Lecture 9 - Judgments and Decisions

Lecture 9 - Judgments and Decisions - LECTURE 9 Judgments...

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10 | 1 Karthik Easwar Consumer Behavior LECTURE 9 Judgments and Decisions
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10 | 2 Karthik Easwar Consumer Behavior Today’s Plan Examine some classic examples, experiments and studies that highlight some of the key ideas from Chapters 10 and 11 Look past the theoretical findings of these studies to see how they were discovered / proven Introduce other concepts that affect JDM
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10 | 3 Karthik Easwar Consumer Behavior Topics Heuristics Framing Biases Overconfidence Forecasting Errors Emotions Awareness Mental Accounting
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10 | 4 Karthik Easwar Consumer Behavior Representativeness Heuristic Probability judgments are based on similarity or resemblance Generally sensible, but it can be a big problem, because probability should be based on other considerations, too, such as base rates
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10 | 5 Karthik Easwar Consumer Behavior Representativeness Heuristic “Jack is a 45-year old man. He is married and has four children. He is generally conservative, careful, and ambitious. He shows no interest in political and social issues and spends most of his free time on his many hobbies which include home carpentry, sailing, and mathematical puzzles.” What is the probability he is a lawyer?
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10 | 6 Karthik Easwar Consumer Behavior Representativeness Heuristic Gamblers Fallacy After 4 heads in a row, people were more willing to bet on a tails, but not if: a 24-minute pause is inserted or if the coin was changed
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10 | 7 Karthik Easwar Consumer Behavior Representativeness Heuristic Conjunction Fallacy Linda is 31 years old, single, outspoken, and very bright. She majored in philosophy. As a student, she was deeply concerned with issues of discrimination and social justice, and also participated in antinuclear demonstrations. Please check off the most likely alternative. • 1. Linda is a bank teller • 2. Linda is a bank teller and is active in the feminist
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10 | 8 Karthik Easwar Consumer Behavior Availability Heuristic We assess frequency or probability by the ease with which instances or occurrences can be brought to mind.
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10 | 9 Karthik Easwar Consumer Behavior Availability Heuristic Which do you think is more lethal (leads to more deaths per year)? Asthma Tornadoes
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10 | 10 Karthik Easwar Consumer Behavior Availability Heuristic People judge tornadoes to be three times as lethal as asthma. Actually asthma is 21 times as lethal The biggest determinants of judged lethality are: # of news inches # deaths per incident (less powerful predictor)
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10 | 11 Karthik Easwar Consumer Behavior Availability Heuristic False Consensus Effect Our opinion is the most available, so we think our opinion is shared by lots of other folks
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10 | 12 Karthik Easwar Consumer Behavior Anchoring and Adjustment Heuristic Question: Percentage of African countries in the United Nations? A number was arbitrarily chosen by spinning
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This note was uploaded on 11/08/2010 for the course BUS-M&L 750 taught by Professor Easwar during the Fall '10 term at Ohio State.

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Lecture 9 - Judgments and Decisions - LECTURE 9 Judgments...

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