum threshold for all attributes. Elimination­by­aspects combines the lexicographic and satisficing strategies by eliminating any alternatives that fail to make a cutoff for the most important attribute, repeated for second most important, etc., until only one alternative is left. AEM 414 Lecture 5 Psychologists, by examining the consumer decision task, have found that people employ several processes under different circumstances: Equal weighting is the same as the weighted adding strategy but with equal weights. Majority of confirming dimensions compares two alternatives at a time on each attribute and the one with the most “wins” survives for further comparison until only one is left. Frequency of good/bad features counts good votes (based on a cutoff) for each attribute for each alternative. Alternative with the most good votes is chosen. Componential context model is the weighted adding criterion plus a weight on relative advantage between alternatives based on their attributes. It thus combines approaches. Random choice. AEM 414 Lecture 5 How do consumers pick their strategy? If there is little emotion, they trade off accuracy versus cognitive effort: Accuracy is measured by the weighted adding criterion (utility). Cognitive effort is measured by elementary information processes (EIPs). EIPs are: reading an item of information, comparing items of information, multiplying or adding information, eliminating information, etc. These steps can be counted and added up for any choice task and give a measure of EIPs for each strategy. QuickTime™ and a TIFF (LZW) decompressor are needed to see this picture. AEM 414 Lecture 5 Example: What strategy would you use to pick a husband (wife) if: Obviously you would use different strategies. Factors that effect choice strategy include: problem size, time pressure, attribute correlation, information completeness and format, and comparable versus non­comparable choice. AEM 414 – You had as long as you liked to search? – You are on TV and have just met three candidates, and have ten seconds (one minute) to choose a husband (wife) or you lose 10 million dollars so you can ask no questions (one question) in the remaining time)? Lecture 5 What have we learned? People have difficulty making tradeoffs. People have difficulty with probability. People have difficulty with time. People care about efficiency and equity. People reciprocate. People have difficulty if they don’t have sufficient cognitive resources. All people are irrational some of the time, some people are irrational all of the time, but not all of the people are irrational all of the time. Lecture 5 AEM 414 ...
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