Consumer Behavior Quiz #3

What are the two systems of reasoning? What are the characteristics of each?

• System 1 (“Intuitive”) – automatic, effortless, rapid, associative, concrete, and parallel. It produces quick, emotional, gut-based judgments.

  • Intuition

• System 2 (“Reflective”) – controlled, effortful, slow, often serial, abstract, and rule-based. It checks, reasons, and corrects System 1 when we pause to think.

  • Deliberation

What is a heuristic?

• Mental shortcut—a simplified rule we use to make quick judgments when System 2 can’t or won’t engage.

• They’re necessary for fast decisions in uncertain situations but can lead to biases and faulty beliefs because they rely on intuition over analysis

What is the affect heuristic? How does it influence our use of numbers in decisions?

• Affect heuristic: People rely on feelings instead of facts. Emotional reactions often outweigh statistics.

• This creates scope insensitivity—the number of lives or size of the issue hardly changes willingness to pay (e.g., saving 2 000 birds =$80 vs. 200 000 birds =$88).

What is the identifiable-victim effect?

People feel more compassion and act more for a single named victim than for large, anonymous groups.
→ Emotion > logic; vivid examples > cold statistics

What is the availability heuristic?

We judge likelihood by how easily examples come to mind, not actual frequency.
→ E.g., people think shark attacks kill more than falling airplane parts, since shark attacks are vivid and reported more.

How does “overclaiming” reflect the availability heuristic? Is it due to the amount of information or the ease of generating it?

• Overclaiming: When people overestimate their personal contribution (e.g., group projects or chores) because their own actions are easier to recall.

• The bias stems from the ease of recall, not the total amount of information available

What is the representativeness heuristic?

People assume that something that looks typical of a category must belong to it (“if it looks right, it must be right”).
→ They ignore base rates or logic, as in the Linda problem (people say she’s a “feminist bank teller” rather than just a bank teller).

How does the conjunction fallacy influence purchase decisions?

Believing specific conditions are more likely than general ones.
→ In marketing, consumers may find a product labeled for a specific purpose more appealing than a general-purpose one, even if the general one covers more.

What is regression to the mean?

Extreme performances naturally move toward average over time.

How does the regression to the mean explain the Sports Illustrated jinx?

Athletes on the cover after a great season often perform worse later—not because of a curse, but because performance fluctuates around the mean