How we Influence Choices: Expectations

What are four ways that marketers take advantage of the fact that people tend to be overconfident?

What is overconfidence? Give an example.

• overconfidence = people’s subjective confidence in their judgments is reliably greater than their objective accuracy

  • if people were perfectly calibrated, their 90% confidence intervals would be correct 90% of the time

• EX:

  • in an interview with college students → students were asked if “will you visit san Fransisco more than 3 times this year? pariticpat in the dorm play? drop a cource”

  • student reports: “82.3% yes

  • overall accuracy: 68.2%

What factors contribute to overconfidence?

1. wishful thinking 

2. confirmation bias

3. hindsight bias

4. self-serving bias

Who do you think are better calibrated (not-overconfident)? Doctors or Weather Forecasters? Why?

Weather Forecasters

• they receive feedback that is… 

  • unambiguous (there is not more than one interpretation) 

  • frequent

  • immediate 

Why are weathermen less overconfident and better calibrated than doctors?

weathermen receive feedback that is MORE unambiguous, frequent, and immediate 

• make a prediction → check the weather → prediction → check weather

• doctors sometimes have to wait before hearing back from patients on their feedback → not immediate → sometimes the cause of something happening is unknown as well (unambiguous) 

What are two ways that marketers can help consumers to be better calibrated?

1. provide clear, frequent, and immediate feedback

2. encourage consumers to construe situations in multiple ways (and consider why their own judgement on the situation might be wrong) 

• be flexible!! 

What factors reduce overconfidence? (multiple answers)

a.) Making a judgment multiple times

b.) construing

c.) Receiving feedback that is unambiguous/frequent/immediate

b.) construing

c.) Receiving feedback that is unambiguous/frequent/immediate

What is the planning fallacy? Give an example (3)

• planning fallacy: describes the tendency for people to overestimate their rate of work or to underestimate how long it will take to get things done

• EX1: me doing work… I have underestimated how long this would take to get down 

• EX2: Sydney Opera House

  • the city thought it would take 4 years and $20 million to complete

  • actually took 14 years and $130 million 

• EX3: lab examples (Buehler et al.):

  • students completed honors thesis and estimated that would take 33.9 days → actually took 55.5 days 

  • the fallacy is to believe that your project will proceed as planned even though you know that most similar projects have run late in the past → you think you are different

What does it mean to take an “outside view versus an “inside view?” Which perspective tends to lead to more accurate predictions?

• inside view: people focus on plans & intentions & construct a “best case scenario” in which the task gets done

  • the imagined scenario is actually more optimistic because it sets goals for the participants in the activity

• outside view: people should take this view instead!!

  • consider others’ failures

  • consider their past failures 

  • helps people develop a more realistic approach 

Is making a detailed plan likely to make you more or less susceptible to the planning fallacy? Why?

• focusing on plans may seem helpful, BUT it leads to overly optimistic predictions 

  • prediction 1: when Buehler et al. (2002) asked one group to make detailed Christmas shopping plans → they estimated to finish over a week early 

  • prediciton 2: another group just give an estimate that they expected to finish 4 days early 

  • reality: they both actually finish 3 days before Christmas  

Are we more or less likely to fall prey to the planning fallacy when we are making predictions about our own behavior or others’ behavior? Why?

• when making predicates about our own behavior → we are overly optimistic about our success and productivity (seen as a goal setting activity and we want to achieve our goals) 

• when analyzing others’ behaviors we are more realistic with environmental factors 

What are two ways that marketers can help consumers avoid the planning fallacy?

1. encourage consumers to take a wholistic, outside view:

• focus on other people’s experiences AND why we might have similar experiences

• focus on relevant past experiences AND why this might turn out like before 

2. consult an unbiased outside observe → observers naturally tend to take an outside view

What is the inside view and the outside view and which view should people take when making a plan?

• inside view: when we focus on plans and intentions & construct what happens to be “the best case scenario” in which the task might get done

• outside view: when people consider their failures adn other people’s failures in achieving a goal

  • more realistic approach

Is making a detailed plan likely to make you more or less susceptible to the planning fallacy? 

more susceptible! (does not account for failures or interruptions; overly optimistic) 

What is the bias blind spot? Give an example.

• bias blind spot: people tend to believe that their own judgements are less prone to bias than others’

• EX: weight loss programs!

  • even though weight-loss programs may have a disclaimer saying that this is not the “norm for everyone” → people may still believe that they are not like others → they think that it is truth that they will do better than what the disclaimer is telling them

What are the three features of the bias blind spot?

bias blind spot: the tendency for people to believe that their own judgements are LESS PRONE to BIAS than others

1. judgment = third person effect: the tendency to think we are less influenced than others by ads and other persuasive messages

2. difference of opinion: the greater the difference in opinion, the more people believe that their own opinions are “valid” adn other opinions are "biased”

3. conflicts of interest: people believe thatchier own connections to an issues are “enlightening” others’ are “biasing”

• EX: variety and intra-mural athletes perception of their own and each other’s opinions about a proposal to open up the variety-only weight room for all athletes

  • proposal suggested that all athletes should get gym

  • bias club: club athletes think that they should get the gym too

  • bias-variety: they think that their thoughts to keep the gym to themselves is “enlightening” and not biased 

What is the Introspection Illusion, and how does it contribute to our tendency to see bias in others but not in ourselves?

• introspection illusion: we trust our thoughts over our actions when judging ourselves

  • BUT … we rely on oerhs’ actions over their thoughts when judging them 

What is a good way to make people less biased?

1. educate them on how specific biases can effect them and help debias them → become more open to alternative perspectives

2. provide personalized feedback and practice → produce larger effects than instructional videos (found in a study with games) (follow-up are important)