BE 06 Utility 2 - Endowment, Expectations.pptx

2 groups take veladone to relieve pain iv dv group a

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2 groups take Veladone to relieve pain . IV DV Group A Sees price of $2.50 per tablet. Takes the pill. Reports level of pain relief. Group B Sees price of $0.10 per tablet. Takes the pill. Reports level of pain relief.
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Group A participants were more likely to report effective pain relief. Why? Experiment 6: 2 groups take Veladone to relieve pain . IV DV Group A Sees price of $2.50 per tablet. Takes the pill. Reports feeling better. Group B Sees price of $0.10 per tablet. Takes the pill.
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How do brands influence our expectations? McLure et al., 2004. Neural Correlates of Behavioral Preference for Culturally Familiar Drinks. Neuron, Vol. 44, No 2, pages 379-387.
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Experiment 4: Brands on the Brain MRI Magnetic Resonance Imaging
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Blind Group: Did not see the brand before drinking Brand Group: Saw either Coca-Cola or Pepsi before sipping that brand of cola. 3 Groups
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ALL: Orbitofrontal cortex – this area registers REWARD (e.g., sugar). Brands only, especially COKE : Dorsolateral prefrontal cortex and hippocampus. Conscious, aware ‘higher thinking’. They also LIKED Coke more when they knew the brand.
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SO... How do expectations influence our perceptions of reality?
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Environment Stereotypes Prices Brands Expectations How we experience the real world!
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Quiz: DO WE KNOW HOW SATISFIED WE ARE?
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UTILITY Increasing Satisfaction Source: SilverStar at en.wikipedia from Wikimedia Commons Composite Good $1 per Unit
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QUIZ: INTERROGATING UTILITY CAN WE ACCURATELY FORESEE HOW MUCH SATISFACTION WE WILL EXPERIENCE? HOW MUCH WE ACTUALLY FEEL? BASED ON HOW THEY INFLUENCE THE SATISFACTION WE FEEL, COMPARE & CONTRAST: 1. THE DECOY EFFECT 2. LOSS AVERSION 3. ENDOWMENT EFFECT 4. EXPECTATIONS Homework: Ariely, Predictably Irrational, Chapters 10 & 11
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  • Spring '14

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