Judgement and Decision Making

Question 1

Information search

Answer 1

Made up of internal and external search, leading to information processing: 
Exposure
Attention
Comprehension
Opinion Formation
Storage

Question 2

Internal Search

Answer 2

Memory Search

Recalling stored information from memory

Question 3

External search

Answer 3

Collecting information from outside sources
Retailers, Media, Interpersonal (family and friends, neighbors), Independent (e.g. Consumer Report), Experiential (e.g. trial)

Question 4

Maximizer v satisficer

Answer 4

Maximizer: only the best will do
Satisficer: good enough is fine

Question 5

Availability Bias

Answer 5

Recall information that is more accessible, but not necessarily more diagnostic

Question 6

Confirmation Bias

Answer 6

Find information that is consistent with attitudes

Find information that proves but do not usually try to falsify

Question 7

Why Study Search?

Answer 7

To Understand Consumers’ Needs, follow-up,

Question 8

Two types of decisions

Answer 8

Judgements: Evaluation of goodness/badness, estimates of likelihood of an outcome
Decision Making: Involves making a selection between options

Question 9

Compensatory

Answer 9

High effort
Consumers select products that may perform poorly on one attribute by compensating for the poor performance by good performance on another attribute.
Good can make up for bad

Question 10

Non-compensatory

Answer 10

High effort
Negative information leads to immediate rejection of the brand or service from the consideration set.
Bad cannot be compensated
Weak performance on one dimension can NOT be offset by strong performances on other dimensions: Conjunctive, Lexicographic, Elimination by Aspects

Question 11

Conjunctive decision making

Answer 11

A type of decision rule for evaluating alternative brands where consumers establish minimally acceptable levels of performance for each important product attribute and accept an alternative (brand) only, if it meets the cutoff level for each attribute.

Process:
Evaluate each option (brand) sequentially
Set minimum cutoffs for each dimension
Start with a set of options and then eliminate the options that don’t meet our cut-offs
Choose first brand that meets all cutoffs

Question 12

Lexicographic decision making

Answer 12

A noncompensatory decision rule where consumers first rank product attributes in terms of their importance, then compare brands in terms of the attribute considered most important. If one brand scores sufficiently high, it is selected; if not, the process is continued with the second ranked attribute, and so on.

Process:
Compare on most important dimension
If tie, compare on 2nd most important dimension

Question 13

Elimination by Aspects

Answer 13

It is a covert elimination process that involves comparing all available alternatives by aspects. The decision-maker chooses an aspect; any alternatives without that aspect are then eliminated. The decision-maker repeats this process with as many aspects as needed until there remains only one alternative
Process: Eliminate brands that do not meet cutoff on most important dimension
Eliminate brands that do not meet cutoff on 2nd most important dimension
Continue until 1 brand remains

Question 14

Two stage decision making

Answer 14

First consideration set: Non-compensatory
Methods
Second consideration set: Compensatory
Method
Then choice is made

Question 15

How Do We Make Decisions When MAO is Low?

Answer 15

Use Decision Heuristics
Fancy word for shortcuts
Also called Choice Tactics for quick, effortless decision making
Why?
They make things easier
Consumers are lazy
Consumers Satisfice (vs. Optimize or Maximize)
Combined meaning of ‘satisfy’ and ‘suffice’
Don’t search for the perfect solution
Find a solution that is “good enough”

Question 16

MAO

Answer 16

motivation, ability, opportunity

Question 17

Decision Heuristics (Choice Tactics)

Answer 17

Low MAO
Habit
Brand Loyalty
Feeling
Variety Seeking
Buying on Impulse….(Relevance to Self-control)
Price (Cheap price, zero cost, free shipping, etc.)

Question 18

Choice Tactics – “Feeling”

Answer 18

Mere presence of someone you like who is smiling  makes you smile (mimic) positive influence on product attitude

Question 19

Choice Tactics – “Variety Seeking”

Answer 19

Consumers tend to seek more variety when they buy things for multiple future usages (vs. buy things for immediate use).
Low-effort situations when consumer wants to try something different!
When satiated with a particular sensory attribute of a product

Question 20

Variety Seeking in Public Consumption

Answer 20

We tend to order different things in the public vs. private context (but not as happy with the selection)
Need for uniqueness

Question 21

Choice Tactics – Impulse Purchase

Answer 21

An unexpected purchase based on a strong or overwhelming feeling
A conflict between control and indulgence
Prompted by a failure of consumers’ self-control (which can be quite taxing)

Question 22

Self-Control and Precommitment

Answer 22

Wertenbroch (1998)
Willingness to forgo quantity discounts on goods that they may be tempted to overcome
Implement a precommitment strategy of rationing their own consumption
Read, Loewenstein, and Kalyanaraman (1999)
Three rental movies: precomit to watching more ‘high-brow’ movies

Question 23

Ariely Self Control

Answer 23

Performance during semester:
1)deadlines dictated by the instructor (equally spaced deadlines)
2)give students a choice to decide the deadlines for three papers
3)all three deadlines at end of semester
Self control credit card ie no spending on candy

Question 24

Gifts

Answer 24

• Preferred/recalled experiential gifts on experiential trips
• Experiential complimentary gifts preferred on Mundane occasions
• Material complimentary gifts seem to be preferred on Unique occasions.
• Experiences are relatively immune to the negative effect of attractive alternatives (not so with material)

Question 25

Purchases

Answer 25

-Experiential purchases make people happier than material purchases.
-In the lab experiment, participants experienced more positive feelings after pondering an experiential purchase than after pondering a material purchase.
Esp as you become wealthier
-Experiential purchases less prone to comparisons
-Greater Buyer’s Remorse for Material Purchases

Question 26

The Compromise Effect (Extremeness Aversion)

Answer 26

Consumers like to avoid extremes so choose the middle brand

Makes justification easier

Question 27

The Decoy Effect

Answer 27

Consumers tend to have a specific change in preference between two options when presented with a third option that is inferior to one of the options ie Rome w/o breakfast (called a decoy).