descriptive decision making / cognitive bias

lexicographic decision rule

the consumer ranks the attributes according to importance and then selects the brand that is superior on the most important attribute

elimination-by-aspect decision rule

consumer sets a minimum standard for each attribute and if a brand fails to pass any standard, it is dropped from consideration

heuristic

simple, experience-based rules of thumb used to guide decisions

representativeness heuristic

making decisions based on its similarity to a mental prototype

scarcity heuristic

scarcer items are worth more / have greater value

effort heuristic

what took more effort to make is better / higher quality / worth more

why are heuristics valuable

• simplify decision making (reduce search/thinking) costs

• reasonable accurate (based on prior experience)

compromise effect

adding an extreme alternative to the choice set to increase preference for the closer alternative

extremeness aversion

people have an aversion to choosing extreme options - we prefer to compromise

atmospherics

the sum of all the physical features of a retail environment

task definition

the reason the consumption activity is occurring

antecedent states

people’s moods and emotions

moods

transient feeling states that are relatively long lasting and not tied to a specific event or object

affect-as-information

we rely primarily on our feelings when making a decision

emotions

short-lived feelings that come from a known cause

positive-valence

seek out experiences of similar arousal-level (relaxed - read a book)

negative-valence

seek out experiences of different arousal-level (anxious - read a book)

diminishing marginal utility

as a person increases consumption of a product, there is a decline in the marginal utility that person derives from consuming each additional unit of that product

endowment effect

people place a higher value on an object they own than they would on an identical object they do not own

framing

identical information presented in different ways (cup ½ full or ½ empty)

prospect theory

we are risk-averse when choosing among two gains that have equal expected value

framing effects

we are risk-seeking when choosing among two losses that have equal expected value

sunk-cost fallacy

we are reluctant to waste something we have paid for

sunk costs

prior investments of time, money, or effort that lead us to make choices we otherwise wouldn’t have made