Noteshells13

# Noteshells13 - Consumer Choice 1 Outline Influences on...

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1 1 Consumer Choice 2 Outline Influences on Consumer Choice Framing Status quo bias Mental accounting (and sunk costs) Conflict Fairness 3 Review: Heuristics Availability Representativeness Anchoring and Adjustment Useful ways of making estimates. Reduce the amount of work involved. But, they can lead us astray.

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2 4 From Judgment to Choice Judgments may often be biased: Natural consequence of information processing. “Satisficing” Recall “rational model” We assess the utility we get from any option. Judgment findings suggest we may be biased here. We choose the option with the most utility. Examine choice behavior. Even if utility assessments are biased, rational model requires that they be relatively stable. 5 An Example: Imagine that the U.S. is preparing for the outbreak of an unusual disease, which is expected to kill 600 people. Two alternative programs to combat the disease have been proposed. Assume that the exact scientific estimate of the consequences of the programs are as follows: ___ If Program A is adopted, 200 people will be saved. ___ If Program B is adopted, there is a 1/3 probability that 600 people will be saved, and 2/3 probability that no people will be saved. 6 An Alternative Framing: Imagine that the U.S. is preparing for the outbreak of an unusual disease, which is expected to kill 600 people. Two alternative programs to combat the disease have been proposed. Assume that the exact scientific estimate of the consequences of the programs are as follows: _____ If Program A is adopted, 400 people will die. _____ If Program B is adopted, there is a 1/3 probability that nobody will die, and a 2/3 probability that 600 people will die. Even though it’s the same choice…: The risky option is chosen when it seems like a choice among losses. The sure option is chosen when it seems like a choice among gains.
3 7 Framing Effects Changes in choices that arise when “irrelevant” aspects of the choice description are changed. The “acts, outcomes, and contingencies” of the choice do not change. And yet the preference itself changes. What’s going on?

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Noteshells13 - Consumer Choice 1 Outline Influences on...

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