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fmpact of eeuristics on Brand Choice tith ppecial oeference to cjCdK

qhesis=pubmitted=to=the==m~dm~shree=arK=aK=vK=m~tiä=rniversityI=aep~rtment=of=_usiness=j~n~gement=

in=p~rti~ä=fuäfiääment=of=the=requirements=for=the=~w~rd=of=the=aegree=of==

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August OMNM

fmpact of eeuristics on Brand Choice tith ppecial oeference to cMCd

abCiAoATflk

f= hereby= decä~re= th~t= the= thesis= entitäed= “fmpact of eeuristics on Brand Choice

tith ppecial oeference to cjCd” submitted=for=the=^w~rd=of=aoctor=of=mhiäosophy=

in=_usiness=j~n~gement=~t=the=m~dm~shree=arK=aKvK=m~tiä=rniversity=aep~rtment=of=

_usiness=j~n~gement= is=my=origin~ä=work=~nd=the=thesis=h~s=not=formed=the=b~sis=

for=the=~w~rd=of=~ny=degreeI=~ssoci~te=shipI=feääowship=or=~ny=other=simiä~r=titäesK=

mlaceW kavi jumbaiK aateW ==========pignature of duide pignature of pignature of ptudent eead of aeptK =

CboTfcfCATb

qhis= is= to= certify= th~t= the= thesis= entitäed= “fmpact of eeuristics on Brand Choice

tith ppecial oeference to cjCd” ~nd=submitted=by=jrK pachin aeshmukh=is=~=

bon~fide= rese~rch= work= for= the= ~w~rd= of= the= aoctor= of= mhiäosophy= in= _usiness=

j~n~gement==~t=the=m~dm~shree=arK=aK=vK=m~tiä=rniversity=aep~rtment=of=_usiness=

j~n~gement=in=p~rti~ä=fuäfiääment=of=the=requirements=for=the=~w~rd=of=the=aegree=of=

aoctor of mhilosophy in Business janagement= ~nd= th~t= the= thesis= h~s= not=

formed= the= b~sis= for= the=~w~rd=previousäy=of=~ny=degreeI=dipäom~I=~ssoci~te= shipI=

feääowship=or=~ny=other=simiä~r=titäe=of=~ny=rniversity=or=fnstitutionK=

=^äso=it=is=certified=th~t=the=thesis=represents=~n=independent=work=on=the=p~rt=of=the=

c~ndid~teK=

====mlaceW kavi jumbai aateW ==== pignature of the pignature of duide eead of the aepartment

Acknowledgement =

=f=wouäd=first=äike=to=th~nk=my=prim~ry=~dvisorI=guide=~nd=mentorX=arK=oKdop~äK=ee=h~s=

inspired=~nd=encour~ged=me=to=write=this=thesisK=eis=const~nt=support=~nd=inv~äu~bäe=

~dvice=h~s=~äw~ys=guided=me=tow~rds=the=right=directionK=curthermoreI=he=h~s=been=

my= roäe= modeä= ~s= ~n= ~c~demic= rese~rcherK= fn= p~rticuä~rI= arK= dop~ä= h~s= ~äw~ys=

heäped=me=sh~rpen=my=insightI=intuitionI=~nd=~äso=h~s=en~bäed=me=to=~chieve=~=highJ

äeveä=methodoäogic~ä=sophistic~tionK=f=couäd=not=h~ve=compäeted=~nything=without=him=

~nd=f=owe=wh~t=f=~m=tod~y=to=himK=

f= gr~tefuääy= ~cknowäedge= the= ~dvice= of= mrofessor= ~nd= ee~dI= oese~rch= bxtension=

CentreI=m~dm~shree=aKvK=m~tiä= rniversity’s=aep~rtment=of= _usiness= j~n~gementI=

arK=mr~dip=j~njrek~rK=f=h~ve=äe~rned=immenseäy=from=the=inter~ctions=with=himK=f=~m=

gr~tefuä=~äso=to=arK=fo~nnis=ktzoufr~sI=aep~rtment=of=pt~tisticsI=^thens=rniversity=of=

bconomics=~nd=_usinessI=dreeceI=~nd=pteve=jiääerI=tin_rdp=fnstitute=rKhK=for=their=

v~äu~bäe=guid~nce=in=constructing=softw~re=progr~ms=for=my=thesisK==

f= dedic~te= my= work= to= my= ä~te= gr~ndf~ther= arK= CKaK= aeshmukhI= the= first= fndi~n=

dovernor= of= oeserve= b~nk= of= fndi~I= cormer= cin~nce= jinister= of= fndi~= ~nd= cormer=

Ch~irm~n=of=rniversity=dr~nts=Commission=of= fndi~=who=h~s=been=~= roäe=modeä= to=

me= ~ää= my= äifeK= f= ~äso= th~nk= my= f~ther= for= encour~ging= me= to= compäete= this=

dissert~tionK=

Signature of Student

Contents=Chapter

no pubtitle

noK Chapter name mage no

= = iist=of=~bbrevi~tions===

= = iist=of=t~bäes===

= = iist=of=figures===

= = bxecutive pummary =

T - PR

N fntroduction

PT - SM

= NWN= qhe=lverview===

= NWO= eeuristics=–=wh~t=it=is?==

= NWP= _r~nd=Choice=–=aefinition==

= NWQ= c~ctors=fnfäuencing=rse=of=eeuristics=by=Consumers==

= NWR= qhe=pt~tistic~ä=jodeä=for=_r~nd=Choice==

= NWS= jodeä=bxecution==

O iiterature oeview mart f – eeuristics C Biases

SO - UV

= OWN= fntroduction===

= OWO= qypes=of=eeuristics=fdentified==

= OWP= _i~ses==

= OWQ= _ounded=o~tion~äity==

= OWR= pome=eeuristics=fdentified=in=j~rketing==

= OWS= ^n=bffort=oeduction=cr~mework=for=ptudying=eeuristics===

Chapter no

pubtitle noK

Chapter name mage no

P iiterature oeview mart – ff Brand Choice jodels

VN - NMU

= PWN= fntroduction==

= PWO= aom~in=of=Choice=oese~rch==

= PWP= mrogress==

= PWQ= i~tent=s~ri~bäes==

= PWR= Combining=oeve~äed=C=pt~ted=mreferences=

= PWS= _~yesi~n=mrocedure==

= PWT= _eh~vior~ä=ayn~mics=C=fnter~ctions==

= PWU= a~t~=fmput~tion==

= PWV= aiscrete=C=Continuous=jodeäs==

= PWNM= poftw~re==

= PWNN== Ch~ääenges===

= PWNO= jodeä=cormuä~tion=C=bstim~tion===

= PWNP= oese~rch=d~p==

Q ptatement of mroblem

NNM - NNS

= QWN= lbjectives=of=ptudy==

= QWO= qhe=mrobäem=pt~tement==

= QWP= fmport~nce=of=ptudy==

= QWQ= _enefits=of=ptudy==

= QWR= qhe=eypotheses==

R mlan of ptudy – oesearch jethodology

NNU - NOQ

= RWN= rnderst~nding=the=fssue==

Chapter no

pubtitle noK

Chapter name mage no

= RWO= a~t~=Coääection==

= RWP= fnstrument=of=a~t~=Coääection==

= RWQ= p~mpäing=mä~n==

= RWR= pt~tistic~ä=qooäs==

= RWS= poftw~re=rsed==

= RWT= iimit~tions=of=ptudy==

S Constructing the Brand Choice jodel part – f rse of eeuristics in Brand Choice aecision

NOT - NQT

= SWN= qhe=Choice=mrocess==

= SWO= Ch~r~cteristics=of=Choice=mrocess==

= SWP= thy=do=Consumers=rse=eeuristics==

= SWQ= d~thering=C=rsing=fnform~tion==

= SWR= bxtern~ä=fnform~tion=pources==

= SWS= k~ture=of=fnform~tion=qr~nsferred==

= SWT= pystem~tic=aifferences==

= SWU= bffects=of=aifferences=in=bxperience=of=Consumers=

= SWV= bffects=of=aifferences=in=aur~biäity=of=mroducts=

T Constructing the Brand Choice jodel part – ff The Background for Brand Choice jodel

NQV - NTP

= TWN= _~yesi~n=fnference==

= TWO= aefinition=of=pt~tistic~ä=jodeä==

= TWP= _~ye’s=qheorem==

= TWQ= jodeä=_~sed=_~yesi~n=fnference==

= TWR= fnference=rsing=Conjug~te=mrior= NRS=

aistribution== TWS= fntroduction=to=j~rkov=Ch~in=

= TWT= jCjC=^ägorithm=in=_~yesi~n=fnference=

= TWU= dibbs=p~mpäing==

= TWV= aevi~nce=fnform~tion=Criterion==

= TWNM= tin_rdp=softw~re==

U Constructing the Brand Choice jodel part – fff The Brand Choice jodel

NTR - ONV

= UWN= ^ccommod~ting=eeuristics=in=_r~nd=choice=

= UWO= Consumer’s=Choice==

= UWP= ^n=bffort=oeduction=cr~mework==

= UWQ= qhe=keed=to=^ccommod~te=eeuristics=in=_r~nd=Choice=

= UWR= qhe=pt~tistic~ä=jodeä=for=_r~nd=Choice=

= UWS= qhe=eeterogeneity===

= UWT= lther=pt~tistic~ä=aistributions==

= UWU= lccurrence==

= UWV= a~t~=Coääection==

= UWNM= bstim~tion=of=jodeä=m~r~meters==

V tinBrdp Code for Brand Choice jodel

OON - OOS

= VWN= tin_rdp=Code=for=^s_j==

= VWO= tin_rdp=Code=for=ls_j= OOO==

= VWP= tin_rdp=Code=for=au~ä=jode=–=qime=fnv~ri~nt=

= VWQ= tin_rdp=Code=for=au~ä=jode=–=qime=s~ri~nt=

NM cindings

OOU - OPV

NN Conclusions C OQO - OQS

oecommendations

= NNWN= Concäusion=C=oecommend~tion==

= NNWO= iimit~tions=of=ptudy==

= NNWP= cuture=pcope=for=oese~rch==

= = _ibäiogr~phy===

= = nuestionn~ire== ORS==

= = a~t~=^n~äysis=in=tin_rdp= OSN==

= = a~t~=mresent~tion=in=tin_rdp==

iist of Abbreviations prK no

Abbreviation cull corm

N= cjCd= c~st=joving=Consumer=doods=

O= ^s_j= ^ttribute=s~äue=_~se=jode=

P= ls_j= lrdered=s~äue=_~se=jode=

Q= au~ä= jodeJ=qfs=

au~ä=jode=qime=fnv~ri~nt=

R= au~ä= jode= –qs=

au~ä=jode=qime=s~ri~nt=

S= tin_rdp= tindow’s= sersion= for= _~yesi~n=fnference=rsing=dibbs=p~mpäing=

T= jCjC= j~rkov= Ch~in= jonte= C~räo=jethod=

U= orj= o~ndom=rtiäity=jodeä=

V= eCj= eybrid=Choice=jodeä=

NM= ^fC= ^k~ike=fnform~tion=Criterion=

NN= _fC= _~yesi~n=fnform~tion=Criterion=

prK no

Abbreviation cull corm

NO= afC= aevi~nce=fnform~tion=Criterion=

NP= jki= juätinomi~ä= iogistic= oegression=cunction=

NQ= iKiKd= fndependent= ~nd= identic~ääy=distributed=s~mpäe=

NR= ff^= fndependent= of= frreäev~nt=^ätern~tives=

iist of Tables =

prKno Table noK

aescription of table mage no

N= RWN= qhe=p~mpäe=

O= ^WPWN= cindings=of=^s_j=moduäe=

P= ^WPWO= cindings=of=ls_j=moduäe=

Q= ^WPWP= cindings= of= au~ä= jode= qime= fnv~ri~nt=moduäe=

R= ^WP≤Q= cindings= of= au~ä= jode= qime= s~ri~nt=moduäe=

S= ^WPWR= pumm~ry= of= _et~= Coefficients= of= the=four=moduäes==

iist of cigures =

prK no

aescription mage no

NWN= fnform~tion=mrocessing=jodeä=

PWN= aom~in=of=Choice=oese~rch=

PWO= Choice=_eh~vior=

PWP= eybrid=Choice=jodeä=

PWQ= qhe=_r~nd=Choice=jodeä=

UWN= qhe=_r~nd=Choice=jodeä=oevisited=

UWO= Convergence=of=a~t~=

UWP= iogistic=oegression=Curve=

NMWN= cäow=Ch~rt=fndic~ting=C~äcuä~tion=of=m~r~meters=of=joduäes=~nd=qr~ce=mäots=

NMWO= qr~ce=mäots=for=^s_j=

NMWP= qr~ce=mäots=for=ls_j==

NMWQ= qr~ce=mäots=for=au~ä=jode=–=qime=fnv~ri~nt=

NMWQWO= Convergence=of=a~t~=au~ä=jode=–=qime=s~ri~nt=

bxecutive pummary

bxecutive pummary =

“fmp~ct= of= eeuristics= on= _r~nd= Choice= with= ppeci~ä= oeference= to= cjCd=

Ef~st= moving= consumer= goodsF≤= is= the= study= to= underst~nd= the= effects= of=

heuristics= used= by= consumers= in= their= decision= m~king= process= of= br~nd=

choiceK= pimon= ENVVOFI= the= f~ther= of= heuristics= rese~rch= in= judgment= ~nd=

decision= m~king= defines= heuristics=~s= “methods= of= ~rriving= ~t= s~tisf~ctory=

soäutions= with= modest= ~mounts= of= comput~tions≤I= suggesting= th~t= peopäe=

seek= to= reduce= the= efforts= ~ssoci~ted= with= decision= m~king= processK=

Consumers= ~dopt= short= cuts= in= their= decision= m~king= process= of= br~nd=

choiceK= qhey= ~re= methods= of= soäving= probäems= or= situ~tions= where= no=

formuä~s=existK=eeuristics=therefore=c~n=be=referred=to=~s=methods=th~t=use=

principäes= of= effort= reduction= ~nd= simpäific~tionK= _y= definitionI= heuristics=

must= ~ääow= consumers= to= process= inform~tion= in= ~= äess= effortfuä= m~nner=

th~n=one=wouäd=expect=from=~n=optim~ä=decision=ruäeK=^K=keweää=~nd=pimon=

ENVTOFI=used=the=word=heuristics=to=describe=simpäe=processes=th~t=repä~ce=

compäex=~ägorithms= in=decision= m~kingK= lne=m~y=be= required= to= process=

compäex=~ägorithms=whiäe=m~king=~=decisionK=

_r~nd= choice= is= defined= ~s= ~= decision= m~king= process= conducted= by=

consumers= for= seäecting= ~=p~rticuä~r= br~nd= from=~=number=of= br~nds= th~t=

~re= present= in= hisLher= consider~tion= set= through= the= ~ppäic~tion= of= some=

choice=ruäesK==

qhis= thesis= is= concerned= with= modeäing= the= beh~vior= of= ~= consumer=

choosing=~n=~ätern~tive=Ebr~nd=choiceF=from=~=set=of=mutu~ääy=excäusive=~nd=

coääectiveäy=exh~ustive=~ätern~tivesK=qhe=modeä=does=not=~ttempt=to=predict=

deterministic~ääy= the= choice= of= ~n= individu~äK= o~ther= it= predicts= the=

prob~biäity=of=~=consumer=picking=up=~n=~ätern~tiveK=curther=the=emph~sis=is=

on= c~pturing= the= underäying= process= undert~ken= by= ~n= individu~ä= whiäe=

choosing=~n=~ätern~tiveK=

jicroeconomic= theory= concentr~tes= on= the= choice= process= by= postuä~ting=

th~t= consumer= is= ~n= optimizing= bä~ck= boxK= qhus= the= underäying= decision=

protocoä= ~ssumed= is= th~t= consumer= chooses= ~n= ~ätern~tive= which=

m~ximizes= hisLher= utiäity= or= weääJbeingK= qhe= ~ttributes= of= different=

~ätern~tivesI= individu~ä= ch~r~cteristicsI= p~st= experienceI= ~mbient=

inform~tion=~nd=situ~tion~ä=constr~ints=~re=inputs=to=the=bä~ck=boxI=whiäe=the=

observed= choice= is= the= outputK= qhe= oper~tion~äiz~tion= of= the=

m~croeconomic=choice=theory=reäies=he~viäy=on=the=individu~ä’s=preferences=

tow~rds=~ätern~tives= ~s=eäicited= in= the=~ctu~ä= m~rket=environmentI=usu~ääy=

referred= to= ~s= reve~äed= preferencesK= curther= it= ~ssumes= th~t= consumers=

h~ve= perfect= inform~tion= ~bout= ~v~iä~bäe= ~ätern~tives= ~nd= their= ~ttributesK=

_ut=in=re~äityI=~=consumer=h~s=äimited=prior=inform~tion=~bout=consumption=

opportunities= ~nd= inform~tion= processing= c~p~biäitiesK= qhe= consumer’s=

preferences= to= different= ~ätern~tives= m~y= cont~in= r~ndom= components=

m~inäy= due= to= the= in~biäity= of= the= rese~rcher= to= me~sure= ~ää= the= inputs=

preciseäyK=po=the=theory=is=oper~tion~äized=by=äinking=the=r~ndom=preference=

to= the= choice= prob~biäities= through= ~= p~r~meterized= st~tistic~ä= modeäK=

bssenti~ääy= the= modeä= äinks= directäy= the= observed= inputs= to= the= observed=

outputI= ~nd= modeä= p~r~meters= ~re= then= estim~ted= through= st~tistic~ä=

proceduresK=

Consumers’=choice=is=inherentäy=~=dyn~mic=processK=oese~rch=tiää=this=d~te=

indic~tes= th~t= whether= one= is= observing= ~= routine= purch~se= of= br~nds= or=

once= –= in= –= äife= time= choices= of= housingI= choices= m~de= in= the= present=

impäicitäy=refäects=wh~t=h~s=been=äe~rnt=from=the=p~st=~nd=often=expect~tions=

of= the= futureK= vetI= whiäe= the= import~nce= of= underst~nding= the= n~ture= of=

dyn~mic=infäuences=on=choice=is=wideäy=recognizedI=the=knowäedge=of=how=

choices=evoäve=rem~ins=highäy= fr~gmentedK=qhe=~ttempt= in= this=study=is= to=

underst~nd= the= dyn~mics= of= the= choice= procedureI= especi~ääy= heuristicsI=

~nd=to=find=the=effects=of=these=dyn~mics=on=the=choice=modeäs=m~rketers=

use=to=predict=future=choice=prob~biäitiesK=

s~rious=choice=modeäs=~re=~v~iä~bäe=tod~y=for=c~äcuä~ting=the=future=choice=

prob~biäities= ~nd= m~rket= sh~re= of= br~ndsK= qhe= use= of= heuristics= by=

consumers= m~y= ch~nge= the=w~y=of= c~äcuä~ting= future= choice=prob~biäities=

~nd= m~rket= sh~re= ~s= the= existing= choice= modeäs= do= not= ~ccommod~te=

heuristicsK==

h~hnem~n= ~nd= qversky= h~ve= identified= three=cognitive= heuristics=used= in=

decision=m~king=which=~re=described=beäow=

oepresentativeness

oepresent~tiveness=refers=to=m~king=~n=uncert~inty=judgment=on=the=b~sis=

of=the=degree=to=which=it=is=EiF=which=is=simiä~r=in=essenti~ä=properties=to=its=

p~rent= popuä~tion= ~nd= EiiF= refäects= the= s~äient= fe~tures= of= the= process= by=

which=it=is=gener~tedK==

Availability

^v~iä~biäity= is= used= to= estim~te= frequency= or= prob~biäity= by= the= e~se= with=

which= inst~nces= or= ~ssoci~tions= come= to= mindK= fn= contr~st= to=

represent~tiveness=which=invoäves=~ssessments=of=simiä~rity=or=connot~tive=

dist~nceI= ~v~iä~biäity= refäects= ~ssessment= of= ~ssoci~tive= dist~nceK=

^v~iä~biäity=h~s=been=reported= to=be= infäuenced=by= im~gin~biäityI= f~miäi~rity=

~nd= vividnessI= ~nd= h~s= been= reported= by= evidence= of= stereotype= ~nd=

scen~rio=thinkingK=

Anchoring –and-Adjustment

^nchoring= ~nd= ~djustment= invoäves= st~rting= from= ~n= initi~ä= v~äue= th~t= is=

~djusted=to=yieäd=the=fin~ä=~nswerK=qhe=initi~ä=v~äueI=or=st~rting=pointI=m~y=be=

suggested=by= the= formuä~tion=of= the=probäemI=or= it=m~y=be= the= resuät= of=~=

p~rti~ä=comput~tionK=fn=either=c~seI=~djustments=~re=typic~ääy=insufficientK==

cactors fnfluencing the rse of eeuristics by Consumers

qhe=re~sons=for=use=of=heuristics=~re=m~nyI=out=of=which=the=most=import~nt=

ones=~re=considered=for=this=studyK==

NK iimitations of euman jemory

lne= of= the= m~in= re~sons= for= consumers= to= use= heuristics= is= the=

äimit~tions=put=by=the=hum~n=memory=on=processing=of=d~t~K=^t=one=

point= of= timeI= hum~n= memory= c~n= ~ttend= T= H= or= –= O= chunks= of=

inform~tionK==

OK The teighted Additive Algorithm

^Kkeweää= ~nd= pimon= ENVTOFI= used= the= word= heuristics= to= describe=

simpäe= processes= th~t= repä~ce= compäex= ~ägorithms= in= decision=

m~kingK=lne=m~y=be=required=to=process=compäex=~ägorithms=whiäe=

m~king=~=decisionK= fn= judgment=~nd=decision=m~kingI= the=weighted=

~dditive= ruäe= is=one=such=compäex=~ägorithm=for=~rriving=~t=compäex=

decisions= ~nd= ~ccur~te= judgmentsK= ^ccording= to= the= weighted=

~dditive= ruäeI= consumers=consider=~ää= the=~v~iä~bäe=~ätern~tives=~nd=

cues= for= e~ch= ~ätern~tiveK= Consumers= must= weight= e~ch= cue=

~ccording=to=objective=or=subjective=impressions=of=how=it=contributes=

to= the= over~ää= v~äueK= lnce= the= consumer= ~rrive= ~t= ~= weighting=

principäe=~nd=~ssign=weights= to=e~ch=cueI= they=must= then=c~äcuä~te=

the=v~äue= for=e~ch=~ätern~tiveK=b~ch=cue’s=v~äue= is=muätipäied=by= its=

corresponding=weightI=~nd=these=products=~re=summed=to=yieäd= the=

over~ää= v~äue= of= the= ~ätern~tiveK= rätim~teäy= using= the= weighted=

~dditive= ruäe= consistentäy= requires= peopäe= to= expend= effort= on= five=

t~sksK=

NK= fdentifying= ~ää= cues= –= ~ää= reäev~nt= pieces= of= inform~tion= must= be=

~cknowäedgedK=

OK=oec~ääing=~nd=storing=~ää= the=cues=v~äues=–=the=v~äues=for= the=pieces=of=

inform~tion= must= either= be= rec~ääed= from= memory= or= processed= from=

extern~ä=sourceK=

PK=^ssessing= the=weights=of=e~ch= cue=–= the= import~nce= of=e~ch= piece=of=

inform~tion=must=be=determinedK==

QK= fntegr~ting= inform~tion= for= ~ää= ~ätern~tives= –= the= weighted= cue= v~äues=

must=be=summed=to=yieäd=~n=over~ää=utiäity=v~äue=or=utiäity=for=the=~ätern~tiveK=

fn=the=c~se=of=inference=or=judgmentI=this=is=the=fin~ä=stepI=~nd=it=produces=

the=t~rget=judgmentI=~nd=it=produces=the=t~rget=judgment=v~äueK=

RK= ^ää= ~ätern~tives= must= be= comp~redI= ~nd= then= the= ~ätern~tive= with= the=

highest=v~äue=shouäd=be=seäectedK==

Cäe~räyI=such=~ägorithm=requires=gre~t=ment~ä=effortX=howeverI=peopäe=do=not=

h~ve= unäimited= processing= c~p~cityK= meopäe= must= oper~te= within= the=

constr~ints= imposed= both= by= their= cognitive= resources= ~nd= the= t~sk=

environment=–=~=concept=known=~s=bounded=r~tion~äityK=^s=the=dem~nd=on=

äimited= cognitive= resources= incre~seI= peopäe= m~y= empäoy= methods= or=

str~tegies= th~t= reduce= effort= they= expend= on= comput~tionK= eeuristics=

therefore= c~n= be= referred= to= ~s= methods= th~t= use= principäes= of= effort=

reduction=~nd=simpäific~tionK=_y=definitionI=heuristics=must=~ääow=consumers=

to= process= inform~tion= in= ~= äess= effortfuä= m~nner= th~n= one= wouäd= expect=

from=~n=optim~ä=decision=ruäeK==

The mroblem ptatement

aue= to= constr~ints= imposed= by= äimited= cognitive= resources= ~nd= t~sk=

environmentI=consumers=m~y=empäoy=methods=~nd=str~tegies=th~t=reduce=

efforts=they=expend=on=comput~tions=for=decision=m~kingK=o~ther=ev~äu~ting=

the=~ttributes=of=~ää=the=br~nds=in=their=consider~tion=setI=they=reäy=on=short=

cuts=to=decide=up=on=~=br~nd=for=purch~seK=eeuristics=m~y=be=good=~t=times=

when=consumers=end=up=choosing=the=m~rketer’s=br~ndI=but=the=b~d=side=of=

it= is= when= they= choose= competitor’s= br~nd= ~nd= äe~d= the= m~rketer= ~str~yK=

qhis=is=when=heuristics=infäuence=consumer’s=judgment=to=the=point=of=bi~sK=

^= m~rketer= needs= to= underst~nd= such= bi~s= whiäe= computing= future=

prob~biäities=of=br~nd=choice=~nd=m~rket=sh~reK==

qhe= recent= rese~rch= in= the= ~re~= of= psychoäogy= into= the= heuristics= ~nd=

bi~ses=th~t=consumers=use=to=simpäify=decisions=is=äikeäy=to=modify=the=strict=

utiäity=m~ximiz~tion=modeäs= th~t=one=often=~ppäy= to=c~äcuä~te= future=choice=

prob~biäitiesK==

lbjectives of ptudy

qhe=prim~ry=objective=of=this=work=is=to=deveäop=~=fr~mework=for=modeäing=

choice= beh~vior= which= is= consistent= with= the= existing= beh~vior~ä= theoriesI=

emph~sizes= ~= c~us~ä= structur~ä= formuä~tionI= m~them~tic~ääy= tr~ct~bäe= ~nd=

empiric~ääy= verifi~bäeK= qhe= study= shouäd= be= fäexibäe= enough= to= c~pture=

unobserved=heterogeneity=in=the=choice=beh~vior=stemming=from=

^K= Choice=sets=considered=by=consumersK=

_K= q~ste=v~ri~tions=~cross=consumers==

CK= ^ttitudes= ~nd= perceptions= of= consumers= since= underäying= choice=

process=h~s=~=signific~nt=psychoäogic~ä=component=

aK= aecision=protocoäs=~dopted=by=consumers=in=~rriving=~t=~=choiceK=

qo= eä~bor~te= furtherI= the= study= sh~ää= expäore= the= possibiäity= of= consumers=

using= heuristics= in= their= decision= m~king= process= of= br~nd= choiceK= qhe=

study=shouäd=heäp=to=underst~nd=the=dyn~mics=of=the=choice=procedure=~nd=

to=find=the=effects=of=these=dyn~mics=on=the=choice=modeäs=m~rketers=use=to=

predict=future=choice=prob~biäities=with=speci~ä=reference=to=cjCdK==

oecent=rese~rch=indic~te=th~t=consumers=frequentäy=do=not=h~ve=predefined=

preferences= but= inste~d= construct= their= preferences= ~s= needed= to= m~ke=

their= choiceK=qo=construct= these=preferencesI=consumers= use=~= v~riety=of=

choice= ruäesK= lne= b~sic= ruäe= is= to= ev~äu~te= ~ää= the= br~nds= in= the=

consider~tion= set= on= the= ~ctu~ä= ~ttribute= v~äue= ~nd= the= br~nd= with= the=

highest= v~äue= is= chosenK= ff= ~= consumer= oper~tes= in= this= f~shion= to= m~ke=

br~nd= choice= decisionsI= then= heLshe= is= s~id= to= be= in=~ttribute=v~äue=b~se=

mode=E^s_jFK==

then= it= comes= to= routine= purch~sesI= consumers= h~rdäy= invest= time= ~nd=

efforts= to= choose= their= br~ndsK=merh~ps=consumers= might= h~ve=ev~äu~ted=

every=br~nd=in= the=consider~tion=set=e~räier=~nd=h~ve= f~ir=experience=with=

the=br~ndX=they=then=h~rdäy=t~ke=~ny=efforts=to=reJev~äu~te=them=for=the=next=

purch~seK= Consumers= m~ke= use= of= cert~in= ruäes= to= convert= these= ~ctu~ä=

~ttribute= v~äues= to= more= psychoäogic~ääy= me~ningfuäI= better= –= defined=

ordered= v~äuesK= Choices= ~re= then= b~sed= on= these= ordered= v~äuesK=

Consumers= ~re= then= s~id= to= oper~te= in= ~= psychoäogic~ä= mode= known= ~s=

ordered=v~äue=b~se=mode=Els_jFK==

qhe= study= expäores= the= possibiäity= of= possibiäity= of= deveäoping= ~= br~nd=

choice=modeä= th~t=c~n=tr~ck=st~tistic~ääy=the=existence=of= the=psychoäogic~ä=

modes=–=^s_j=or=ls_jK=

qhe=äist=of=objectives=is=mentioned=beäowK=

NK= qo= ex~mine= the= possibiäity= of= consumers= using= heuristics= in= br~nd=

choice=in=the=cjCd=c~tegoryK=

OK= qo= ex~mine= in= which= psychoäogic~ä= mode= consumers= oper~te= –=

~ttribute= v~äue= b~se= mode= E^s_jF= or= ordered= v~äue= b~se= mode=

Els_jF=whiäe=m~king=~=decision=on=br~nd=choiceK==

PK= qo= ex~mine= the= dur~tion= for= which= ~= consumer= oper~tes= in= ~=

p~rticuä~r=psychoäogic~ä=modeK=

QK= qo=expäore= the=possibiäity=of= deveäoping=~= st~tistic~ä=modeä= th~t= c~n=

eä~bor~te=the=äogic=of=existence=of=the=psychoäogic~ä=modesK=

RK= qo= expäore= the= possibiäity= of= whether= the= st~tistic~ä= modeä= c~n=

c~äcuä~te= future= choice= prob~biäities= in= e~ch= of= the= psychoäogic~ä=

modes=–=^s_j=or=ls_j=or=bothK=

SK= qo=~dopt=~=st~tistic~ä=~ppro~ch=to=postuä~te=th~t=the=observed=choice=

beh~vior=is=the=outcome=of=~=prob~biäistic=d~t~=gener~ting=processK==

fmportance of ptudy

qhe= m~rketing= pä~n= of= ~ny= firm= st~rts= with= consumers= ~t= its= ~pexK= qhe=

psychoäogy= of= consumer= h~s= ~= direct= imp~ct= on= the= br~nd= choiceK=

rnderst~nding= consumer= psychoäogy= is= ~s= good= ~s= winning= h~äf= of= the=

competitionK=^n= insight= into=consumer’s=buying=beh~vior= is=expected= from=

the=studyK==

qhis=modeä=is=buiät=on=simpäicity=of=m~croeconomic=theoryI=~nd=incorpor~tes=

the= key= psychoäogic~ä= f~ctors= which= ende~vor= to= expä~in= ~nd= qu~ntify=

seemingäy=irr~tion~ä=or=inconsistent=beh~vior=of=consumersK=

Benefits of ptudy

qhe=study=shouäd=identify=the=v~rious=psychoäogic~ä=modes=consumers=c~n=

be=inI=whiäe=m~king=~=decision=on=br~nd=choiceK=qhe=psychoäogic~ä=modes=

identified= ~re= b~sed= on= the= use= of= cert~in= heuristics= by= consumersK= = ^=

m~rketer=c~n=underst~nd=how=consumers=t~ke=decisions=by=rem~ining=in=~=

p~rticuä~r= psychoäogic~ä= modeK= ^ccommod~ting= heuristics= ~nd= bi~ses= in=

comput~tion= of= future= prob~biäities= of= br~nd= choice= c~n= heäp= m~rketer= to=

~chieve=better=~ccur~cyK=j~rketers=c~n=design=better=m~rketing=pä~ns=~nd=

str~tegies=b~sed=on=the=knowäedge=of=heuristicsK==

The eypotheses

eMNW=Consumers=do=not=m~ke=use=of=fuää=inform~tion=they=receive=on=br~nds=

to= ev~äu~te= themK= eeuristics= ~re= uncommon= phenomenon= in= consumers=

br~nd=choice=processK=

nualitative

eNNW= Consumers= m~ke= use= of= fuää= inform~tion= they= receive= on= br~nds= to=

ev~äu~te= themK=eeuristics= ~re= common= phenomenon= in= consumers=br~nd=

choice=processK=

eMOW=eeuristics=do=not=m~ke=~ny=imp~ct=on=br~nd=choice==

eNOW=eeuristics=m~ke=imp~ct=on=br~nd=choice==

eMPW=Consumers=~re=not= in=~=psychoäogic~ä= st~te=of=^ttributes=s~äue=_~se=

jodeI=th~t=isI=they=do=not=ev~äu~te=the=~ttributes=of=the=br~nds=which=~re=in=

their=consider~tion=set=whiäe=m~king=~=br~nd=choiceK==

eNPW= Consumers= ~re= in= the= psychoäogic~ä= st~te= of= ^ttributes= s~äue= _~se=

jodeI=th~t=isI=they=ev~äu~te=the=~ttributes=of=the=br~nds=which=~re=in=their=

consider~tion=set=whiäe=m~king=~=br~nd=choiceK=

eMQW= Consumers= ~re= not= in= psychoäogic~ä= st~te= of= lrdered= s~äue= _~se=

jodeI= th~t= isI= they= do= not= put= the= br~nds= in= their= consider~tion= set= in= ~=

p~rticuä~r=order=of=their=preferences=whiäe=m~king=~=choiceK=

eNQW=Consumers=~re= in=psychoäogic~ä= st~te=of=lrdered=s~äue=_~se=jodeI=

th~t=isI=they=put=the=br~nds=in=their=consider~tion=set=in=~=p~rticuä~r=order=of=

their=preferences=~nd=then=m~ke=~=br~nd=choice=

eMRW=Consumers=~re=in=singäe=st~te=of=modeI=th~t=isI=either=in=^ttribute=s~äue=

_~se=jode=or=in=lrdered=s~äue=_~se=jode=whiäe=m~king=~=br~nd=choiceK=

eNRW=Consumers=~re= in=hybrid=st~te=of=modeI= th~t= isI= in=both= the=st~tes=of=

modes=–= ^ttribute=s~äue= _~se=jode=or=lrdered=s~äue= _~se=jode=whiäe=

m~king=~=br~nd=choiceK=

nuantitative

eMSW= cuture= prob~biäities= of= br~nd= choice= c~n= be= c~äcuä~ted= for= e~ch=

psychoäogic~ä=mode=

eNSW= cuture= prob~biäities= of= br~nd= choice= c~nnot= be= c~äcuä~ted= for= e~ch=

oesearch jethodology

rnderstanding the fssue

qhis= study= is= to= know= how= consumers= use= heuristics= in= their= decision=

process=of=br~nd=choiceK=j~ny=times=heuristics=äe~d=to=bi~s=in=the=decision=

m~king=process=of=br~nd=choice=th~t=m~y=äe~d=m~rketers=~str~yK=oese~rch=

tiää= this=d~te= indic~tes= th~t= consumersI=whiäe=m~king= ~= decision= on=br~ndI=

ev~äu~te=~ää= the=inform~tion=they=receive=on=the=~ttributes=of=~ää= the=br~nds=

they=h~ve=in=their=consider~tion=setK=_ut=beh~vior~ä=rese~rch=indic~tes=th~t=

~ää=the=inform~tion=is=not=used=in=the=ev~äu~tion=of=the=br~ndsK=curther=it=w~s=

proved= consumers= convert= these= ~ctu~ä= ~ttributes= v~äue= to= more=

psychoäogic~ääy= me~ningfuäI= better= defined= ordered= v~äuesK= qh~t= is=

consumers= put= the= br~nds= in= order= of= their= preference= with= reference= to=

some=~ttribute=sc~äeK=qhe=two=b~sic=modes=consumers=~re=s~id=to=oper~te=

whiäe= m~king= ~= br~nd= choice= ~re= termed= ~s= ^ttribute= s~äue= _~se= jode=

E^s_jF=~nd=lrdered=s~äue=_~se=jode=Els_jFK=qhe=issues=for=study=~re=

in= which= psychoäogic~ä= mode= consumers= st~y= whiäe= t~king= ~= decision= on=

br~nd= choiceK= eow= äong= the= order= of= the= br~nds= rem~in= unch~nged= ~nd=

whyI=if=the=consumer=is=oper~ting=in=the=ordered=v~äue=mode?=^re=heuristics=

responsibäe=to=keep=the=order=unch~nged=for=äong?==

^nother= import~nt= issue= is= to= find= whether= choice= prob~biäities= c~n= be=

c~äcuä~ted=for=e~ch=psychoäogic~ä=mode=~fter=~ccommod~ting=heuristics=in=

the=choice=processK=

aata Collection

mrim~ry= d~t~= on= the= purch~se= of= three= detergent= br~nds= were= coääected=

from=the=st~te=of= j~h~r~shtr~=POR=househoäds=p~rticip~ted= in= the=surveyK=

b~ch= househoäd= w~s= monitored= for= three= months= for= the= purch~se= of=

detergent=powder=of=the=three=br~ndsK=qhe=prim~ry=d~t~=were=used=for=the=

execution=of=the=br~nd=choice=modeä=which=is=deveäoped=in=this=studyK=

pecond~ry= d~t~= were= rese~rch= p~persI= m~g~zines= ~nd= reference= booksK=

qhe=foääowing=web=sites=were=used=for=the=second~ry=d~t~=coääection=

NK= ppok=Epoci~ä=pciences=oese~rch=ketworkF==

OK= teb=site=of=e~rv~rd’s=rniversity=

PK= teb=site=of=^meric~n=j~rketing=^ssoci~tion=

QK= = b_pCl=

qhe=foääowing=journ~äs=were=referred=for=the=study=

NK= qhe=gourn~ä=of=j~rketing=oese~rch=

OK= qhe=gourn~ä=of=Consumer=_eh~vior=

PK= e~rv~rd=_usiness=oeview=

QK= oese~rch= p~pers= compiäed= by= C~mbridge= rniversity= mress=

“gudgment=rnder=rncert~inty=–=eeuristics=~nd=_i~ses=

fnstrument of aata Collection

a~t~=on=purch~ses=of=detergent=br~nds=by=POR=househoäds=were=coääected=

with= the= heäp= of= ~= questionn~ireK= b~ch= househoäd= w~s= monitored= for=

detergent= purch~ses= for= three= months= which= m~kes= PxPOR= Z= VTR=

observ~tionsK= qhe= questionn~ire= comprised= of= questions= m~inäy= to= coääect=

d~t~= on= the= purch~se= of= the= br~nds= ~nd= the= price= ~t= which= they= were=

purch~sedK=ft=~äso=h~d=provisions=to=find=whether=consumers=were=exposed=

to= ~dvertisements= which= sign~äed= the= receipt= of= ~ttributes= Efe~turesF=

inform~tion=~nd=whether=the=br~nds=were=purch~sed=under=~ny=promotion=

done=either=by=the=ret~iä=outäet=or=the=comp~ny=owning=the=br~ndK=

qhe= br~nd= choice= modeä= deveäoped= is= b~sed= on= ~= utiäity= function= using=

juätinomi~ä= iogistic= oegressionK= qhree= br~nds= of= detergents= EcjCdF=

considered= for= study= ~re= purfI= ^rieä= ~nd= oinK= qhe= utiäity= function= in= the=

modeä=used=five=~ttributes=~=dummy=term=for=br~ndO=~nd=br~ndP=e~chI=price=

term= giving= the= price= in= rupeesI= ~= fe~ture= term= th~t= w~s= “N≤= when= the=

respondents=were=exposed= to=~dvertisements=of= the=br~nds=otherwise= “M≤=

w~s=~ssignedK=qhe=promotion=term=w~s=given=the=v~äue=“N≤=when=the=br~nd=

w~s=especi~ääy=promoted=~nd=“M’=when=the=br~nd=w~s=notK=

The pampling mlan

a~t~= were= coääected= from= POR= househoäds= who= were= monitored= for= their=

detergent=purch~ses=for=three=monthsK==

rniverse of ptudy

qhe=universe=of=study=w~s=the=househoäds=th~t=use=detergent=powders=~nd=

those=who=h~ve=purch~sed=the=three=br~nds=in=the=ä~st=three=monthsK==

pampling crame

qhe=s~mpäing=fr~me=consists=of=the=househoäds=who=purch~sed=N=kg=p~ck=

of=~ny=of=the=three=br~nds=of=detergents=in=the=ä~st=three=monthsK=

marameters for Choosing the pample

qhe=respondents=were=middäe=income=äiter~tes=who=h~ve=purch~sed=~ny=of=

the=three=br~nds=in=previous=three=months=from=the=d~te=of=the=visit=

pample pize

qhe=s~mpäe=size=c~äcuä~ted=is=three=hundred=~nd=twenty=five=househoädsK=

p~mpäe=size=is=determined=~s=foääows=

= = = p=Z=xzO=EpEN=–=pFFz=L=eO=

cor=VRB=äeveä=of=signific~nce=z=Z=NKVS=

mroportion=of=popuä~tion=to=be=s~mpäed=Z=PMB=Z=MKP=

e=Z=the=proportion=of=error=Z=RB=Z=MKMR=

= = = p=Z=xNKVSO=EMKPEN=–=MKPFFz=L=EMKMRFO=

= = = ===Z=POOKSV=rounded=off=to=POR=

The pample

prK no kame of mlace koK of households

participated

N= _eed= OR=

O= m~rbh~ni= OR=

P= hoäph~pur= OR=

Q= phoä~pur= OR=

R= ^ur~ng~b~d= OR=

S= ^mr~v~ti= OR=

T= mune= OR=

U= jumb~i= TR=

V= k~gpur= OR=

NM= qh~ne= OR=

NN= i~tur= OR=

= Total POR

Table N pampling plan for data collection

ptatistical Tools

qhe= b~sis= for= deveäoping= the= st~tistic~ä= br~nd= choice= modeä= is= the= utiäity=

function=b~sed=on=juätinomi~ä=iogistic=oegressionK=qhe=foääowing=st~tistic~ä=

functions= ~re= used= in= the= deveäopment= of= the= four= moduäes= of= the= br~nd=

choice=modeäK==

juätiv~ri~te=korm~ä=aistribution=

C~tegoric~ä=aistribution=

tish~rt=aistribution=

airichäet=aitribution=

pignum=function==

poftware

qhe= four= moduäes= of= the= br~nd= choice= modeä= were= converted= into= ~=

softw~re= code= ~nd= executed= in= tin_rdpK= tin_rdp= is= softw~re= which=

st~nds=for=tindow’s=sersion=for=_~yesi~n=fnference=rsing=dibbs=p~mpäingK==

The Brand Choice jodel

aefinition of ptatistical jodel

lne= of= the= import~nt= steps= in= st~tistic~ä= science= is= the= construction= of=

prob~biäistic= modeä= th~t= represent= or= sufficientäy= ~pproxim~teI= the= true=

gener~ting=mech~nism=of=~=phenomenon=under=studyK=qhe=construction=of=

such=modeä=is=b~sed=on=prob~biäistic=~nd=äogic~ä=~rguments=concerning=the=

n~ture=~nd=function=of=~=given=phenomenonK==

iet=us=~ssume=th~t=~=r~ndom=v~ri~bäe=vI=c~ääed=the=responseI=which=foääows=

~=prob~biäistic=ruäe=with=prob~biäity=function=fEy|θFI=where=θ=is=the=p~r~meter=

vectorK= Consider= ~n= independentI= identic~ääy= distributed= EiKiKdF= s~mpäe= y= Z=

xyNI=yOI=…=ynzq=of=size=n=of=this=v~ri~bäeX=where=^q=denotes=the=tr~nspose=of=

~=vector=or=m~trix=^K=the=joint=distribution== = = = =

= = = =

fEy|θF=Z=Π=fEyi|θF=

is=c~ääed=the=äikeäihood=of=the=modeä=~nd=cont~ins=the=~v~iä~bäe=inform~tion=

provided=by=the=observed=s~mpäeK==

rsu~ääy= modeäs= ~re= constructed= in= order= to= ~ssess= or= interpret= c~us~ä=

reä~tionships=between= the=response=v~ri~bäe=v=~nd=v~rious=ch~r~cteristics=

expressed=~s=v~ri~bäes=ujI= j=Є=sI= c~ääed= the=cov~ri~tes=or= the=expä~n~tory=

v~ri~bäesX=j=indic~tes=~=cov~ri~te=or=~=modeä=term=~nd=s=indic~tes=the=set=of=

~ää=the=terms=under=consider~tionK=fn=such=c~sesI=the=expä~n~tory=v~ri~bäes=

~re=äinked=with=the=response=v~ri~bäes=vi~=~=deterministic=function=~nd=p~rt=

of= the= origin~ä= p~r~meter= vector= is= substituted= by= ~n= ~ätern~tive= set= of=

p~r~meters= denoted= by= β= th~t= usu~ääy= enc~psuä~tes= the= effect= of= e~ch=

cov~ri~te= on= the= response= v~ri~bäeK= cor= ex~mpäe= in= ~= norm~ä= regression=

modeä=with=y=~=kEXβ,σOf=F=the=p~r~meter=vector=is=given=by=θq=Z=xβqI=σOz==

The cour jodules of Brand Choice jodel

qhe=modeä=deveäoped=in=this=study=~ccommod~tes=the=use=of=heuristics=by=

the= consumers= in= their= decisions= on= br~nd= choiceK= cour= psychoäogic~ä=

st~tes=~re= identified= in=this=studyK=^=consumer= is=expected=to=be=in=one=of=

the=psychoäogic~ä=st~te=whiäe=t~king=~=decision=on=br~nd=choiceK=qhe=modeä=

incorpor~tes=st~tistic~ä= expression= for=e~ch=psychoäogic~ä= st~teK=qhe=b~sis=

of=~n~äysis= is=muätinomi~ä= äogistic= regressionI=p~r~meters=of= e~ch= moduäe=

~re= c~äcuä~ted= which= proves= the= äogic= of= the= psychoäogic~ä= mode=

st~tistic~ääyK==

qhe=four=psychoäogic~ä=modes=identified=~re==

NK= ^ttribute=s~äue=_~se=jode=E^s_jF=

OK= lrdered=s~äue=_~se=jode=Els_jF=

PK= au~ä=jode=EeybridF=–=qime=fnv~ri~nt==

QK= au~ä=jode=EeybridF=–=qime=s~ri~nt=

Attribute salue Base jode

oecent=rese~rch=indic~te=th~t=consumers=frequentäy=do=not=h~ve=predefined=

preferences= but= inste~d= construct= their= preferences= ~s= needed= to= m~ke=

their= choiceK=qo=construct= these=preferencesI=consumers= use=~= v~riety=of=

choice= ruäesK= lne= b~sic= ruäe= is= to= ev~äu~te= ~ää= the= br~nds= in= the=

consider~tion= set= on= the= ~ctu~ä= ~ttribute= v~äue= ~nd= the= br~nd= with= the=

highest= v~äue= is= chosenK= qhe= consumer= is= s~id= to= oper~te= in= the=

psychoäogic~ä= mode= c~ääed= the= ~ttribute= v~äue= b~se= mode= E^s_jFK= qhe=

moduäe= deveäoped= for= this= psychoäogic~ä= mode= is= pureäy= b~sed= on= the=

muätinomi~ä= äogistic= regressionK= ouäes= used= by= the= consumers= use= ~ctu~ä=

~ttribute= v~äues= ~s= inputsK= _ut= such= ruäes= require= the= consumer= to= use=

weighted=~dditive=ruäe=th~t=considers=the=~ctu~ä=v~äues=of=~ää=the=~ätern~tives=

on=~ää=the=reäev~nt=~ttributesK==

rsing=such=weighted=~dditive= ruäe=~ägorithm= to=ev~äu~te= routine=br~nds=of=

cjCd= is= too=big=~= t~sk= for=hum~n=memory=even= for=simpäe=products=~nd=

even= when= fuää= inform~tion= is= ~v~iä~bäeK= qhis= gives= w~y= to= find= how= ~=

consumerI=thenI=m~kes=~=br~nd=choiceK=qhe=~nswer=to=this=ä~ys=in=the=next=

psychoäogic~ä= mode= the= ordered= v~äue= b~se= mode= which= is= described=

beäowK=

lrdered salue Base jode

then= it= comes= to= routine= purch~sesI= consumers= h~rdäy= invest= time= ~nd=

efforts= to= choose= their= br~ndsK=merh~ps=consumers= might= h~ve=ev~äu~ted=

every= br~nd= in= the= consider~tion= set= e~räierX= they= then= h~rdäy= t~ke= ~ny=

efforts=to=reJev~äu~te=them=for=the=next=purch~seK=Consumers=m~ke=use=of=

cert~in= ruäes= to= convert= these= ~ctu~ä= ~ttribute= v~äues= to= more=

psychoäogic~ääy= me~ningfuäI= better= –= defined=ordered= v~äuesK= Choices= ~re=

then=b~sed=on=these=ordered=v~äuesK=Consumers=~re=then=s~id=to=oper~te=

in=~=psychoäogic~ä=mode=known=~s=ordered=v~äue=b~se=mode=Els_jFK=

qhe= order=of= preference=of= the=br~nds=sh~ää= rem~in= the=s~me=~s= äong= ~s=

products’= reä~tive= positions= ~äong= ~ttributes= ~re= preservedK= qo= st~tistic~ä=

expression= for= the=ls_j=mode=uses= the=expression=of=^s_j=but=with=~=

differenceK=pignum=function= is=used=for=sign~äing=~=ch~nge=in= the=order=of=

the= br~ndK= fn= this= modeä= ~ny= ch~nge= th~t= preserves= the= ordering= of=

products’=v~äues=~äong=the=~ttribute=äe~ves=signum=function=unch~ngedK=

qhe= ls_j= st~te= of= psychoäogy= is= dependent= on= the= ^s_jK= Consumers=

c~n=switch=between=modes=whiäe=m~king=~=decision=on=br~nd=choiceK=qh~t=

is= their= psychoäogy= c~n= be= in= both= the= st~te= of= modes= ~nd= they= keep=

switching=from=one=mode=to=~nother=depending=upon=the=ch~nges=th~t=t~ke=

pä~ce= in= the= ~ttribute= v~äuesK= qhe= mode= th~t= ~ccommod~tes= both= ^s_j=

~nd=ls_j=is=termed=~s=du~ä=modeK=au~ä=mode=c~n=be=either=time=v~ri~nt=

or=time=inv~ri~ntK=_oth=these=~re=described=beäowK=

aual jode – Time fnvariant

ff=~=consumer=oper~tes=in=^s_j=on=one=occ~sionI=the=consumer=oper~tes=

in=^s_j=on=~ää=the=occ~sionsK==

aual jode – Time sariant

qhe=consumer=switches=from=one=mode=to=~nother=whiäe=m~king=~=decision=

on=br~nd=choice=depending=upon=the=product=c~tegoryK==

qhe= four= moduäes= of= the= st~tistic~ä= modeä= were= converted= into= softw~re=

codes= ~nd= executed= in= tin_rdp= to= c~äcuä~te= the= p~r~meters= of= e~ch=

moduäeK= tin_rdp= uses= _~yesi~n= inference= ~nd= j~rkov= Ch~in= jonte=

C~räo= method= EjCjCF= for= the= c~äcuä~tion= of= p~r~meters= of= the= moduäesK= =

qo=find=the=~ccur~cy=of=p~r~metersI=jCjC=w~s=run=~nd=the=convergence=

of=d~t~=w~s=~ssessedK=qhe=first=NMIMMM=dr~ws=were=disc~rded=~nd=the=next=

NMIMMM=dr~ws=were=used=to=~ssess=convergence=~nd=to=m~ke=inferenceK==

cindings

NK eypothesis eMS C eNS

qhe= four= moduäes= n~meäy= ^s_jI= ls_jI= au~ä= jodeä= –= qime=

fnv~ri~nt= ~nd= au~ä= jode= –= qime= s~ri~nt= were= estim~ted= using=

tin_rdp= progr~mming= in= the= detergent= c~tegory= of= N= kg=

p~ck~gingK= m~neä= d~t~= w~s= coääected= through= ~= survey= from= POR=

househoäds=who=coääectiveäy=m~de=VTR=purch~ses=in=~=sp~n=of=three=

monthsK=qhe= three=br~nds=considered=for=d~t~=coääection=were=purfI=

^rieä=C=oinK=qhe=utiäity=function=in=the=modeä=used=five=~ttributes=–=~=

dummy=term=for=br~ndO=~nd=br~ndP=e~chI=price=term=giving=the=price=

in=rupeesI=~=“fe~ture’=term=th~t=w~s=“N≤=when=the=respondents=were=

exposed= to= the= ~dvertisementI= otherwise= ~= “M≤= w~s= ~ssignedI= the=

promotion= term= t~king= v~äues= “N≤= or= “M≤= when= the= product= w~s=

speci~ääy= promotedLnot= promotedK= qhe= tin_rdp= code= w~s=

executed=by= the= softw~re=~nd= the=bet~=coefficients= Ep~r~metersF=of=

the= moduäes= were= c~äcuä~tedK= qhe= c~äcuä~tion= of= the= p~r~meters=

proves= th~t= consumer= c~n= be= in= one= of= the= four= st~tes= ^s_jI=

ls_jI=au~ä=jode=–=qime=fnv~ri~nt=or=au~ä=jode=qime=s~ri~ntK=cor=

moduäes= with= onäy= ^s_j= ~nd= ls_jI= five= p~r~meters= for= μ= ~re=

estim~ted= for= e~ch= ~nd= for= hybrid= modeäsI= both= time= inv~ri~nt= ~nd=

time=v~ri~ntI=ten=p~r~meters=~re=estim~ted=for=e~chK=jCjC=w~s=run=

in=tin_rdp=~nd=the=convergence=of=the=d~t~=w~s=~ssessedK==

ioading fnitial salues=

fniti~ä= v~äues=~re=provided= to= the=progr~m=for= the=execution=of= the=jCjC=

~ägorithmK=cor=this=choice=modeäI=initi~ä=v~äues=~re=gener~ted=by=tin_rdpK=

Burn-in mrocess

qhis=process=is= initi~ted=in=order=to=eäimin~te=the=first=_=iter~tions=from=the=

s~mpäe= to=~void= the= infäuence=of= the= initi~ä= v~äuesK=qhe= first=NMIMMM=dr~ws=

~re= disc~rded= to= ~void= this= infäuence= ~nd= the= next= NMIMMM= dr~ws= ~re=

considered=for=further=~n~äysisK==

Convergence of aata

qhis=refers=to=situ~tion=where=the=jCjC=~ägorithm=re~ches=its=equiäibrium=

~nd= gener~tes= v~äues= from= the= desired= t~rget= distributionK= qhe= notion= of=

equiäibrium=distribution=is=reä~ted=to=j~rkov=Ch~in=used=to=construct=jCjCK=

ff= the=~ägorithm=re~ches=the=equiäibrium=st~geI=then=the=gener~ted=s~mpäe=

comes= from= the= t~rget= distribution= ~nd= the= d~t~= ~re= s~id= to= converge=

s~tisf~ctoriäyK= eence= monitoring= the= convergence= of= the= ~ägorithm= is=

essenti~ä= for= producing= resuäts= from= the= posterior= distribution= of= interestK=

qr~ce= päot= is= one= w~y= of= monitoring= the= convergence= which= ~re= päots= of=

iter~tion= versus= the= gener~ted= v~äuesK= ff= ~ää= the= v~äues= ~re= within= ~= zone=

without= strong= periodicities= ~nd= tendenciesI= then= one= c~n= ~ssume=

s~tisf~ctory=convergenceK==

qr~ce= päots= of= the= p~r~meters= of= ~ää= the= four= moduäes= dispä~yed= beäow=

reve~ä= th~t= convergence= for= e~ch= is= s~tisf~ctory= ~nd= the= resuäts= c~n= be=

~cceptedK==

qhe=m~r~meters=of=the=jodeä=

AsBj jodule

marameters of the jodule

_r~ndO= = Z=MKMPMMP=

_r~ndP= = Z=MKNVPVP=

mrice = = = Z=JMKMPSQN=

ce~ture= = = Z=MKMMQQV=

mromotion== Z=MKNTMOM=

^fter= running= jCjC= ~nd= conducting= burnJin= processI= the= tr~ce= päots=

indic~te=th~t=the=convergence=of=the=d~t~=is=s~tisf~ctory=~nd=~ccept~bäeK=

lsBj jodule

The parameters of the lsBj module

_r~ndO= = Z=JMKMPT=

_r~ndP= = Z=MKMTV=

mrice = = = Z=JMKMVM=

ce~ture= = = Z=JMKNNN=

mromotion== Z=JMKMRN=

aual jode – Time fnvariant jodule

Attribute Coefficients

_r~ndO= = Z=JMKMNTMN=

_r~ndP= = Z==MKMNOPS=

mrice === = Z=JMKPTNU=

ce~ture== = Z=JMKMVMPO=

mromotion= = = Z==MKMPQNR=

lrdered Coefficients

_r~ndO= = =Z==MKMQPV=

_r~ndP= = Z=JMKRMUO=

mrice === = Z==NKOO=

ce~ture== = Z=JMKPMSO=

mromotion= = = Z=JMKMTQV=

aual jode – Time sariant jodule

_r~ndO= = Z==MKONVS=

_r~ndP= = Z==MKPTMN=

mrice === = Z==MKNPOV=

ce~ture== = Z=JMKNNQQ=

mromotion= = = Z=JMKRNQQ=

_r~ndO= = Z==MKNMUO=

_r~ndP= = Z==MKQURV=

mrice === = Z=JMKPVTP=

ce~ture== = Z==MKOSUP=

mromotion= = = Z=JMKNQQN=

OK= qhe=study=tries=to=find=in=which=mode=–=^s_j=or=ls_jI=consumers=

~re=in=whiäe=m~king=~=decision=on=br~nd=choiceK=^n~äysis=of=au~ä=

jode=modeä=reve~äs=th~t=RRKOUB=of=the=househoäds=m~de=their=

br~nd=choice=by=rem~ining=in=ls_j=mode=Erefer=t~bäe=^WPWP=in=

~nnexureF=

PK eypothesis eMN C eNN

qhe= study= reve~äs= th~t= consumers= do= not= m~ke= use= of= fuää=

inform~tion= they= receive= on= every= br~nd= they= h~ve= in= their=

consider~tion=setK=fnste~d=they=m~ke=use=of=short=cuts=to=~rrive=~t=~=

decisionK=

QK eypothesis eMO C eNO

aue= to= the=constr~ints= imposed=by=cognitive=resourcesI=consumers=

~dopt= heuristics= to= ~rrive= ~t= ~= decision= on= br~nd= choiceK= rse= of=

heuristics=m~y= induce=~=bi~s= in= the=decision=of= the= consumerK= qhe=

kind= of= heuristics= used= by= consumer= depends= up= on= hisLher=

demogr~phic= ~nd= psychogr~phic= ch~r~cteristicsK= qhe= finding= is=

heuristics=does=h~ve=imp~ct=on=the=decisions=of=consumersK=

RK eypothesis eMP C eNPI eMQ C eNQ

Consumers= receive= d~t~= on= the= br~nds= th~t= ~re= present= in= their=

consider~tion= set= through= experienceI= ~dvertisements= ~nd= t~äk=

f~ctorK=qhe=d~t~=~re=then=stored=in=the=äong=term=memoryK=fn=order=to=

use=this=d~t~=stored=in=the=äong=term=memoryI=it=shouäd=be=retrieved=

~nd=brought= into= the=short= term=memory=where= it= is=processed=~nd=

converted=into=inform~tionK=_ut=the=short=term=memory=c~n=store=onäy=

T=H=or=–=O=chunks=of=d~t~=which=puts=~=restriction=on=the=inform~tion=

processing=~nd=us~geK=Consumers=do=ev~äu~te=the=~ttributes=of=the=

br~ndsI=but= inste~d=of=storing=huge=~mount=of= inform~tion=on=e~ch=

~ttribute= of= e~ch= br~ndI= they= put= the= br~nds= in= the= order= of= their=

preference=~äong=with= the= ~ttributes=sc~äeK= Consumers= refer= to= this=

order=whiäe=m~king=~=decision=on=br~nd=choiceK=

SK eypothesis eMR C eNR

Consumers= ~re= found= to= be= in= du~ä= st~te= of= mode= whiäe= m~king= ~=

br~nd= choiceK= qh~t= isI= consumers= oper~te= in= both= the= modes= –=

^s_j=~nd=lsj_=~t= the=s~me=point= in= time=whiäe=m~king=~=br~nd=

choiceK=qhe=hybrid= or= the= du~ä= mode= is=either= time= inv~ri~nt=which=

me~ns= if= ~= consumer= is= in= ~= p~rticuä~r= st~te= of= mode= E^s_j= or=

ls_jF=he=continues=to=rem~in=in=th~t=mode=for=~=äong=period=of=time=

or= time= v~ri~nt= which= me~ns= the= consumer= switches= between= the=

modes= occ~sion~ääyK= qhe= existence= of= the= du~ä= mode= is= ~äso=

st~tistic~ääy=tr~ct~bäe=through=the=_r~nd=Choice=jodeäK=

iimitations of ptudy

NK=qhe=study=considers=onäy= the=br~nd=choice=decision=~nd=ignores=

the= other= ~spects= of= buying= beh~viorK= ft= is= not= cäe~r= how= ordered=

v~äue=processing=~ffects= these=other=decisionsK=curther= rese~rch= is=

necess~ry=to=investig~te=thisK=

OK=qhe=modeä=~ääows=for=onäy=m~in=effects=of=price=~nd=other=predictor=

termsK=qhere=~re=other= v~ri~bäes= Ewhich= ~re= ignored= in= this= studyFI=

such=~s= purch~se= incidenceI= qu~ntity= decisions=etc= in= the= situ~tion=

th~t=m~y=~ffect=br~nd=choiceK=

PK= jore= rese~rch= is= necess~ry= to= specify= the= f~ctors= th~t= c~use=

consumers= to= b~se= their= choice= on= ~ttribute= versus= ordered= v~äue=

inform~tionK= j~rketing= mix= f~ctors= ~nd= consumer= specific= f~ctors=

wouäd= be= expected= to= infäuence= consumers’= use= of= ~ttribute=

inform~tionK=cor=ex~mpäeI=m~rketing=communic~tions=th~t=fix~tes=on=

specific=~ttribute=v~äues=r~ther= th~n=~ttribute= import~nce=might= äe~d=

consumers=to=focus=on=products’=~ctu~ä=r~ther=th~n=ordered=v~äuesK=

pignific~nt= price= v~ri~tions= might= äe~d= consumers= to= focus= on=

product’s=~ttribute=v~äuesK==

cuture pcope for oesearch

NK= qhis= study= focuses= on= the= äogic~ä= execution=of= the= four= moduäes= of=

the=br~nd=choice=modeä=~nd=c~äcuä~tes=the=bet~=coefficients=of=~ää=the=

moduäesK= qhese= bet~= coefficients= c~n= be= used= to= c~äcuä~te= the=

prob~biäity=of=the=next=purch~se=of=the=househoädK=ft=m~y=be=possibäe=

to= forec~st=m~rket= sh~re=of=~=p~rticuä~r=br~nd= Eof= the= three=br~nds=

considered=in=the=exerciseF=by=differing=the=price=äeveäsK=

OK= ft=is=possibäe=to=c~äcuä~te=the=aevi~nceL^k~ikeL_~yesi~n=fnform~tion=

Criterion=to=find=which=moduäe=is=h~ving=the=best=fitK==

PK = ft =m~y =be =possibäe =to =c~äcuä~te =which =modeI =^s_j =or =ls_jI =is =

more=prev~äent=in=consumer=psychoäogyK=qh~t=isI=it=m~y=be=possibäe=

to=c~äcuä~te=prev~äence=index=by=tin_rdp=softw~reK==

QK= curther= rese~rch= is= required= to= underst~nd= the= effects= of= other=

v~ri~bäes=such=~s=purch~se= incidenceI=qu~ntity=decision=etc=on= the=

br~nd=choice=modeä=

Chapter N

fntroduction

NWN=fntroduction=

NWO=eeuristics=–=th~t=it=is?=

NWP=_r~nd=Choice=–=aefinition=

NWQ=c~ctors=fnfäuencing=the=rse=of=eeuristics=

NWR=qhe=pt~tistic~ä=jodeä=for=_r~nd=Choice=

NWS=jodeä=bxecution=

Chapter N

fntroduction =

NWN The lverview

jicroeconomic= theory= concentr~tes= on= the= choice= process= by=

postuä~ting= th~t= consumer= is= ~n= optimizing= bä~ck= boxK= qhus= the=

underäying= decision= protocoä= ~ssumed= is= th~t= consumer= chooses= ~n=

~ätern~tive=which=m~ximizes=hisLher=utiäity=or=weääJbeingK=qhe=~ttributes=

of= different= ~ätern~tivesI= individu~ä= ch~r~cteristicsI= p~st= experienceI=

~mbient= inform~tion=~nd=situ~tion~ä=constr~ints=~re=inputs= to=the=bä~ck=

boxI=whiäe=the=observed=choice=is=the=outputK=qhe=oper~tion~äiz~tion=of=

the= m~croeconomic= choice= theory= reäies= he~viäy= on= the= individu~ä’s=

preferences= tow~rds= ~ätern~tives= ~s= eäicited= in= the= ~ctu~ä= m~rket=

environmentI= usu~ääy= referred= to= ~s= reve~äed= preferencesK= curther= it=

~ssumes= th~t= consumers= h~ve= perfect= inform~tion= ~bout= ~v~iä~bäe=

~ätern~tives=~nd=their=~ttributesK=_ut= in=re~äityI=~=consumer=h~s= äimited=

prior= inform~tion= ~bout= consumption= opportunities= ~nd= inform~tion=

processing= c~p~biäitiesK= qhe= consumer’s= preferences= to= different=

~ätern~tives= m~y= cont~in= r~ndom= components= m~inäy= due= to= the=

in~biäity=of= the= rese~rcher= to=me~sure= ~ää= the= inputs= preciseäyK=po= the=

theory= is= oper~tion~äized= by= äinking= the= r~ndom= preference= to= the=

choice= prob~biäities= through= ~= p~r~meterized= st~tistic~ä= modeäK=

bssenti~ääy=the=modeä=äinks=directäy=the=observed=inputs=to=the=observed=

outputI= ~nd= modeä= p~r~meters= ~re= then= estim~ted= through= st~tistic~ä=

proceduresK=

Cognitive=~nd=beh~vior~ä=scientists=focus=on=the=subst~ntive=theoretic~ä=

~spects= which= guide= the= re~ä= woräd= choice= processK= cor= the= ä~st= four=

dec~des= the= beh~vior~ä= scientists= h~ve= been= ~rguing= th~t= the=

m~croeconomic= theory= is= not= ~n= ~ccur~te= description= of= how=

consumers=m~ke=decisionsK=

h~hnem~n= ~nd= pneää= noted= the= v~gueness= of= the= concept= of= utiäity=

theory= ~nd= ~rgued= th~t= ~= distinction= shouäd= be= m~de= between=

experience=utiäity=Es~tisf~ction=from=the=use=of=~n=~ätern~tiveFI=predicted=

utiäity= E~nticip~ted= ~nd= expected= s~tisf~ction= from= the= use= of= ~n=

~ätern~tiveF= ~nd= decision= utiäity= Ethe= weight= ~ctu~ääy= given= to= ~n=

~ätern~tive=when=choosingFK=curtherI=soci~ä=psychoäogists=contend= th~t=

soci~ä= motives= ~nd= pressures= m~y= sometime= be= ~s= import~nt=

determin~nts= of= choice= ~s= consumer’s= egoistic= motivesK= msychoäogist=

~rgues= th~t= ~ssumption= of= the= perfect= inform~tion= underäying=

m~croeconomic= theory= is= r~reäy= justifiedK= curthermore= the= bounded=

r~tion~ä= principäe= of= pimon= ENVRRF= exempäifies= the= f~ct= th~t= the= errors=

consumers= gener~te= in= ~cquiring= ~nd= processing= inform~tion= before=

m~king=choices=~re=system~ticK=

qhe= conceptu~äiz~tion= of= cognitive= psychoäogists= ~nd= beh~vior~ä=

scientists=~re=b~sed=on=the=foääowing=key=fe~turesW=

NK= fndividu~äs= h~ve= äimited= inform~tion= ~cquisition= ~nd= processing=

c~p~biäities=which=v~ryK=

OK= mrior= experiences= ~ffect= the= choice= process= ~s= consumers=

gener~teLupd~te= perceptions= ~bout= ~ätern~tives= ~nd= their=

~ttributesK=

PK= fndividu~äs=~dopt=different=heuristics=decision=ruäes=contingent=on=

time=pressureI=inform~tion=~v~iä~biäity=~nd=reäi~biäityK=

QK= qhe= soci~äI= economic= ~nd= poäitic~ä= environment= in= conjunction=

with= consumer’s= ch~r~cteristics= conditionsI= consumer’s=

~ttitudesI= v~äues= ~nd= opinions= ~nd= orient~tion= tow~rds= workI=

äeisureI= consumption= p~tternsI= ~ctivities= pursuedI= which= in= turn=

~ffect=the=choice=processK=

fn= the= e~räy= NVTM’sI= qversky= ~nd= h~hnem~n= described= ~= rese~rch=

orient~tion= which= h~s= domin~ted= the= judgment= ~nd= decision= m~king=

äiter~ture=ever=sinceK=qhey=~rgued=th~t=hum~ns=m~ke=use=of=cognitive=

heuristics= which= reduce= the= compäexity= of= m~king= prob~biäistic=

judgmentsK= fn= gener~ä= these= heuristics= ~re= quite= usefuäI= but= m~ny= ~=

times= they= äe~d= to= severe= ~nd= system~tic= errorsK= qversky= ~nd=

h~hnem~n=deveäoped=numerous=demonstr~tions=in=which=the=subjects’=

beh~vior= devi~ted= from= norm~tive= st~nd~rdsK= fn= recent= ye~rsI= ~n=

extensive= ~nd= oftenJcited= äiter~ture= h~s= deveäoped= ~round= heuristics=

~nd=bi~sesK=

h~hnem~n= ~nd= qversky’s= rese~rch= h~s= resuäted= in= ~= theory= th~t=

provides= ~= system~tic= expä~n~tion= for= some= of= the= most= puzzäing=

~spects= of= hum~n= beh~viorI= ~nd= spe~rhe~ded= the= growth= of= ~= new=

discipäine= of= science= devoted= to= the= beh~vior~ä= ~spects= of= decision=

m~kingK= h~hnem~n= ~nd= qversky’s= work= h~s= begun= to= ~ttr~ct= the=

~ttention= of= wider= ~udience= –= doctorsI= ä~wyersI= businessI= m~rketers=

~nd= poäitici~ns= who= sees= ~ppäic~tion= for= it= in= choosing= ther~piesI=

devising= äeg~ä= ~rguments= ~nd= corpor~te= str~tegiesI= ~nd= even=

conducting=foreign=~ff~irsK==

NWO eeuristics – what it is?

NWOWN aefinition of eeuristics

pimon= ENVVOFI= the= f~ther= of= heuristics= rese~rch= in= judgment= ~nd=

decision= m~king= defines= heuristics= ~s= “methods= of= ~rriving= ~t=

s~tisf~ctory= soäutions= with= modest= ~mounts= of= comput~tions≤I=

suggesting= th~t= peopäe= seek= to= reduce= the= efforts= ~ssoci~ted= with=

decision=m~king=processK=Consumers=~dopt=short=cuts=in=their=decision=

m~king= process= of= br~nd= choiceK= qhey= ~re= methods= of= soäving=

probäems= or= situ~tions= where= no= formuä~s= existK= eeuristics= therefore=

c~n= be= referred= to= ~s= methods= th~t= use= principäes= of= effort= reduction=

~nd= simpäific~tionK= _y= definitionI= heuristics= must= ~ääow= consumers= to=

process= inform~tion= in=~= äess=effortfuä=m~nner= th~n=one= wouäd=expect=

from=~n=optim~ä=decision=ruäeK==

h~hnem~n=~nd=qversky=h~ve=identified=three=cognitive=heuristics=used=

in=decision=m~king=which=~re=described=beäowK=

NWOWO oepresentativeness

then= using= represent~tivenessI= the= hum~n= decision= m~ker= decides=

prob~biäity=b~sed=on=the=degree=to=which=one=group=is=represent~tive=of=

~notherK=qhis=~ppro~ch=c~n=äe~d=to=errors=bec~use=represent~tiveness=

is=not=infäuenced=by=prob~biäityK==

oepresent~tiveness=c~n=express=itseäf=through=muätipäe=bi~sesW==

·= fnsensitivity= to=p~mple=pizeW=qhe=s~mpäe=size=wiää=not=~ffect=the=

~biäity= of= hum~ns= to= judge= the= represent~tiveness= of= ~= s~mpäe=

from= the= popuä~tionK= qhis= runs= in= contr~st= to= s~mpäing= theory=

which=s~ys= th~t=~= ä~rger=s~mpäe=size=is= äess=äikeäy= to=str~y=from=

the=me~nK==

·= Ch~nceW= eum~ns= view= ch~nce= ~s= ~= seäfJcorrecting= process= in=

which= one= outcome= wiää= be= the= opposite= of= ~= previous= one= in=

order=to=reg~in=b~ä~nceK==

·= fllusion= of= s~lidityW= qhis= bi~s= produces= ~n= unjustifi~bäe=

confidence=in=the=reä~ted=decisionK=qhis=unjustifi~bäe=confidence=

is= cre~ted= by= ~= good= fit= between= input= inform~tion= ~nd= the=

predicted=outcomeK==

·= jisconceptions= of= oegressionW= qhe= hum~n= beäieves= th~t= ~=

predicted= outcome= shouäd= be= represent~tive= of= the= inputK= qhis=

runs=in=contr~st=to=regression=tow~rds=the=me~nI=which=s~ys=th~t=

eventsI=over=timeI=wiää=regress=tow~rds=the=me~nK==

oepresent~tiveness= refers= to= m~king= ~n= uncert~inty= judgment= on= the=

b~sis= of= the= degree= to= which= it= is= EiF= which= is= simiä~r= in= essenti~ä=

properties=to=its=p~rent=popuä~tion=~nd=EiiF=refäects=the=s~äient=fe~tures=of=

the=process=by=which=it=is=gener~tedK==

NWOWP Availability

^v~iä~biäity=is=used=to=estim~te=frequency=or=prob~biäity=by=the=e~se=with=

which= inst~nces= or= ~ssoci~tions= come= to= mindK= fn= contr~st= to=

represent~tiveness= which= invoäves= ~ssessments= of= simiä~rity= or=

connot~tive= dist~nceI= ~v~iä~biäity= refäects= ~ssessment= of= ~ssoci~tive=

dist~nceK= ^v~iä~biäity= h~s= been= reported= to= be= infäuenced= by=

im~gin~biäityI= f~miäi~rity= ~nd= vividnessI= ~nd= h~s= been= reported= by=

evidence=of=stereotype=~nd=scen~rio=thinkingK=

^v~iä~biäity= is=~=usefuä= heuristic=when= the=hum~n=needs= to=~ssess= the=

prob~biäity=of=~n=event=or=even=the=frequency=of=~=cä~ss=by=how=e~siäy=

the= occurrences= c~n= be= brought= to= mindK= qhe= ~v~iä~biäity= heuristic=

c~uses=the=decision=m~ker=to=seäect=the=hypothesis=th~t=is=most=re~diäy=

~v~iä~bäe=in=memory=r~ther=th~n=the=one=th~t=is=the=most=äikeäy=Eeuey=C=

tickensI=NVVPFK==

cour= bi~ses=~re=~ssoci~ted=with= this=heuristic= Eqversky=C= h~hnem~nI=

OMMMFW==

·= oetriev~bility=of= fnst~ncesW=Cä~sses=with=inst~nces=th~t=come=to=

mind=e~siäy=~re=judged=by=the=hum~n=to=be=more=numerous=th~n=

othersK==

·= bffectiveness= of= pe~rch= petW= then= ~= se~rch= for= one= cä~ss= is=

e~sier=th~n=th~t=for=~notherI= it=bi~ses=the=hum~n=who=therefore=

tends=to=erroneousäy=judge=the=cä~ss=to=be=more=frequentK==

·= fllusory=Correl~tionW=qhis=bi~s=c~uses=the=hum~n=to=overestim~te=

the= coJoccurrence= of= eventLobjects= due= to= the= strength= of= the=

perceived=~ssoci~tion=between=the=twoK==

·= fm~gin~bilityW= qhis= bi~s= ~ffects= how= the= hum~n= ~ssesses= the=

frequency= of= something= b~sed= on= ~= given= ruäeK= qhis= pä~ys= ~=

ä~rge=roäe=in=the=ev~äu~tion=of=prob~biäities=in=re~äJäife=situ~tionsK==

^v~iä~biäity=bi~ses=~re=~mpäified=when=decision=m~kers=oper~te=under=

stress=due=to=the=effects=of=noiseI=d~ngerI=~nd=time=pressureK=ptress=is=

~äso=~=c~use=of=perceptu~ä= tunneäing=which=occurs=when= the=decision=

m~ker= focuses=on= the=most=subjectiveäy= import~nt= inform~tion=sourceI=

which=m~y=not=h~ve=~=direct=correä~tion=with=its=true=reäi~biäity=Eeuey=C=

tickensI=NVVPFK=

NWOWQ Anchoring –and-Adjustment

^nchoring=~nd=~djustment=invoäves=st~rting=from=~n=initi~ä=v~äue=th~t=is=

~djusted= to= yieäd= the= fin~ä= ~nswerK= qhe= initi~ä= v~äueI= or= st~rting= pointI=

m~y=be=suggested=by=the=formuä~tion=of= the=probäemI=or=it=m~y=be=the=

resuät=of=~=p~rti~ä=comput~tionK=fn=either=c~seI=~djustments=~re=typic~ääy=

insufficientK==

qhe= ~djustment= ~nd= ~nchoring= heuristic= suggests= th~t= peopäe= m~ke=

estim~tes=EdecisionsF=b~sed=on=~n=initi~ä=st~rting=v~äue=th~t=is=~djusted=

to= re~ch= ~= concäusionK= qhis= bi~s= occurs= when= these= estim~tes= ~re=

bi~sed= tow~rds= the= initi~ä= v~äueI= äe~ding= to= ~n= overestim~tion= or= ~n=

underestim~tion=of=~=fin~ä=v~äueK=qhe=two=~ssoci~ted=bi~ses=~reW==

·= Confirm~tionW= ^= decision= m~ker’s= tendency= to= p~y= ~ttention= to=

inform~tion= th~t= supports= ~= current= hypothesis= ~nd= disreg~rd=

inform~tion=th~t=m~y=support=~n=~ätern~tive=hypothesisK==

·= p~lienceW=qhe= tendency= to= focus=on= the=most=s~äient= cue=when=

integr~ting=muätipäe=inform~tion=sourcesI=even=though=it=m~y=not=

be=the=most=indic~tiveK==

NWPWN Brand Choice

Consumers’=choice= is= inherentäy=~=dyn~mic=processK=oese~rch= tiää= this=

d~te= reve~äs= th~t= whether= one= is= observing= ~= routine= purch~se= of=

br~nds=or=once=–=in=–=äife=time=choices=of=housingI=choices=m~de=in=the=

present=impäicitäy=refäects=wh~t=h~s=been=äe~rnt=from=the=p~st=~nd=often=

expect~tions=of=the=futureK=vetI=whiäe= the=import~nce=of=underst~nding=

the=n~ture= of=dyn~mic= infäuences=on= choice= is=wideäy= recognizedI= the=

knowäedge= of= how= choices= evoäve= rem~ins= highäy= fr~gmentedK= qhe=

second= ~ttempt= of= this= study= is= to= underst~nd= the= dyn~mics= of= the=

choice= procedure= ~nd= to= find= the= effects= of= these= dyn~mics= on= the=

choice=modeäs=m~rketers=use=to=predict=future=choice=prob~biäitiesK=

NWPWO aefinition of Brand Choice

_r~nd= choice= is= defined= ~s= ~= decision= m~king= process= conducted= by=

consumers= for= seäecting= ~= p~rticuä~r= br~nd= from= ~= number= of= br~nds=

th~t=~re=present=in=hisLher=consider~tion=set=through=the=~ppäic~tion=of=

some=choice=ruäesK=

NWQ cactors fnfluencing the rse of eeuristics by

Consumers

j~ny=m~rketers=~re=of=the=opinion=th~t=consumers’=choice=of=br~nd=is=

b~sed= on= the= ev~äu~tion= of= the= ~ttributes= of= ~ää= the= br~nds= in= their=

choice= setK=lne= m~y= thereforeI= find=m~ny= m~rketing= communic~tions=

str~tegies= ~re= designed= to= n~rr~te= ~nd= highäight= the= ~ttributes= of= the=

br~ndsK=fn=spite=of=designing=the=best=of=the=m~rketing=communic~tion=

str~tegies=~nd=best=of=the=m~rketing=pä~nsI=m~rketers=~re=surprised=to=

know= th~t= consumers= h~ve= ended= up= choosing= competitors’= br~ndsK=

qhis=m~y=be=due=to=the=use=of=heuristics=by=consumers=in=their=decision=

m~king=processK=qhe=use=of=heuristics=by=consumers=is=expected=to=be=

more=in=their=routine=purch~ses=of=cjCd=c~tegoryK==

qhe= re~sons= for= use= of= heuristics= ~re= m~nyI= out= of= which= the= most=

import~nt=ones=~re=considered=for=this=studyK==

NWQWN euman jemory

lne= of= the= m~in= re~sons= for= consumers= to= use= heuristics= is= the=

~v~iä~biäity=of= äimited=cognitive=resourcesK=^t=one=point=of= timeI=hum~n=

memory=c~n=~ttend=T=H=or=–=O=chunks=of=inform~tionK=tith=such=äimited=

c~p~city= to= process= d~t~I= consumers= resort= to= using= heuristics= whiäe=

m~king=~=decisionK=

NWQWO The teighted Additive Algorithm

^Kkeweää= ~nd= pimon= ENVTOFI= used= the= word= heuristics= to= describe=

simpäe=processes=th~t=repä~ce=compäex=~ägorithms= in=decision=m~kingK=

lne= m~y= be= required= to= process= compäex= ~ägorithms= whiäe= m~king= ~=

decisionK= fn= judgment=~nd=decision=m~kingI= the=weighted=~dditive=ruäe=

is= one= such= compäex= ~ägorithm= for= ~rriving= ~t= compäex= decisions= ~nd=

~ccur~te= judgmentsK= ^ccording= to= the= weighted= ~dditive= ruäeI=

consumers= consider= ~ää= the= ~v~iä~bäe= ~ätern~tives= ~nd= cues= for= e~ch=

~ätern~tiveK=Consumers=must=weight=e~ch=cue=~ccording=to=objective=or=

subjective=impressions=of=how=it=contributes=to=the=over~ää=v~äueK=lnce=

the= consumer= ~rrive= ~t= ~= weighting= principäe= ~nd= ~ssign= weights= to=

e~ch=cueI=they=must=then=c~äcuä~te=the=v~äue=for=e~ch=~ätern~tiveK=b~ch=

cue’s= v~äue= is= muätipäied= by= its= corresponding= weightI= ~nd= these=

products= ~re= summed= to= yieäd= the= over~ää= v~äue= of= the= ~ätern~tiveK=

rätim~teäy=using=the=weighted=~dditive=ruäe=consistentäy=requires=peopäe=

to=expend=effort=on=five=t~sksK=

NK= fdentifying= ~ää= cues= –= ~ää= reäev~nt= pieces= of= inform~tion= must= be=

~cknowäedgedK=

OK=oec~ääing=~nd=storing=~ää=the=cues=v~äues=–=the=v~äues=for=the=pieces=

of=inform~tion=must=either=be=rec~ääed=from=memory=or=processed=from=

extern~ä=sourceK=

PK=^ssessing=the=weights=of=e~ch=cue=–=the=import~nce=of=e~ch=piece=of=

inform~tion=must=be=determinedK==

QK=fntegr~ting=inform~tion=for=~ää=~ätern~tives=–=the=weighted=cue=v~äues=

must= be= summed= to= yieäd= ~n= over~ää= utiäity= v~äue= or= utiäity= for= the=

~ätern~tiveK= fn=the=c~se=of= inference=or= judgmentI= this= is=the=fin~ä=stepI=

~nd= it= produces= the= t~rget= judgmentI= ~nd= it= produces= the= t~rget=

judgment=v~äueK=

RK=^ää=~ätern~tives=must=be=comp~redI=~nd=then=the=~ätern~tive=with=the=

highest=v~äue=shouäd=be=seäectedK==

Cäe~räyI= such= ~ägorithm= requires= gre~t= ment~ä= effortX= howeverI= peopäe=

do=not=h~ve=unäimited=processing=c~p~cityK=meopäe=must=oper~te=within=

the=constr~ints=imposed=both=by=their=cognitive=resources=~nd=the=t~sk=

environment=–=~=concept=known=~s=bounded=r~tion~äityK=^s=the=dem~nd=

on= äimited=cognitive= resources= incre~seI=peopäe=m~y=empäoy= methods=

or=str~tegies=th~t=reduce=effort=they=expend=on=comput~tionK=eeuristics=

therefore= c~n= be= referred= to= ~s= methods= th~t= use= principäes= of= effort=

reduction= ~nd= simpäific~tionK= _y= definitionI= heuristics= must= ~ääow=

consumers= to=process=inform~tion= in=~= äess=effortfuä=m~nner= th~n=one=

wouäd=expect=from=~n=optim~ä=decision=ruäeK==

ln= the= b~sis= of= the= study= on= heuristics= ~nd= its= use= by= consumers= in=

their= choice= processI= ~n= ~ttempt= w~s= m~de= to= deveäop= ~= st~tistic~ä=

modeä= th~t= c~äcuä~tes= future= prob~biäities= of= br~nd= choiceK= qhe=

st~tistic~ä=modeä=is=described=beäowK=

NWQWP Time – Critical aecision jaking

then= timeJcritic~ä= decisions= need= to= be= m~de= in= ~= dyn~mic=

environmentI= the= consumers= ch~nges= their= cognitive= processing=

methods= Ej~uäeI= NVVTFK= eow= signific~ntäy= these= cognitive= processing=

methods=~re=modified=is=~=function=of=the=time=eäement=~ssoci~ted=with=

the= decisionK= qhe= shorter= the= ~v~iä~bäe= time= to= m~ke= ~= decision= the=

more=the=decision=m~ker=modifies=their=cognitive=processing=methodsK=

j~uäe= ENVVTF= m~kes=~= distinction=between= the=ch~nges= th~t=occur= in=

cognitive= processing= methods= when= the= consumer= is= under= time=

pressure= versus= those= th~t= occur= when= the= consumer= is= under= time=

stressK=qime=pressure=provides=incre~sed=urgency= for=finishing=~= t~skX=

whiäe=the=more=extreme=st~te=of=time=stress=occurs=when=the=decision=

m~ker= determines= th~t= there= is= insufficient= time= for= t~sk= compäetionK=

diven=the=dem~nds=of=the=f^’s=t~skI=underst~nding=how=time=pressure=

imp~cts= the= decision= m~ker’s= cognitive= processing= methods= is= more=

reäev~nt=to=the=rese~rch=th~n=the=potenti~ä=imp~cts=of=time=stressK==

_ro~däyI= j~uäe= ENVVTF= notes= th~t= time= pressure= shifts= the= cognitive=

processing= focus= of= the= decision= m~ker= from= extern~ä= inform~tion=

sources= to= intern~ä= inform~tion= sourcesK= qhis=shift= c~n= ~ffect=decision=

m~kingI=~s= intern~ä=sources=~re=gener~ääy=more=neutr~ä= th~n=the=more=

poä~rizing= extern~ä= inform~tion= sourcesK= qime= pressure= c~n= ~äso=

incre~se=~=decision=m~ker’s=reäi~nce=on=the=more=import~nt=~spects=of=

reäev~nt=inform~tion=whiäe=decre~sing= the=consider~tion=given=to=other=

äess= essenti~ä= ~ttribute= inform~tionK= fnterestingäyI= m~yne= et= ~äK= ENVVMF=

compäeted= studies= indic~ting= ~= decre~se= in= the= qu~äity= of= decision=

m~king=~s=~=resuät=of=time=pressureK==

ppecific~ääyI= j~uäe= ENVVTF= identifies= five= distinct= ch~nges= in= cognitive=

processing=methods=decision=m~kers=often=empäoy=in=response=to=time=

pressureK=qhese=~reW==

·= Acceler~tionW= qhe= consumer= incre~ses= the= speed= of= their=

inform~tion=processingK==

·= ciltr~tionW=qhe=consumer=reduces=the=tot~ä=~mount=of=inform~tion=

they=processK==

·= pwitch=from=Compens~tory=to=koncompens~toryW=aecision=ruäes=

c~n= be= cä~ssified= ~s= compens~tory= or= noncompens~toryK=

Compens~tory= ruäes= ~ääow= for= ~= neg~tive= ev~äu~tion= of= ~n=

~ttribute=to=be=compens~ted=by=~=positive=ev~äu~tion=of=~notherK=

koncompens~tory= ruäes= disc~rd= ~= choice= when= ~= neg~tive=

ev~äu~tion=is=m~deK==

·= pwitch= from=~ltern~tiveJb~sed= to=~ttributeJb~sedW= fn=~ätern~tiveJ

b~sed= inform~tion= processing= the= decision= m~ker= seäects= ~n=

~ätern~tive= ~nd= ev~äu~tes= it= b~sed= on= ~ää= reäev~nt= ~ttributes=

where~s= in= ~ttributeJb~sed= inform~tion= processing= the= decision=

m~ker=seäects=~n=~ttribute=of=~=choice=~nd=comp~res=~ää=choices=

b~sed= on= th~t= p~rticuä~r= ~ttributeK= E^bduäJjuhminI= NVVVFK=

m~yne’s= ENVVMF= studies= showed= simpäer= str~tegies= of= b~sic=

se~rch=~nd=ev~äu~tion=of=the=most=import~nt=~ttribute=inform~tion=

to=be=optim~ä=under=time=pressureK==

·= Ch~nge= the= CostJBenefit= An~lysisW= qhe= consumer= reJev~äu~tes=

the= v~äue= of= using= ~= p~rticuä~r= str~tegy= ~g~inst= the= ~ssoci~ted=

cost=of=impäementing=the=str~tegy=within=the=~ääotted=timeK==

pever~ä= issues=need=to=be=considered=when=using=these=str~tegies=~s=

their=empäoymentI=me~nt= to=~ääevi~te= the= time=pressureI=often= induces=

errors= in= decision= m~king= Eeog~rthI= NVUTFK= brrors= c~n= occur= when=

confäicts=~rise=between=st~tistic~ä= re~soning=principäes=~nd= the=hum~n=

tendency= to= think= c~us~ääyI= ~s= there= is= the= potenti~ä= to= combine=

inform~tion=sources=th~t=~re=not=st~tistic~ääy= independentK=^ddition~ääyI=

the=m~nner=in=which=cognitive=str~tegies=inter~ct=with=judgment~ä=t~sks=

shouäd=be=consideredI=~s=issues=such=~s=the=order=in=which=inform~tion=

is=presentedI= the=differenti~ä=~v~iä~biäity=of= inform~tionI=~nd= the=n~ture=

Epositive=~nd=neg~tiveF=of=the=inform~tion=c~n=erroneousäy=infäuence=the=

decision=m~kerK=

CompäexI=dyn~mic=environments=often=utiäize=~n=incre~sed=inform~tion=

dom~in= cre~ted= through= the= sh~ring= of= ~nd= ~ccess= to= inform~tionK=

fntuitiveäyI=in=this=inform~tion=rich=dom~inI=the=time=pressure=~ssoci~ted=

with= timeJcritic~ä= decision= m~king= c~n= äe~d= to= the= empäoyment= of= ~=

v~riety=of=techniquesI=by=the=consumerI=to=~ääevi~te=the=time=pressureK=

then= this= timeJpressure= persistsI= the= consumer= often= ch~nges= their=

cognitive= processing= methods= which= c~n= äe~d= to= the= use= of= cognitive=

heuristics=~nd=bi~sesK==

NWQWQ fnformation mrocessing

= = = = = torking=jemory= = = = ^ttention=

Cues= = merception= = = ===processingL=================oesponding== = = = = aecision=j~king==

iong Term jemory

cigKNWN – fnformation mrocessing jodel

euey=~nd=tickens’=inform~tion=processing=modeä=E~d~pted=from=euey=

~nd=tickensI=NVVPF=~ppe~rs=in=cigure=NWNK=_riefäyI=their=work=identifies=

three= m~jor= st~ges= of= inform~tion= processingK= qhese= ~re= perceptionI=

processingI= ~nd= respondingK= euey= ~nd=tickens= ENVVPF= suggest= th~t=

this=cognitive=function=is=~n=iter~tive=process=where=e~ch=decision=th~t=

is= m~de= ~dds= knowäedge= to= the= preJexisting= äongJterm= memory=

repositoryK= fnform~tion= in= working= memory= is= interpreted= b~sed= on=

knowäedge=in=äongJterm=memoryK=pchemes=~re=storedI=m~king=it=e~sier=

to=identify=~n=object=th~t=is=f~miäi~rK=lver=timeI=these=schemes= äe~d=to=

the=deveäopment=of=heuristic=str~tegies=me~nt=to=improve=efficiency=~nd=

v~äidity= of= the= inform~tion= processing= functionI= howeverI= the=

empäoyment=of= these=heuristics=c~n=~äso= äe~d= to=decision=degr~d~tion=

due=to=the=presence=of=bi~ses=~ssoci~ted=with=the=heuristicsK==

qhe=inform~tion=processing=modeä= is=import~nt=to=underst~nd=bec~use=

of= its= bro~d= ~ppäic~biäity= to= numerous= cognitive= t~sksK= lbject=

identific~tionI= the= focus= of= the= rese~rch= undert~ken= ~nd= discussed=

hereinI=isI=~t=its=coreI=~n=inform~tion=processing=t~skK=qhe=extension=of=

this= reä~tionship= between= object= identific~tion= ~nd= inform~tion=

processing= suggests= th~t= the= bi~ses= present= in= one= t~sk= reä~ted= to=

inform~tion= processing= h~ve= the= potenti~ä= to= exist= in= ~ny= t~sk= where=

inform~tion= processing= is= centr~ä= to= its= executionK= qhis= ~ssertion= is=

boästered= by= the= comm~nd= ~nd= controä= rese~rch= of= auv~ää= EOMMRFI=

which= m~pped= the= lbserveI= lrientI= aecideI= ~nd= ^ct= modeä= to= euey=

~nd=tickens=inform~tion=processing=modeäI=~nd=denoted=the=presence=

of= sever~ä= bi~sesK= pome= of= these= bi~ses= were= ~äso= present= in= this=

object= identific~tion= rese~rchK= qhusI= ~n= effective= decision= support=

system= th~t= mitig~tes= bi~ses= ~rising= during= the= object= identific~tion=

t~skI= äikeäy= h~s= extensibiäity= to= other= inform~tion= processing= b~sed=

t~sksK==

qhe=äiter~ture=identifies=sever~ä=bi~ses=th~t=~ppe~r=to=h~ve=the=potenti~ä=

to=~ffect= the= qu~äity= of=decisions= m~de= during= the= object= identific~tion=

t~skK=^=discussion=of=these=specific=bi~ses=foääowsK==

^=recent=work=by=^rnott=EOMMSF=contributes=~n=exh~ustive=t~xonomy=of=

cognitive= bi~ses= identified= by= decision= theory= rese~rchersK= qhis=

t~xonomy=of=bi~ses=is=divided=into=six=bro~d=c~tegoriesK=qhey=~reW==

·= jemoryW=_i~ses=invoäving=the=stor~ge=~nd=rec~ää=of=inform~tionK==

·= pt~tistic~lW=_i~ses=referring=to=the=decision=m~ker=going=~g~inst=

norm~tive= principäes= of= prob~biäity= theory= during= inform~tion=

processingK==

·= ConfidenceW= _i~ses= serving= to= incre~se= the= decision= m~ker’s=

confidence=in=their=~biäity=to=m~ke=good=decisionsK==

·= mresent~tionW=_i~ses=skewing=the=w~y=decision=m~kers=perceive=

~nd=process=inform~tionK==

·= pitu~tionW= _i~ses= concerning= the= m~nner= in= which= peopäe=

respond=to=the=over~ää=decision=m~king=environmentK==

·= AdjustmentW= _i~ses= ~ffecting= the= w~y= decision= m~kers= m~ke=

~djustments=from=~=given=positionK==

NWR The ptatistical jodel Brand Choice

qhe= prim~ry= objective= of= this= work= is= to= deveäop= ~= fr~mework= for=

modeäing= choice= beh~vior= which= is= consistent= with= the= existing=

beh~vior~ä= theoriesI= emph~sizes= ~= c~us~ä= structur~ä= formuä~tionI=

m~them~tic~ääy=tr~ct~bäe=~nd=empiric~ääy=verifi~bäeK=qhe=study=shouäd=be=

fäexibäe= enough= to= c~pture= unobserved= heterogeneity= in= the= choice=

beh~vior=stemming=from=

CK= ^ttitudes=~nd=perceptions=of=consumers=since=underäying=choice=

qo= eä~bor~te= furtherI= the= study= sh~ää= expäore= the= possibiäity= of=

consumers=using=heuristics= in= their=decision=m~king=process=of=br~nd=

choiceK= qhe= study= shouäd= heäp= to= underst~nd= the= dyn~mics= of= the=

choice=modeäs=m~rketers=use=to=predict=future=choice=prob~biäities=with=

speci~ä=reference=to=cjCdK==

NWRWN aefinition of ptatistical jodel

lne=of= the= import~nt= steps= in= st~tistic~ä= science= is= the=construction=of=

prob~biäistic=modeä= th~t= represent=or= sufficientäy=~pproxim~teI= the= true=

gener~ting= mech~nism= of= ~= phenomenon= under= studyK= qhe=

construction= of= such= modeä= is= b~sed= on= prob~biäistic= ~nd= äogic~ä=

~rguments=concerning=the=n~ture=~nd=function=of=~=given=phenomenonK==

iet=us= ~ssume= th~t= ~= r~ndom=v~ri~bäe= vI= c~ääed= the= responseI=which=

foääows=~=prob~biäistic=ruäe=with=prob~biäity=function=fEy|θFI=where=θ=is=the=

p~r~meter= vectorK= Consider= ~n= independentI= identic~ääy= distributed=

EiKiKdF =s~mpäe =y =Z =xyNI =yOI =… =ynzq= of= size= n= of= this= v~ri~bäeX= where= ^q=

denotes=the=tr~nspose=of=~=vector=or=m~trix=^K=the=joint=distribution==

= = = = =

fEy|θF=Z=Π=fEyi|θF=

is= c~ääed= the= äikeäihood= of= the= modeä= ~nd= cont~ins= the= ~v~iä~bäe=

inform~tion=provided=by=the=observed=s~mpäeK==

rsu~ääy=modeäs=~re=constructed= in=order= to=~ssess=or= interpret= c~us~ä=

reä~tionships= between= the= response= v~ri~bäe= v= ~nd= v~rious=

ch~r~cteristics=expressed=~s=v~ri~bäes=ujI=j=Є=sI=c~ääed=the=cov~ri~tes=or=

the=expä~n~tory=v~ri~bäesX=j=indic~tes=~=cov~ri~te=or=~=modeä=term=~nd=s=

indic~tes= the= set=of= ~ää= the= terms=under= consider~tionK= fn= such=c~sesI=

the=expä~n~tory=v~ri~bäes=~re= äinked=with= the=response=v~ri~bäes=vi~=~=

deterministic= function= ~nd= p~rt= of= the= origin~ä= p~r~meter= vector= is=

substituted= by= ~n= ~ätern~tive= set= of= p~r~meters= denoted= by= β= th~t=

usu~ääy= enc~psuä~tes= the= effect= of= e~ch= cov~ri~te= on= the= response=

v~ri~bäeK=cor=ex~mpäe=in=~=norm~ä=regression=modeä=with=y=~=kEXβ,σOf=F=

the=p~r~meter=vector=is=given=by=θq=Z=xβqI=σOz==

qhe=modeä=deveäoped=in=this=study=~ccommod~tes=the=use=of=heuristics=

by= the= consumers= in= their= decisions= on= br~nd= choiceK= cour=

psychoäogic~ä= st~tes= ~re= identified= in= this= studyK= ^= consumer= is=

expected=to=be=in=one=of=the=psychoäogic~ä=st~te=whiäe=t~king=~=decision=

on=br~nd=choiceK=qhe=modeä=incorpor~tes=st~tistic~ä=expression=for=e~ch=

psychoäogic~ä= st~teK= qhe= b~sis= of= ~n~äysis= is= muätinomi~ä= äogistic=

regressionI= p~r~meters= of= e~ch= moduäe= ~re= c~äcuä~ted= which= proves=

the=äogic=of=the=psychoäogic~ä=mode=st~tistic~ääyK==

qhe=four=psychoäogic~ä=modes=identified=~re==

NK= ^ttribute=s~äue=_~se=jode=E^s_jF=

OK= lrdered=s~äue=_~se=jode=Els_jF=

PK= au~ä=jode=EeybridF=–=qime=fnv~ri~nt==

QK= au~ä=jode=EeybridF=–=qime=s~ri~nt=

NWRWNWO Attribute salue Base jode

oecent= rese~rch= indic~te= th~t= consumers= frequentäy= do= not= h~ve=

predefined= preferences= but= inste~d= construct= their= preferences= ~s=

needed= to= m~ke= their= choiceK= qo= construct= these= preferencesI=

consumers=use=~=v~riety=of=choice=ruäesK=lne=b~sic=ruäe=is=to=ev~äu~te=

~ää=the=br~nds=in=the=consider~tion=set=on=the=~ctu~ä=~ttribute=v~äue=~nd=

the=br~nd=with=the=highest=v~äue=is=chosenK=qhe=moduäe=deveäoped=for=

this= psychoäogic~ä= mode= is= pureäy= b~sed= on= the= muätinomi~ä= äogistic=

regressionK=ouäes= used= by= the= consumers= use=~ctu~ä= ~ttribute= v~äues=

~s= inputsK= _ut= such= ruäes= require= the= consumer= to= use= weighted=

~dditive=ruäe=th~t=considers=the=~ctu~ä=v~äues=of=~ää= the=~ätern~tives=on=

~ää= the= reäev~nt= ~ttributesK= qhe= st~tistic~ä= expression= for= ^s_j= is=

mentioned=beäowK=

rsing=such=weighted=~dditive=ruäe=~ägorithm=to=ev~äu~te=routine=br~nds=

äike= cjCd= is= too= big= ~= t~sk= for= hum~n= memory= even= for= simpäe=

products=~nd=even=when=fuää=inform~tion=is=~v~iä~bäeK=qhis=gives=w~y=to=

find=how=~=consumerI=thenI=m~kes=~=br~nd=choiceK=qhe=~nswer=to=this=

ä~ys= in= the= next= psychoäogic~ä= mode= the= ordered= v~äue= b~se= mode=

which=is=described=beäowK=

NWRWNWP lrdered salue Base jode

then=it=comes=to=routine=purch~sesI=consumers=h~rdäy=invest=time=~nd=

efforts= to= choose= their= br~ndsK= merh~ps= consumers= might= h~ve=

ev~äu~ted=every=br~nd=in=the=consider~tion=set=e~räierX=they=then=h~rdäy=

t~ke=~ny=efforts=to=reJev~äu~te=them=for=the=next=purch~seK=Consumers=

m~ke= use= of= cert~in= ruäes= to= convert= these= ~ctu~ä= ~ttribute= v~äues= to=

more= psychoäogic~ääy= me~ningfuäI= better= –= defined= ordered= v~äuesK=

Choices=~re=then=b~sed=on=these=ordered=v~äuesK==

qhe=order=of=preference=of=the=br~nds=sh~ää=rem~in=the=s~me=~s=äong=~s=

products’=reä~tive=positions=~äong=~ttributes=~re=preservedK=qo=st~tistic~ä=

expression=for=the=ls_j=mode=uses=the=expression=of=^s_j=but=with=

~= differenceK= pignum= function= is= used= for= sign~äing= ~= ch~nge= in= the=

order= of= the= br~ndK= fn= this= modeä= ~ny= ch~nge= th~t= preserves= the=

ordering=of=products’=v~äues=~äong=the=~ttribute=äe~ves=signum=function=

unch~ngedK=

qhe= ls_j= st~te= of= psychoäogy= is= dependent= on= the= ^s_jK=

Consumers= c~n= switch= between= modes= whiäe= m~king= ~= decision= on=

br~nd= choiceK= qh~t= is= their= psychoäogy= c~n= be= in= both= the= st~te= of=

modes=~nd=they=keep=switching=from=one=mode=to=~nother=depending=

upon=the=ch~nges=th~t=t~ke=pä~ce=in=the=~ttribute=v~äuesK=qhe=mode=th~t=

~ccommod~tes=both=^s_j=~nd=ls_j=is=termed=~s=du~ä= modeK=au~ä=

mode= c~n= be= either= time= v~ri~nt= or= time= inv~ri~ntK= _oth= these= ~re=

described=beäowK=

NWRWNWQ aual jode – Time fnvariant

ff= ~= consumer= oper~tes= in= ^s_j= on= one= occ~sionI= the= consumer=

oper~tes=in=^s_j=on=~ää=the=occ~sionsK==

NWRWNWR aual jode – Time sariant

qhe= consumer= switches= from= one= mode= to= ~nother= whiäe= m~king= ~=

decision=on=br~nd=choice=depending=upon=the=product=c~tegoryK==

NWS jodel bxecution

qhe= four=moduäes= of= the=st~tistic~ä=modeä= ~re=converted= into=softw~re=

progr~ms=~nd=executed=with=the=heäp=of=softw~re=known=~s=tin_rdpK=

qhe=utiäity=function=used=five=~ttributesW=~=dummy=term=corresponding=to=

br~ndOI=~=dummy=term=corresponding=to=br~ndPI=~=price=term=giving=the=

price=in=rupeesI=~=fe~ture=term=th~t=w~s=N=when=the=respondent=viewed=

the= ~dvertisement= ~nd= ~= M= w~s= ~ssigned= when= the= product= w~s= no=

~dvertised=or=viewed=~nd=~äso=~=M=–=N=v~ri~bäe= to=represent=when=the=

br~nd=w~s=speci~ääy=promotedLnot=promotedK==

_~yesi~n= fnference= ~nd= j~rkov= Ch~in= jonte= C~räo= jethod= EjCjCF=

~re= used= for= the= ~n~äysis= of= d~t~K= jCjC= w~s= used= to= ~ssess= the=

convergence=of=the=d~t~K=qhe=softw~re=codes=of=the=four=moduäes=were=

run= in= tin_rdp= ~nd= the= p~r~meters= of= the= four= moduäes= were=

c~äcuä~tedK==

qhe=execution=of=the=moduäes=refäects=the=äogic=th~t=the=consumers=c~n=

be= in= one= of= the= four= modes= of= psychoäogyK= qhe= consumers= ~re=

expected=to=be=in=ordered=v~äue=b~se=mode=most=of=time=whiäe=m~king=

~= br~nd= choice= in= the= cjCd= c~tegoryK= qhe= consumer= sh~ää= not= t~ke=

much=effort=to=switch=from=ls_j=to=^s_jK=qhis=m~y=be=due=to=the=use=

of=one=or=more=of=the=foääowing=heuristicsK=

NK= Brand kame eeuristics=which=st~tes=th~t=consumers=f~vor~bäy=

ev~äu~te=those=products=with=positiveäy=v~äenced=br~nd=n~mesK=

OK= mrice eeuristics= which= suggests= th~t= consumers= judge=

expensive=products=to=be=of=high=qu~äityK=

PK= bffort eeuristics= suggest= th~t= consumers= wiää= judge= products=

th~t=took=~=äong=time=to=produce=to=be=of=high=v~äue=

QK= fdiosyncratic cit eeuristics suggest= consumers= wiää= ev~äu~te=

consumer= äoy~äty= progr~ms= Ebuy= two= get= one= freeF= with=

person~ääy=reäev~nt=fe~tures=to=be=more=v~äu~bäeK==

RK= Audience oesponse eeuristics= st~tes= th~t= ~n= enthusi~stic=

~udience= response= to= ~= mess~ge= wiää= äe~d= consumers= to=

positiveäy=reg~rd=or=~gree=with=~=mess~geK==

SK= bndorsement eeuristics= suggest= th~t= peopäe= wiää= find=

mess~ges=more=convincing=if=~=positiveäy=reg~rded=org~niz~tion=

endorses=themK=

TK= bxpertise eeuristics=~re=the=ones=where=peopäe=~re=convinced=

by=experts=th~n=novicesK=

qhis=study=thus=~ttempts=to=prove=the=use=of=heuristics=in=the=decision=

m~king=process=of=br~nd=choiceK=^=st~tistic~ä=modeä=is=deveäoped=which=

~ccommod~tes= heuristics= in= the= comput~tion= of= future= choice=

prob~biäitiesK=

Ch~pter=O=

iiter~ture=oeview=m~rt=f=

eeuristics=C=_i~ses=

OWN=fntroduction=

OWO=qypes=of=eeuristics=fdentified=

OWP=_i~ses=

OWQ=_ounded=o~tion~äity=

OWR=pome=eeuristics=fdentified=in=j~rketing=

OWS=^n=bffort=oeduction=cr~mework=ptudying=eeuristics=

Ch~pter=O=

iiterature oeview mart - f

eeuristics and Biases

We Don’t See Things As They Are, We See Things As We Are

OWN fntroduction

qhe=concept=of=heuristics=w~s= first= introduced=by=pimon=ENVRVF= in=his=

discussion=on=“äimited=r~tion~äity≤K=ee=~rgued=th~t=bec~use=of=cognitive=

äimit~tionsI=hum~ns=h~ve=äittäe=option=but=to=construct=simpäified=modeäs=

of= the= worädK=eeuristics= ~re=~= product=of= these=simpäified=modeäs= ~nd=

provides= short= cuts= th~t= c~n= produce= decisionsK= pimon= observed=

heuristics= ~s= ~d~ptive= str~tegies= used= by= hum~ns= to= cope= with= their=

äimited= inform~tion= processing= c~p~cityK= ee= st~ted= th~t= heuristics= ~re=

“methods=for=~rriving=~t=s~tisf~ctory=soäutions=with=modest=~mounts=of=

comput~tionI≤= pimon= identified= s~tisficing= Eseäect= the= first= ~v~iä~bäe=

option=th~t=meets=univers~ä=st~nd~rdsF=~s=~=str~tegy=commonäy=used=in=

compäex=decision=situ~tionsK==

h~hnem~n= ~nd= qversky= g~ve= impetus= to= heuristics= by= proving= th~t=

beh~vior= often= does= not= even= ~pproxim~te= norm~tiveäy= optim~ä= ruäesK=

o~ther=peopäe=seem=to=reäy=on=h~ndy=ruäes=of=thumb=or=heuristicsK=

lftentimes= the= word= “heuristics≤= is= defined= ~s= ~= “ruäe= of= thumb≤= or= ~=

“ment~ä= shortcut≤= for=soäving=probäems=suggesting= th~t=peopäe=seek= to=

reduce=the=effort=~ssoci~ted=with=decision=processesK==

qhe= recent= rese~rch= in= the= ~re~= of= psychoäogy= into= the= bi~ses= ~nd=

heuristics= th~t= consumers= use= to=simpäify= decisions= is= äikeäy= to= modify=

the=strict=utiäity=m~ximiz~tion=modeäs=th~t=one=often=~ppäyK=qversky=~nd=

h~hnem~n= in= NVTQ= det~iäed= the= heuristics= ~nd= bi~ses= th~t= they=

observed= in= decision= m~kers= incäuding= consumersK= qhe= three= bi~ses=

th~t=they=identified=were=represent~tivenessI=~v~iä~biäity=~nd=~nchoringK=

qhese=~re=described=beäowK=

OWO Types of eeuristics fdentified

OWOWN oepresentativeness eeuristicsW==

qversky=~nd=h~hnem~n=ENVTQFS=suggested=th~t=peopäe=typic~ääy=reäy=on=

the= represent~tiveness= heuristics= whiäe= ~nswering= prob~biäistic=

questions=such=~s=wh~t= is= the=prob~biäity= th~t=event=^=origin~tes= from=

process= _?=qh~t= is= the= represent~tiveness= heuristics= is=used= when= ~=

person= must= determine= such= prob~biäities= b~sed= on= the= degree= to=

which=^=resembäes=_K==

oepresent~tiveness= heuristics= is= used= when= ~n= ~gent= must= upd~te= ~=

subjective= prob~biäity= with= new= inform~tionK= pometimes= peopäe= use=

_~ye’s=ä~w=when=upd~ting=prob~biäities==

mEuL^F=Z=mE^LuF=mEuF=

===============mE^F=

there= mE^F= is= the= condition~ä= prob~biäity= of= ^= given= u= ~nd= mEuF= ~nd=

mE^F= ~re= popuä~tion= p~r~meters= typic~ääy= referred= to= ~s= b~se= r~tesK=

thiäe=_~ye’s= ä~w=is=~=usefuä= st~tistic~ä= ruäeI=psychoäogists=h~ve= found=

th~t= peopäe= tend= to= ~ct= in= decidedäy= nonJ_~yesi~n= f~shion= ~nd= h~ve=

identified=~=number=of=subjective=prob~biäity=bi~ses=grouped=under=the=

umbreää~=of=represent~tiveness=heuristicsK==

qversky=~nd=h~hnem~n=noted=th~t=using=represent~tiveness=heuristics=

when= determining= the= prob~biäity= c~n= äe~d= to= insensitivity= to= prior=

prob~biäityI= or= b~se= r~te= frequency= of= the= outcomesK= fn= one= ex~mpäe=

subjects= were= ~sked= to= identify= ~= described= individu~ä= ~s= either= ~=

ä~wyer= or= ~n= engineerK= qhe= subjects= were= given= descriptions= th~t=

incäuded=phr~ses=such=~s= “he=we~rs=gä~sses≤K=pubjects=were= first= toäd=

th~t= the= individu~ä= in= question= w~s= dr~wn= from= ~= r~ndom= s~mpäe=

composed=of=NMM=peopäeI=TM=of=which=were=engineers=~nd=PM=of=which=

were=ä~wyersK=qhen=the=b~se=r~te=w~s=reversedK=qhe=subjects=were=toäd=

th~tI= of= NMM= peopäe= in= the= s~mpäeI= TM= were= ä~wyers= ~nd= thirty= were=

engineersK= h~hnem~nI= päovic= ~nd= qversky= found= th~t= the= subjects’=

prob~biäity= judgment= did= not= differ= when= the= b~se= r~te= w~s= ch~ngedI=

even= though= _~ye’s= ä~w= indic~te= th~t= the= condition~ä= prob~biäities=

c~nnot=be=equ~ä=if=the=b~se=r~tes=ch~ngeK==

OWOWO Availability eeuristicsSW==

qhis= type= of= heuristics= indic~tes= th~t= respondents= seäect= events= or=

outcomes= th~t= ~re= f~miäi~r= to= themI= even= in= defi~nce= of= the= true=

prob~biäitiesK=qhe=~v~iä~biäity=heuristics=describes=~=method=by=which=~=

person=determines=the=äikeäihood=of=~n=event=~ccording=to=the=e~se=with=

which= he= or= she= c~n= rec~ää= inst~nces= th~t= m~tch= the= eventK= qh~t= is=

one’s= experiences= ~nd= conditioning= ~ffect= how= ~= person= determines=

äikeäihood=th~t=~n=event=wiää=occurK=cor=ex~mpäeI=one=might=estim~te=the=

risk=of=~=burgä~ry=in=~=cert~in=neighborhood=by=the=number=of=burgä~ries=

one=c~n=rec~ääK=

^= simiä~r= method= is= the= simuä~tion= heuristicsI= by= which= peopäe= wiää=

determine= the=äikeäihood=of= the=events=b~sed=on=e~se=with=which= they=

c~n=simuä~te=or=im~gine=the=outcome=in=their=mindsK=^n=ex~mpäe=of=this=

is=~=person=who=determines=the=prob~biäity=th~t=~=v~äue=of=cert~in=stock=

wiää=decäine=b~sed=on=the=number=of=different=scen~rios=he=or=she=c~n=

e~siäy=im~gine=th~t=wouäd=c~use=such=~n=occurrenceK=

thiäe= ~v~iä~biäity= heuristics= c~n= often= be= heäpfuä= in= m~king= decisions=

~nd=estim~tesI=qversky=~nd=h~hnem~n=h~ve=äisted=sever~ä=bi~ses=th~t=

c~n=resuät=from=~v~iä~biäity=heuristicsK==

NK= _i~ses=due=to=retriev~biäity=of=inst~ncesI=th~t=isI=ex~mpäes=e~siäy=

brought= to= mind= ~re= often= judged= to= be= more= äikeäy= th~n= they=

~ctu~ääy=~reK==

OK= _i~ses= due= to= im~gin~biäityI= th~t= isI= e~siäy= im~gined= outcomes=

c~n=give=the=iääusion=th~t=they=~re=more=commonK=

PK= _i~ses= due= to= iääusory= correä~tionI= th~t= isI= one= event= strongäy=

impäies=~nother=if=the=two=events=occur=simuät~neousäyK=

^v~iä~biäity=heuristics=h~s=been=~ppäied=to=m~rketing=~nd=~dvertising=to=

investig~te= the= effects= of= retriev~ä= on= the= subjective= ~ssessment= of=

product= f~iäureK=coäkes= ENVUUF= presents= four=studies= in= which=subjects=

were=~sked=to=predict=how=äikeäy=v~rious=products=were=to=f~iäK=aifferent=

scen~rios= ~nd= distinctive= br~nd= n~mes= were= used= to= m~ke= some=

products= or= inst~nces= more= memor~bäeK= coäkes= found= th~t= these=

judgments= were= bi~sed= in= w~ys= described= by= ~v~iä~biäity= heuristics= –=

th~t= more= memor~bäe= products= infäuenced= the= subjects’= decisionsK=

o~bin= ENVVUF= points= out= th~t= peopäe= often= give= too= much= weight= to=

memor~bäe= evidencesI= even= when= better= sources= of= inform~tion= ~re=

~v~iä~bäeK=ee=notes=th~t=one=m~y=~ääow=~=dr~m~tic=person~ä=story=from=

~=friend=reg~rding=~n=inst~nce=of=product=f~iäure= to=be=more=infäuenti~ä=

th~n=consumer=reports=with=gener~ä=st~tistics=reg~rding=th~t=productK=

OWOWP Anchoring and Adjustment eeuristicsW==

^ccording= to= this= heuristicsI= individu~äs= m~kes= estim~tes= b~sed= on= ~=

st~rting=pointI=the=~nchorI=~nd=upd~te=their=subjective=prob~biäity=b~sed=

on= new= inform~tionK= thiäe= this= does= not= seem= to= differ= from=

represent~tiveness= heuristicsI= psychoäogists= h~ve= shown= th~t=

individu~äs= h~ve= ~= propensity= to= bi~s= their= estim~ted= prob~biäities=

tow~rd=the=~nchorK=qh~t=is=individu~äs=do=not=~djust=to=new=inform~tionI=

m~king= the= v~äue= of= the= ~nchor= more= critic~äK= = xgudgment= under=

uncert~intyW=eeuristics=C=_i~ses=by=h~hnem~n=~nd=qversky=NVTVzTK=

^n=individu~ä’s=initi~ä=guess=E~nchorF=c~n=be=subjective=EinterpretedF=or=

objective=Et~ken=from=b~se=r~tesFK=lften=the=~nchor=depends=upon=the=

m~nner=in=which=the=question=is=~sked=or=how=the=inform~tion=is=givenK=

cor= ex~mpäe= qversky= ~nd= h~hnem~n= ENVTQF= ~sked= subjects= to=

estim~te=the=percent~ge=of=^fric~n=countries=in=rnited=k~tions=by= first=

giving=them=~=number=~nd=then=~sking=them=whether=th~t=number=w~s=

higher=or=äower=th~n=the=percent~ge=of=^fric~n=countriesK=aifferent=initi~ä=

v~äues= äed= to=strikingäy=different=estim~tesK=thiäe= the=medi~n=estim~te=

w~s=OR=percent= for=groups= th~t= received=NM=~s= the=st~rting=v~äueI= the=

medi~n= estim~te= w~s= QR= percent= for= those= given= ~= v~äue= of= SR= –=

iääustr~ting=the=bi~s=tow~rd=the=~nchorK==

^nchoring= refers= to= ~= bi~sed= judgment= on= ~= stimuäus= b~sed= on= the=

initi~ä= ~ssessment=of= ~nother= stimuäus= ~nd= the= insufficient=~djustment=

~w~y= from= th~t= initi~ä= ~ssessmentK= mrevious= rese~rch= indic~tes= th~t=

~nchoring= seems= to= be= ~= gener~ä= phenomenon= underäying= ~= wide=

v~riety= of= process= str~tegies= Ebpäey= ~nd= diäovich= OMMNI= qversky= ~nd=

h~hnem~n=NVTQFK=bvery=time=when=~n= individu~ä= forms=~n= impression=

or=~n= im~ge=~bout=~=stimuäus=whiäe=~nother=stimuäus=is=presentI=these=

impressions=m~y=be=subject=to=~nchoring=effectsK=

Consumers= reguä~räy= form=im~ges=~bout=br~nds=~nd=comp~re=br~nds=

to=other=br~ndsK= ft= is=possibäe= th~t= there=wiää=be=~n=~nchoring=effect= in=

im~ge= impressions= ~bout= br~nds= –= ~= phenomenon= th~t= is= referred= to=

“br~nd= ~nchoring= effect≤K= qhe= br~nd= ~nchoring= effects= c~n= be=

investig~ted= for= ex~mpäe= in= the= context= of= coJbr~nded= identitiesK= cor=

ex~mpäe= mobiäe= phones= offered= by= pony= brricssonK= ft= is= studied= th~t=

one=br~nd=m~y=serve=~s=~n=~nchor=~nd=~ffect= the= im~ge=structure=of=

the=coJbr~nded=identity=Epony=brricssonF=~s=~=whoäeK=

oese~rch= reve~äs= th~t= subjects= tend= to= focus= onäy= on= ~= p~rt= of= ~=

probäemK= cor= inst~nce= prob~biäity= of= success= ~t= ~ny= one= st~ge= of= ~n=

event= is= often= used= ~s= ~= st~rting= point= E~n= ~nchorF= to= determine= the=

prob~biäity= of= over~ää= successK= eowever= the= ~ssessment= of= the=

prob~biäity= for=~n=event=with=muätipäe=st~ges= is=often=skewed=bec~use=

they=do=not=devi~te=enough=from=the=~nchorK==

oem~rk~bäyI= it= ~ppe~rs= th~t= hum~n= br~in= h~ve= been= h~rd= wired= to=

m~ke=cert~in=errorsK=eundreds=of=different=bi~ses=h~ve=been=identified=

~nd= c~tegorizedI= incäuding= bi~ses= th~t= ~ffect= our= judgmentsI= th~t=

introduce= errors= into= the= estim~tes= ~nd= forec~sts= th~t= consumers=

produceI= ~nd= th~t= c~uses= to= m~ke= wrong= choicesK= qhe= concäusion=

re~ched= by= a~nieä= h~hnem~n= ~nd= his= coääe~gues= is= th~t= peopäe= use=

unconscious= shortcutsI= termed= heuristicsI= to= cope= with= compäex=

decisionsK==

OWOWQ pimulation eeuristics

gust= ~s= ~= singäe= event= th~t= is= e~sy= to= retrieve= in= the= memory= seems=

very= äikeäy=occurI=~=singäe=event=or=sequence=of=events=th~t= is=e~sy=to=

im~gine=or=simuä~te=~äso=seems=very= äikeäy= to=occurK=pimpäy= im~gining=

the= occurrence= of= ~= hypothetic~ä= event= incre~ses= the= perceived=

äikeäihood=of=the=eventK==

pimiä~räyI= im~gining= the=occurrence=of=~= compäex=sequence=of=events=

m~kes= this= sequence= of= events= seem= more= äikeäyK= ^n= im~gined=

sequence= of= events= is= ~= scen~rioK= qhe= findings= th~t= ~n= im~gined=

sequence=of=events=seems=more=äikeäy=~re=known=~s=scen~rio=effectK==

OWOWR The mriority eeuristic

qhe=priority=heuristic=is=~=simpäe=~nd=precise=modeä=for=choices=~mong=

risky= options= E_r~ndstätterI= digerenzerI= C= eertwigI= OMMSFUK= then=

m~king=~=choice=between=g~mbäesI=the=priority=heuristic=~ssumes=th~t=

e~ch= g~mbäe= c~n= be= described= by= sever~ä= ~spectsW= its= minimum=

outcomeI=its=m~ximum=outcomeI=~nd=the=prob~biäities=of=e~ch=p~rticuä~r=

outcome= ~ctu~ääy= occurringK= Contr~ry= to= the= expected= utiäity=

perspectiveI=this=heuristic=does=not=~ssume=th~t=peopäe=form=~n=over~ää=

ev~äu~tion= of= g~mbäes= by= weighting= outcomes= ~ccording= to= their=

prob~biäities= of= occurringK= fnste~dI= it= ~ssumes= th~t= ~spects= of= the=

g~mbäes= ~re= comp~red= sequenti~ääyI= ~nd= th~t= e~ch= of= these=

comp~risons=c~n= äe~d= to=~=decisionK=then=m~king=~=choice=between=

two= g~mbäesI= their= “minimum= outcomes≤= ~re= comp~red= firstK= ff= the=

difference= between= two= outcomes= exceeds= NM= B= of= the= m~ximum=

p~yoff=th~t=c~n=be=obt~ined=from=either=of=the=twoI=the=g~mbäe=with=the=

ä~rger= minimum= outcome= is= seäectedK= cor= g~mbäes= with= onäy= positive=

p~yoffsI= the= minimum=outcome= refers= to= the= minimum=g~in= EiK= eKI= the=

äowest= p~yoffFK= ff= the= difference= does= not= exceed= the= threshoädI= the=

second=~spect=is=ex~minedW=the=prob~biäities=of=the=minimum=outcomes=

occurringK=ff=the=prob~biäities=differ=by=more=th~n=NM=BI=the=g~mbäe=with=

the= äower=prob~biäity=of= the=minimum=outcome= is=seäectedK=ltherwiseI=

the= ä~st= ~spectµthe= m~ximum= outcomes= of= the= two= g~mbäesµis=

consideredI= ~nd= the= g~mbäe= with= the= ä~rger= m~ximum= outcome= is=

seäectedK= _r~ndstätter= et= ~äK= EOMMSF= comp~red= the= priority= heuristic= to=

sever~ä=v~ri~nts=of=expected=utiäity=theory=on=g~mbäes=from=four=studiesK=

qhe=priority=heuristic=w~s=better=~bäe= to=predict= the=m~jority=choice=of=

p~rticip~nts= for= ~= wide= r~nge= of= g~mbäesK= _r~ndstätter= et= ~äK= EOMMSF=

demonstr~ted=th~t=the=system~tic=study=of=~d~ptive=heuristicsI=such=~s=

the=priority=heuristicI=c~n=provide=~=psychoäogic~ääy=informed=~ätern~tive=

to= the= expected= utiäity= fr~meworkI= which= h~s= been= t~ken= ~s= the=

found~tion=E~nd=goäd=st~nd~rdF=for=much=of=the=work=in=economics=~nd=

the=psychoäogy=of=decision=m~kingK=

h~hnem~n=~nd=qversky=demonstr~ted=th~t=the=use=of=heuristics= äe~ds=

to=poor=decisionsK=eeuristics=äe~d=to=errors=which=~re=termed=~s=bi~sesK==

OWP Biases

_i~ses= ~re= errors= committed= by= the= consumers= due= to= the= use= of=

heuristicsK=_i~ses=resuäts=from=äimit~tions=in=our=~ttention~ä=~nd=memory=

systemsK= Consumers= c~n= rec~ää= onäy= reä~tiveäy= sm~ää= ~mounts= of=

inform~tion=~t=~ny=one=point=of=timeK=rnfortun~teäyI=consumers=c~nnot=

~äw~ys=~ttend=to=or=rec~ää=the=most=di~gnostic=inform~tionK=pome=bi~ses=

~re=described=in=the=next=sectionK=

OWPWN Comfort wone Biases or ptatus nuo Biases==

qhis=refers=to=tendency=of=peopäe=to=do=wh~t’s=comfort~bäe=r~ther=th~n=

wh~t’s=import~ntK=meopäe=become=more=~tt~ch=to=the=st~tus=quoI=v~äue=

things=more= highäy= if= they=~äre~dy=own= themK= qhey= ignore= inform~tion=

inconsistent=with= their= current=beäiefsK=meopäe= f~iä= to= äe~rn= ~nd= correct=

their= beäiefs= despite= strong= evidence= th~t= they= shouäd= do= soK= qhe=

individu~äs= keep= doing= the= s~me= thingsI= even= if= they= no= äonger= work=

weääK=qhe= individu~äs=distort= their=views=of= re~äity= in=order= to= feeä=more=

comfort~bäeK= oese~rch= indic~tes= th~t= bre~king= from= st~tus= quoI= is= for=

most= peopäeI= emotion~ääy= uncomfort~bäeK= i~ck= of= uncert~inty= ~nd= too=

m~ny= ~ätern~tives= promote= hoäding= to= the= st~tus= quoK= th~t= c~uses=

st~tus= quo= bi~s?= oese~rch= indic~tes= th~t= the= äoss= ~spects= of= the=

ch~nge=äoom=ä~rger=th~n=the=g~in=~spectsK=iosses=represent=the=cert~in=

eäimin~tion= of= visibäeI= existing= benefitsK= d~ins= in= contr~stI= ~re=

prospective= ~nd= specuä~tiveK= lne= knows= wh~t= he= h~veI= who= knows=

wh~t=he=wiää=get?=

OWPWO merception Biases==

meopäe’s=beäiefs=~re=distorted=by=f~uäty=perceptionsK=qhey=~nchor=on=the=

inform~tion= th~t= is= re~diäy= ~v~iä~bäeI= vivid= or= recentK= qhe= individu~äs=

m~ke= insufficient= ~djustments= from= their= initi~ä= ~nchorsI= ~scribe= more=

credibiäity= to= d~t~= th~n= is= w~rr~ntedI= overestim~te= wh~t= they= knowI=

underestim~te=the=effort=invoäved=to=compäete=~=difficuät=t~skK==

OWPWP jotivation Biases=

meopäe’s= motiv~tions= ~nd= incentives= tend= to= bi~s= their= judgmentsK=

meopäe=unconsciousäy=distort=judgments=to=“äook=good≤=~nd=“get=~he~d≤K=

qhey=t~ke=~ctions=~s=if=concerned=onäy=with=short=term=consequencesK=

meopäe=tend=to=~ttribute=good=decisions=to=skiääsI=~nd=b~d=outcomes=to=

others’= f~iäure= or= b~d= äuckK= qhey= tend= to= t~ke= ~ctions= to= shieäd=

themseäves=from=unf~vor~bäe=feedb~ckK=

OWPWQ brrors in oeasoning==

meopäe= use= fä~wed= re~soning= to= re~ch= incorrect= concäusionsK= meopäe=

simpäify= in~ppropri~teäyI= ~re= persu~ded= by= circuä~r= re~soningI= f~äse=

~n~äogies=~nd=other=f~ää~cious=~rgumentsK=fndividu~äs= try=to=~bhor= risk=

but=seek=bigger=risk=to=~void=~=sure=äossK==

droup= qhinkingW= droups= “dive= in≤= without= h~ving= ~ää= the= necess~ry=

inform~tionI=~re=excessiveäy=c~utious=in=sh~ring=d~t~I=~void=expressing=

opposing=viewsI=jump=to=concäusions=prem~tureäy=or=get=bogged=down=

trying= to= re~ch= ~n= ~greementK= xe~mmondI= heeney= ~nd= o~iff~= NVVUK=

e~rv~rd=_usiness=oeviewzNMK=

jost=of=the=timeI=consumers’=purch~sing=decisions=~re=often=b~sed=on=

perceptions= ~nd= predictions= of= product= qu~äityK= qhese= judgments= of=

qu~äity=~re=in=turn=dependent=on=product=~ttributes=~nd=their=reä~tion=to=

the=potenti~ä=utiäity=~=consumer=derives=from=th~t=productK=lne=shouäd=

~gree= th~t= consumers= choose= ~= br~nd= on= the= b~sis= of= underäying=

physic~ä= ~nd= reput~tion~ä= ch~r~cteristics= th~t= determine= the= br~nd’s=

v~äueK= ft= is= often= unwieädy= t~sk= for= consumers= to= process= ~ää= the=

~v~iä~bäe= ~ttribute= inform~tionK= qherefore= consumers= reäy= on= simpäe=

decision= m~king= str~tegies= when= ev~äu~ting= ~nd= choosing= ~= productK=

Consumer= m~y= choose= ~= br~nd= by= ev~äu~ting= inform~tion= on= ~= few=

~ttributes=äike=its=priceI=physic~ä=qu~äities=or=the=br~nd=n~meK==

jost=consumers=wouäd=~gree=th~t=it=is=not=the=br~nd=n~me=or=price=th~t=

in= ~nd= of= themseäves= determine= qu~äityK= _ut= it= is= often= puzzäing= th~t=

most= consumers= use= br~nd= ~nd= price= inform~tion= heuristic~ääy= in=

ev~äu~ting=the=products=~nd=bäocks=consumer=~ttention=to=other=qu~äity=

determining=product=ch~r~cteristicsK=^s=~=resuät=consumers=often=f~iä=to=

correctäy= differenti~te= between= products= of= v~rying= qu~äityK= fn= other=

words=such=f~iäure=m~y=h~ve=signific~nt=effect=vi~=the=direct=cost=of=the=

productI= for=ex~mpäeI= p~ying=~= premium=price= for= the=br~nded=goods=

over= identic~ä= generic= productsI= ~nd= indirect= costs= of= the= product= not=

fuääy=s~tisficing=~=consumers=utiäity=expect~tionsI=th~t=isI=~=product=m~y=

not=effectiveäy=m~tch=with=the=consumer=preferencesK=

oese~rch=in=psychoäogy=h~s=demonstr~ted=th~t=individu~äs=often=reäy=on=

heuristics= when= coping= with= even= moder~teäy= äe~rning= t~sksK= lne=

consequence= of= heuristics=b~sed= äe~rning= is= the= phenomenon= known=

~s=~ttention=bäockingW=once=~n=individu~ä=äe~rns=to=~ssoci~te=~=cue=with=

~n= outcomeI= this= ~ssoci~tion= tends= to= bäock= subsequent= ~ttempts= to=

p~ir= new= cues= with= th~t= s~me= outcomeK= bssenti~ääyI= bäocking= ~rises=

from=individu~äs’=reäi~nce=on=“first=impressions≤=r~ther=th~n=eng~ging=in=

the= more= sophistic~ted= äe~rning= str~tegiesK= ff= consumers= initi~ääy=

~ssoci~te= ~= p~rticuä~r= br~nd= n~me= with= high= qu~äityI= this= ~ssoci~tion=

m~y= bäock= consumers= from= identifying= the= physic~ä= ch~r~cteristics= of=

competing= products= th~t= ~re= ~äso= indic~tive= of= high= qu~äityK= ^ttention=

bäocking= in= ~= consumer= äe~rning= context= h~s= been= expäored= by=

s~nlsseä~er=~nd=^äb~=in=the=ye~r=OMMMK==

OWQ Bounded oationality

eum~ns=~nd=~nim~äs=must=m~ke=inferences=~bout=unknown=fe~tures=of=

their= woräd= under= constr~ints= of= äimited= timeI= knowäedgeI= ~nd=

comput~tion~ä=c~p~citiesK=lne=shouäd=not=conceive=bounded=r~tion~äity=

~s=optimiz~tion=under=constr~ints=nor=do=one=shouäd=think=of=bounded=

r~tion~äity= ~s= the= study= of= how= peopäe= f~iä= to= meet= norm~tive= ide~äsK=

o~therI= bounded= r~tion~äity= is= the= key= to= underst~nding= how= peopäe=

m~ke= decisions= without= utiäities= ~nd= prob~biäitiesK= _ounded= r~tion~äity=

consists= of= simpäe= stepJbyJstep= ruäes= th~t= function= weää= under= the=

constr~ints=of=äimited=se~rchI=knowäedgeI=~nd=timeµwhether=~n=optim~ä=

procedure=is=~v~iä~bäe=or=notK=gust=~s=~=mech~nic=wiää=puää=out=specific=

wrenchesI= päiersI= ~nd= g~p= g~uges= to= m~int~in= ~n= engine= r~ther= th~n=

just=hit=everything=with=~=h~mmerI=different=dom~ins=of=thought=require=

different=speci~äized=tooäsK=qhe=notion=of=~=tooäbox=fuää=of=unique=singäeJ

function= devices= ä~cks= the= be~uty= of= ieibniz’s= dre~m= of= ~= singäe= ~ääJ

purpose= inferenti~ä= power= tooäK= fnste~dI= it= evokes= the= ~biäities= of= ~=

cr~ftsm~nI= who= c~n= provide= service~bäe= soäutions= to= ~ämost= ~ny=

probäem=with=just=wh~t=is=~t=h~ndK=

qhis=repertoire=of=speci~äized=cognitive=mech~nismsI=which=incäude=f~st=

~nd= frug~ä= heuristicsI= were= sh~ped= by= evoäutionI= äe~rningI= ~nd=

cuäture= for= specific= dom~ins= of= inference= ~nd= re~soningK= qhis=

coääection=of=mech~nisms=is=c~ääed=~s=the=“~d~ptive=tooäboxK≤=qhe=

concept=of=~n=~d~ptive=tooäbox=is=cä~rified=~s=foääowsW==

–= ft= refers= to= ~= specific= group= of= ruäes= or= heuristics= r~ther= th~n= to= ~=

gener~äJpurpose=decisionJm~king=~ägorithmK=

–= qhese= heuristics= ~re= f~stI= frug~äI= ~nd= comput~tion~ääy= che~p= r~ther=

th~n=consistentI=coherentI=~nd=gener~äK=

–= qhese= heuristics= ~re= ~d~pted= to= p~rticuä~r= environmentsI= p~st= or=

presentI=physic~ä=or=soci~äK=

–= qhe= heuristics= in= the= ~d~ptive= tooäbox= ~re= orchestr~ted= by= some=

mech~nism= refäecting= the= import~nce= of= confäicting= motiv~tions= ~nd=

go~äsK=

OWR pome heuristics identified in jarketing

qwo=~re~s=of= rese~rch= in=which=m~ny=heuristics=h~ve=been=proposed=

~re=persu~sion=~nd=m~rketingK=vet=m~ny=of=these=proposed=heuristics=

~ppe~r= to= be= dom~in= specific= inst~nti~tions= of= more= dom~inJgener~ä=

principäesK= ConsiderI= for= ex~mpäeI= the= brand name= heuristic=

Ej~hesw~r~nI= j~ckieI= C= Ch~ikenI= NVVOFI= which= st~tes= th~t= peopäe=

more= f~vor~bäy= ev~äu~te= products= with= positiveäy= v~äenced= br~nd=

n~mesI=or=the=country of=origin heuristic=ECh~ngI=OMMQFI=which=st~tes=

th~t= peopäe= wiää= more= f~vor~bäy= ev~äu~te= products= from= positiveäy=

reg~rded= countriesK= qhe= price heuristic= Ejitr~I= NVVRF= suggests= th~t=

peopäe= judge= expensive= products= to= be= of= high= qu~äityK= qhe= scarcity

heuristic= Efor= ~= reviewI= see= _r~nnon= C= _rockI= OMMNF= suggests= th~t=

peopäe= judge= r~re=products= to=be= of=high= v~äue=or= qu~äityK=qhe= effort

heuristic=EhrugerI=tirtzI=s~n=_ovenI=C=^äterm~ttI=OMMQF=suggests=th~t=

peopäe=wiää=judge=objects=th~t=took=~=äong=time=to=produce=to=be=of=high=

v~äueK= curthermoreI= the= idiosyncratic fit heuristic= Ehivetz= C=

pimonsonI=OMMPF=suggests= th~t=peopäe=wiää= ev~äu~te=consumer= äoy~äty=

progr~ms= EeKgKI= buy= NM= coffeesI= get= N= freeF= with= person~ääy= reäev~nt=

fe~tures= to=be=more= v~äu~bäeK=qhusI=~äthough= these=heuristics=v~ry= in=

the= specificsI= they= ~ää= ~ppe~r= quite= reä~ted= in= describing= how= cert~in=

cues=~re=used= to=m~ke=positive=ev~äu~tionsK=ptiää= other=overäy=specific=

heuristics=popuä~te=the=persu~sion=äiter~tureK=qhe=audience response

heuristic=E^xsomI=v~tesI=C=Ch~ikenI=NVUTFI=for=ex~mpäeI=st~tes=th~t=~n=

enthusi~stic=~udience=response=EeKgKI=he~rty=~ppä~useF= to=~=mess~ge=

wiää= äe~d= observers= to= positiveäy= reg~rd= or= ~gree= with= ~= mess~geK=

Cäoseäy= reä~ted= to= this= is= the= consensus heuristicI= which= is= ~=

gener~äized= version=of= the=~udience= response= heuristic= EdinerJporoää~=

C= Ch~ikenI= NVVTX= j~hesw~r~n= C= Ch~ikenI= NVVNFK= qhere= is= ~äso= the=

endorsement heuristic= Ecoreh~ndI= d~stiäI= C= pmithI= OMMQFI= which=

suggests=th~t=peopäe=wiää=find=mess~ges=more=convincing=if=~=positiveäy=

reg~rded= org~niz~tion= endorses= themK= qhe= likeability heuristic=

suggests= th~t= peopäe= wiää= be= more= convinced= by= äike~bäe= th~n=

unäike~bäe=spe~kers= ECh~ikenI=NVUMFNNK=curthermoreI=~ccording= to= the=

expertise heuristic= Eo~tneshw~r= C= Ch~ikenI= NVVNFI= peopäe= wiää= be=

more=convinced=by=experts=th~n=novicesK=^s=in=the=m~rketing=äiter~tureI=

these=heuristics=v~ry=in=specifics=but=~re=~ää=cäoseäy=reä~ted=by=the=f~ct=

th~t=they=specify=how=peopäe=~re=more=convinced=by=mess~ges=th~t=~re=

~ssoci~ted=with=positiveäy=v~äenced=inform~tion

OWS An bffort oeduction cramework for ptudying

eeuristics

^ccording=to=^nuj=ph~h=~nd=a~nieä=lppenheimerI=heuristic=beh~vior=in=

the= re~äm= of= judgment= ~nd= decision= m~king= necess~riäy= reä~xes= the=

difficuät= requirements=of= the=weighted=~dditive= ruäeK=_y=simpäifying=one=

or= more= of= the= requirements= of= the= weighted= ~dditive= ruäe= ~nd= its=

v~ri~ntsI= heuristics=predict~bäy= reduce= cognitive=effortK= _ec~use= there=

~re= five= effortfuä= components= of= the= weighted= ~dditive= ruäeI= there= ~re=

~äso=five=principäes=for=effortJreductionK=ft=is=proposed=th~t=~ää=heuristics=

reäy=on=one=or=more=of=the=foääowing=methods=for=effortJreductionW==

NK=bx~mining=fewer=cuesK=

OK= oeducing= the= difficuäty= ~ssoci~ted= with= retrieving= ~nd= storing= cue=

v~äuesK=

PK=pimpäifying=the=weighting=principäes=for=cuesK=

QK=fntegr~ting=äess=inform~tionK=

RK=bx~mining=fewer=~ätern~tivesK=

qhe=most=b~sic=effort=reduction=principäes=c~n=be=derived=by=ex~mining=

the=dem~nds=th~t=optim~ä=ruäes=pä~ce=on=decision=m~kersK=lne=wiää=use=

the= weighted= ~dditive= modeä= ~s= the= optim~ä= processing= ruäe= ~g~inst=

which= to= comp~re= heuristicsK= pome= m~y= consider= this= ~n= ~rbitr~ry=

st~rting= pointI= ~s= one= c~n= deveäop= sever~ä= optim~ä= ruäes= within= ~nd=

beyond=judgment=~nd=decision=m~kingK=eoweverI=there=is=good=re~son=

to=t~ke=this=ruäe=~s=our=point=of=referenceK=qhe=weighted=~dditive=ruäe=is=

considered=“the= tr~dition~ä=goäd= st~nd~rd= for=r~tion~ä=preferences≤=~nd=

inferences= EdigerenzerI= qoddI= C= the= ^_C= oese~rch= droupI= NVVVI= pK=

OSFNO=~nd=~=prim~ry=route=to=m~ximizing=v~äue=or=utiäity=Efor=~=det~iäed=

discussionI= see= heeney= C= o~iff~I= NVTSFK= curthermoreI= previous=

rese~rch=h~s=shown=th~t=using=this=ruäe=requires=the=most=effort=~nd=is=

the= most= ~ccur~te= of= common= decision= ruäes= Em~yne= et= ~äKI= NVVPFK=

^ddition~ääyI=this=ruäe=c~n=be=~ppäied=to=both=judgment=~nd=choiceK=qhe=

prim~ry= distinction= is= th~tI= in= judgmentI= onäy= the= fin~ä= v~äue= for= ~n=

~ätern~tive=m~ttersI=where~s=in=choiceI=decision=m~kers=must=seäect=the=

~ätern~tive= with= the= best= v~äueK= qhe= heuristics= th~t= peopäe= use= wiää=

reduce=the=cognitive=dem~nds=comp~red=with=this=ruäeK=^äthough=there=

~re=v~ri~nts=of=this=ruäeI=such=~s=the=~dditive=difference=modeä=EqverskyI=

NVSVFI=most=of=the=dem~nds=pä~ced=on=decision=m~kers=~re=the=s~meK=

^t= its=coreI= the=weighted=~dditive=ruäe=describes=how=decision=m~kers=

use= ~nd= integr~te= reäev~nt= inform~tionK= ^nd= the= dem~nds= pä~ced= on=

decision=m~kers=stem=from=how=the=weighted=~dditive=ruäe=specifies=the=

use= of= inform~tionK= lther= compäex= ruäes= th~t= consistentäy= äe~d= to=

optim~ä=choices=must=~äso=use=~nd=integr~te=reäev~nt=inform~tionI=~nd=

they=wiää= therefore=pä~ce=dem~nds=on=decision=m~kers=th~t=~re=simiä~r=

to=the=dem~nds=of=the=weighted=~dditive=ruäeK

OWSWN bxamining cewer Cues

qo= reä~x= the= first= dem~nd= of= the= weighted= ~dditive= modeäI= decision=

m~kers= c~n= use= heuristics= th~t= reduce= the= number= of= cues= th~t= ~re=

considered=for=e~ch=~ätern~tiveK=aecision=m~kers=might=focus=on=wh~t=

they= deem= the= most= import~nt= cues= or= on= wh~t= cues= most= v~äidäy=

predict= judgments= ~bout= ~ätern~tivesK= cor= inst~nceI= the= lexicogr~phic=

heuristic= EcishburnI=NVSTI=NVTQFNP= requires=decision=m~kers= to=decide=

which= cue= wiää= be= the= most= import~nt= ~nd= then= seäect= the= ~ätern~tive=

with= the= best= v~äue= on= th~t= cueK= fn= the= c~se= of= ~= tie= on= the= most=

import~nt= cueI= decision= m~kers= se~rch= the= tied= ~ätern~tives= ~g~in=

~ccording=to=the=second=most=import~nt=cueI=~nd=so=on=untiä=choosing=~=

singäe= ~ätern~tiveK= s~ri~nts= of= the= äexicogr~phic= heuristic= incäude= the=

lexicogr~phic=semiJorder=heuristic=EqverskyI=NVSVFI=the=priority=heuristic=

E_r~ndst~¨tterI= digerenzerI= C= eertwigI= OMMSFNQI= the= q~ke= the= Best=

heuristic= Edigerenzer= et= ~äKI= NVVVFI= ~nd= the= single= v~ri~ble= heuristic=

Eeog~rth=C=h~reä~i~I=OMMR~I=OMMTFKNRINS=kote= th~t=even=when=decision=

m~kers= must= se~rch= muätipäe= cues= bec~use= the= first= cue= does= not=

discrimin~te=between=~ätern~tivesI=they=~re=stiää=reducing=effort=bec~use=

they= consider= onäy= one= cue= ~t= ~= timeI= which= reduces= the= ~mount= of=

inform~tion= th~t= must= be= kept= in= working= memoryK= Consider= ~nother=

v~ri~nt= of= the= äexicogr~phic= heuristicI= the= elimin~tion= by= ~spects=

heuristic= EqverskyI=NVTOFK=^ccording= to= this=heuristicI=decision=m~kers=

seäect=~nd=est~bäish=~=cutoff=v~äue=for=the=most=import~nt=cueK=aecision=

m~kers=eäimin~te=~ny=~ätern~tives=th~t=do=not=s~tisfy=the=criterion=v~äue=

on=this=cue=~nd=continue=to=choose=cues=in=this=m~nner=untiä=onäy=one=

~ätern~tive=rem~insK=aecision=m~kers=m~y=stiää=h~ve=to=consuät=most=of=

the= cues= ~v~iä~bäe= before= fin~ääy= äimiting= the= outcome= set= to= one=

~ätern~tiveK=eoweverI=by=consuäting=fewer=cues=during=e~ch=comp~rison=

of= ~ätern~tivesI= the= decision= t~sk= becomes= signific~ntäy= e~sierK= ^=

heuristic=might=reduce=the=number=of=cues=used=but=use=more=th~n=one=

cueI= ~s= is= the= c~se= with= the= Clkc= heuristic= Eh~reä~i~I= OMMSFK= qhis=

heuristic= is= simiä~r= to= the= q~ke= the= _est= heuristic= Edigerenzer= et= ~äKI=

NVVVF= but= requires= two= confirming= cues= inste~d= of= just= oneK= qo=

underst~nd=when=decision=m~kers=ex~mine=fewer=cuesI=it=is=necess~ry=

to=expä~in=wh~t=is=me~nt=by=“cue≤=with=respect=to=effortJreductionK=qhe=

tr~dition~ä= definition= of= ~= cue= ~s= ~= piece= of= inform~tion= cert~inäy= stiää=

hoädsX=howeverI=the=question=now=is=~bout=which=cues=~re=~tomic=~nd=

which=c~n=be=divided=into=more=eäement~ä=cuesK=ConsiderI=for=ex~mpäeI=

~ffective= cues= such= ~s= outr~ge= Eh~hnem~n= C= crederickI= OMMOFNTK=

^äthough= there= is= evidence= th~t= outr~ge= is= used= ~s= ~= cue= tow~rd=

judgmentI= the= ~ffective= experience= of= outr~ge= is= itseäf= determined= by=

other=pieces=of=inform~tionI=such=~s=who=w~s=hurt=or=how=much=h~rm=

w~s= doneK= b~ch= of= these= cues= c~n= ~äso= be= broken= down= into= more=

b~sic= pieces= of= inform~tionI= ~nd= this= process= of= dividing= cues= c~n=

continueK= pimiä~räyI= sportsc~sters= ev~äu~ting= pä~yers= often= refer= to=

“~thäeticismK≤= eoweverI= this= c~n= be= broken= down= into= more= b~sic=

eäementsI= such=~s= speedI= strengthI=~nd= heightI= ~ää= of=which= ~re=wh~t=

one=couäd=c~ää=cuesK=

cor=the=purposes=of=the=current=fr~meworkI=one=c~n=~dopt=the=notion=of=

n~tur~l=~ssessments=Eqversky=C=h~hnem~nI=NVUPFNUK=^ccording=to=the=

ide~=of=n~tur~ä=~ssessmentsI=b~sic=cues=~re=represent~tions=th~t=resuät=

from= routine= perceptions= ~nd= cognitionsK= cor= ex~mpäeI= ~äthough= ~=

feeäing= of= outr~ge= m~y= resuät= from= numerous= other= pieces= of=

inform~tionI=outr~ge=~nd=~nger=~re=n~tur~ääy=c~äcuä~ted=on=~=d~iäy=b~sis=

~nd=therefore=c~n=be=thought=of=~s=~=b~sic=äeveä=cueK=

lf= courseI= it= is= not= ~äw~ys= seäfJevident= whether= ~= p~rticuä~r= cue= is= ~=

n~tur~ä=~ssessment=or=~n=integr~tion=of=muätipäe=b~sic=cuesK=qhe=pe~kJ

end= heuristic= Eh~hnem~nI= credericksonI= pchreiberI= C= oedeämeierI=

NVVPF= serves= ~s= ~n= ex~mpäe= of= how= the= äine= between= n~tur~ä=

~ssessment= ~nd= cueJintegr~tion= c~n= become= bäurredK= qhis= heuristic=

describes=how=peopäe=m~ke=judgments=~nd=decisions=reg~rding=p~infuä=

~nd= päe~sur~bäe= experiencesK= o~ther= th~n= integr~ting= momentJbyJ

moment=hedonic=experiences=over=timeI=peopäe=~ppe~r=to=~ttend=soäeäy=

to= the= pe~k= experience= of= p~in= ~nd= the= fin~ä= experience= of= p~inK=

gudgments=of=hedonic=experience=cäoseäy=correspond=to=the=~ver~ge=of=

these=two=experiencesK=h~hnem~n=et=~äK=ENVVPF=h~ve=posited=th~t=this=

heuristic=uses=~=singäe=cueI=resuäting=from=~=n~tur~ä=~ssessment=of=the=

~ver~ge=of= the=pe~k=~nd=endK=eoweverI= it= is=not=obvious=whether=this=

heuristic= shouäd= be= thought= of= ~s= using= ~= singäe= cue= Ethe= n~tur~ä=

~ssessment=of=hedonic=experienceF=or= two=cues= Ethe=pe~k=experience=

~nd=the=end=experience=th~t=~re=then=~ver~gedFK=ft=is=worth=noting=th~t=

in= both= c~ses= peopäe= ~re= using= onäy= ~= sm~ää= subset= of= the= ~v~iä~bäe=

inform~tion=when=m~king=judgmentsµignoring=~ää=the=inform~tion=~side=

from=the=pe~k=~nd=the=endK==

qhis=suggests=th~t=rese~rchers=need= to=t~ke=gre~t=c~re=when=~rguing=

th~t=~=process= reduces=effort=by=using= fewer=cuesK=cor=ex~mpäeI= one=

wouäd=not=w~nt=to=propose=~=“utiäity=heuristic≤=by=which=peopäe=~re=s~id=

to=onäy=consider=the=singäe=cue=of=tot~ä=utiäity=of=~n=optionI=bec~use=the=

c~äcuä~tion= of= utiäity= is= effortfuä= ~nd= requires= the= use= of= sever~ä= other=

cuesK=konetheäessI=in=m~ny=c~ses=onäy=~=subset=of= the=~v~iä~bäe=cues=

is=~ctu~ääy=usedI=~nd=in=these=c~ses=the=beh~vior=couäd=be=described=~s=

heuristicK=

OWSWO oeducing the aifficulty Associated tith oetrieving

and ptoring Cue salues

aecision= m~kers= c~n= reduce= the= difficuäty= ~ssoci~ted= with= ~ccessing=

cue=v~äues=in=two=w~ysK=qhe=first=form=of=these=processes=dispenses=of=

~ctu~ä=cue=v~äues=~nd=inste~d=stores=the=resuät=of=~=simpäe=comp~rison=

Egre~ter= th~nI= äess= th~nI= equ~ä= toFK= _y= using= ~= simpäified= v~äueI= it=

becomes=e~sier= to=store=~nd=retrieve=cue=v~äuesK=cor=ex~mpäeI=when=

using=the=weighted=pros=heuristic=EeuberI=NVTVFI=decision=m~kers=onäy=

consider=the=inform~tion=pert~ining=to=which=~ätern~tive=is=superior=on=~=

cert~in=cueK=poI=if=decision=m~kers=were=comp~ring=~=jini=Cooper=~nd=

eummer=on=fueä=efficiencyI=they=wouäd=not=ret~in=the=~ctu~ä=difference=

in=miäes=per=g~ääonI=but=they=wouäd= inste~d=store=the=comp~rison=~s=~=

“positive≤= for= the= jini= CooperK= _y= reducing= the= compäexity= of= the=

inform~tion=used=during=the=decision=processI=decision=m~kers=expend=

äess=effortK=

qhe= second= form= of= this= effortJreduction= principäe= suggests= th~t=

decision= m~kers= ~ccess= inform~tion= th~t= is= e~sier= to= retrieveI= either=

bec~use= it= is= computed= quickäy= or= h~s= been= m~de= re~diäy= ~v~iä~bäe=

through=other=me~nsK=qhis=type=of=effortJreduction=h~s=~ttr~cted=much=

rese~rch= ~nd= is= ~kin= to= h~hnem~n= ~nd= crederick’s= EOMMOF= ~ttribute=

substitution=theoryK=

qhis=form=of=effortJreduction=not~bäy=incäudes=the=three=m~in=heuristics=

from=the=heuristics=~nd=bi~ses=progr~m=Eqversky=C=h~hnem~nI=NVTPI=

NVTQFW=~v~il~bilityI= represent~tivenessI=~nd=~nchoring=~nd=~djustmentK=

kote= th~t= ~v~iä~biäity= inherentäy= refers= to= reducing= cognitive= effortI= ~s=

decision=m~kers=use=the=e~se=with=which=they=c~n=im~gine=~n=event=~s=

the=b~sis=for=predicting=how=äikeäy=th~t=event=is=to=occur=~g~inK=fn=other=

wordsI= the= ~v~iä~biäity= of= these= ment~ä= im~ges= is= itseäf= ~n= e~siäy=

~ccessibäe= cue= for= the= äikeäihood= of= ~n= eventK= lffshoots= of= the=

~v~iä~biäity= heuristic= incäude= the= fluency= heuristic= Eg~coby= C= a~ää~sI=

NVUNX= jetc~äfe= et= ~äKI= NVVPX= thittäese~= C= ieboeI= OMMPFI= the=

distinctiveness= heuristic= Epch~cter= et= ~äKI= OMMNFI= ~nd= the= recognition=

heuristic=Edigerenzer=et=~äKI=NVVVFK=qhe=represent~tiveness=heuristic=is=

often=used=to=m~ke=judgments=~bout=whether=~=t~rget=object=beäongs=to=

~= given= cä~ssK= ^ccording= to= this= heuristicI= peopäe= m~ke= these=

judgments= by= using= e~syJtoJ~ccess= inform~tion= ~bout= the= degree= to=

which=the=t~rget=object=resembäes=~=prototypic~ä=inst~nce=of= the=cä~ssK=

^nchoring= ~nd= ~djustment= simiä~räy= refers= to= using= e~syJtoJ~ccess=

inform~tionK= qhis= heuristic= st~tes= th~t= decision= m~kers= wiää= form=

judgments=by=first=~nchoring=to=~=s~äient=~nd=~ccessibäe=v~äue=~nd=then=

~djusting=their=ev~äu~tions=from=this=v~äueK=

qhe= ~ffect= ~ssoci~ted= with= ~n= ~ätern~tive= ~äso= serves= ~s= ~nother=

prominent=cue=th~t= is=e~sy=to=ev~äu~te=Ecinuc~neI=^äh~k~miI=päovicI=C=

gohnsonI= OMMMX= joninI= OMMPX= jonin= C= lppenheimerI= OMMRX= päovicI=

cinuc~neI= metersI= C= j~cdregorI= OMMOFK= ^ccording= to= ~ffectJb~sed=

heuristicsI=peopäe=often=b~se=judgments=~bout=~n=object=on=emotion~ä=

ev~äu~tions= of= th~t= objectK= qhis= compiäed= feeäing= resuäts= from= the=

neg~tive=~nd=positive=~spects=of=the=objectI=~nd=this=feeäing=is=e~sy=to=

~ccessK=cor= ex~mpäeI= ~ffect= c~n=be=used=~s=~=cue= for= ev~äu~ting= the=

risks=~nd=benefits=of=~=prospect=Epäovic=et=~äKI=OMMOFK=ff=decision=m~kers=

äike=~=prospectI= then=when= they=~re=~sked= to=determine= the=risks=~nd=

benefits=of=the=prospect=they=judge=the=risks=to=be=äow=~nd=the=benefits=

to=be=highX= the=opposite=p~ttern=occurs=when=decision=m~kers=do=not=

äike=~=prospectK=pimiä~räyI=the=outr~ge=heuristic=Eh~hnem~n=C=crederickI=

OMMOF=st~tes=th~t=peopäe=consider=the=outr~geousness=of=crimes=when=

determining= retribution= ~nd= punishmentK= ^ccording= to= this= heuristicI=

peopäe=might=w~nt=to=punish=robbery=of=~=chiäd=more=th~n=the=robbery=

of=~n=~duätI=even=if=the=crimes=were=äeg~ääy=indistinguish~bäeK==

bvidence=for=the=use=of=e~syJtoJ~ccess=cues=~äso=~ppe~rs=in=~=number=

of= dom~inJspecific= heuristics= th~t= reäy= on= dom~inJb~sed= f~ciäit~tion= of=

retriev~äK=cor=ex~mpäeI=it=is=typic~ääy=~ssumed=th~t=heuristic=processing=

of=~rguments=reäies=on=cues=th~t=~re=~ssoci~ted=with=mess~ge=v~äidity=

EseeI= eKgKI= j~hesw~r~n= C= Ch~ikenI= NVVNX= o~tneshw~r= C= Ch~ikenI=

NVVNFONK=^s=these=cues=become=~ssoci~ted=with=highJqu~äity=mess~gesI=

the=t~sk=of= judging=mess~ge=qu~äity=might=prime=the=~ssoci~ted=cuesK=

qhereforeI=when=judging=mess~ge=v~äidity= it=m~y=be=e~sier=to= retrieve=

or=~ccess=such=~ssoci~ted=cuesI=~nd=using= these=cues=wouäd= reduce=

the= effort= reä~ted= to= retrieving= more= difficuätJtoJ~ccess= cuesI= such= ~s=

~rgument=qu~äityK=

OWSWP pimplifying the teighting mrinciples for Cues

then= simpäifying= weighting= principäesI= decision= m~kers= might= use=

heuristics= th~t= ignore=cueJv~äidity= inform~tionI=or= the=predictive=qu~äity=

of= e~ch= cueK= qypic~ääyI= more= v~äid= cues= ~re= weighted= more= he~viäyX=

howeverI= by= using= nonv~äidity= b~sed= cue= seäectionI= decision= m~kers=

inherentäy=simpäify= cue=weighting=principäes=bec~use= they=do=not=h~ve=

to= judge= the= predictive= ~ccur~cy= of= e~ch= cue= Efor= ~= discussionI= see=

ph~h= C= lppenheimerI= OMMTFK= cor= ex~mpäeI= the= equ~l= weightingI= or=

t~llyingI=heuristic=Ea~wesI=NVTVX=m~yne=et=~äKI=NVVPF=is=virtu~ääy=identic~ä=

to=the=weighted=~dditive=modeäI=except=th~t=it=gives=e~ch=cue=~n=equ~ä=

weightK= qhe= m~jority= of= confirming= dimensions= heuristic= Eousso= C=

aosherI= NVUPF= simiä~räy= ~ppäies= equ~ä= weights= to= every= cue= v~äueK=

^ccording= to= this=heuristicI=decision=m~kers= comp~re= two=~ätern~tives=

~t=~=timeI=~nd=they=ret~in=the=~ätern~tive=th~t=is=superior=on=the=m~jority=

of= cuesX= no= one= cue= is= weighted= more= he~viäy= th~n= ~notherK=

curthermoreI= digerenzer= et= ~äK= ENVVVF= h~ve= posited= the= jinim~list=

heuristicI= in= which= decision= m~kers= wiää= r~ndomäy= choose= ~= cue= untiä=

they= find= one= th~t= discrimin~tes= between= ~ätern~tivesK= ^ddition~ääyI=

there= is= the= q~ke= the= i~st= heuristic= Edigerenzer= et= ~äKI= NVVVFI= which=

suggests= th~t= decision= m~kers= use= the= cue= th~t= h~s= most= recentäy=

discrimin~ted= between= ~ätern~tivesK= tithout= h~ving= to= decide= on=

different=weights=for=e~ch=cueI=decision=m~kers=reduce=cognitive=effortK

OWSWQ fntegrating iess fnformation

then= decision= m~kers= reduce= effort= by= integr~ting= äess= inform~tion=

~cross=muätipäe=~ttributesI=they=often=do=not=form=~n=over~ää=impression=

of=~n=~ätern~tive=Em~yne=et=~äKI=NVVPFK=qhe=heuristic=for=choice=th~t=best=

exempäifies= the=use=of= this=principäe=is=the=s~tisficing=heuristic= EpimonI=

NVRRI=NVRSI=NVVMFK=^äthough=this=heuristic=uses=numerous=cuesI=it=does=

not= integr~te= the= inform~tion= from=~ää= of= these=cues= to= form=~n=over~ää=

impression= of= ~n= ~ätern~tive’s= utiäityK= qo= m~ke= ~= choiceI= decision=

m~kers= set= cutoff= äeveäs= for= e~ch= cue= ~nd= then= seäect= the= first=

~ätern~tive=in=their=se~rch=th~t=surp~sses=their=cutoff=for=e~ch=cueK=qh~t=

isI=the=chosen=~ätern~tive=is=simpäy=“good=enoughI≤=but=its=over~ää=utiäity=

is= not= ~ssessedK= pimiä~räyI= the= domr~n= heuristic= Eeog~rth= C= h~reä~i~I=

OMMRbF= does= not= require= decision= m~kers= to= integr~te= inform~tion=

~cross=muätipäe=cuesK=qhe=domr~n=heuristic=eäimin~tes=~ätern~tives=th~t=

~re=domin~ted=by=~t= äe~st=one=other=~ätern~tiveK=_ec~use=e~ch=cue=is=

ev~äu~ted= independentäyI= there= is= no= need= to= integr~te= inform~tion=

~cross=cues=or=to=form=~n=over~ää=impression=of=~n=~ätern~tive=before=it=

is= eäimin~tedK= fndeedI= ~ää= noncompens~tory= heuristics= EiKeKI= heuristics=

th~t=do=not=m~ke=tr~deJoffs=between=cuesF=reduce=effort=by=integr~ting=

äess=inform~tion=or=even=by=not=integr~ting=inform~tion=~t=~ääK=

lf=courseI=when=~=heuristic=uses=onäy=one=cueI=decision=m~kers=~void=

integr~ting= muätipäe= pieces= of= inform~tion= ~s= ~= necess~ry= sideJeffectK=

eeuristics=th~t=use=onäy=one=cue=incäude=the=q~ke=the=_est=Edigerenzer=

et= ~äKI= NVVVFI= the= äexicogr~phic= EcishburnI= NVSTI= NVTQF= ~nd= the=

eäimin~tion=by=~spects=EqverskyI=NVTOF=heuristicsK=^äthough=these=oneJ

cue= heuristics= might= m~ke= it= seem= ~s= though= ex~mining= fewer= cues=

~nd= integr~ting= äess= inform~tion= ~re= identic~ä=w~ys= of= reducing= effortI=

heuristics= such= ~s= s~tisficing= show= how= these= principäes= ~re=

discrimin~bäeK= qhese= oneJcue= heuristics= therefore= represent= onäy= ~=

subset=of=heuristics=th~t=integr~te=äess=inform~tionK=

qhis= principäe= m~y= ~äso= heäp= expä~in= effortJreduction= underäying=

response=mode=comp~tibiäity=effects=Eiichtenstein=C=päovicI=NVTNFK=cor=

ex~mpäeI=consider=~=choice=between=two=äotteriesW=lne=äottery=offers=~=

high=p~yoff=but=with=~=äow=prob~biäity=of=winningX=the=other=äottery=offers=

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with=these=g~mbäesI=p~rticip~nts’=preferences=wiää=depend=on=how=they=

~re=~sked=to=indic~te=such=preferK=then=~sked=to=chooseI=p~rticip~nts=

wiää= more= often= choose= the= highJprob~biäity= g~mbäeK= eoweverI= when=

~sked=to=bid=on=e~ch=g~mbäeI=p~rticip~nts=wiää=often=offer=~=higher=price=

for=the=high=p~yoff=g~mbäe=Eindic~ting=gre~ter=preferenceFK=ft=seems=th~t=

in=the=c~se=of=choiceI=it=is=e~sier=to=~nchor=the=preference=on=prob~biäity=

of=winningK=eoweverI= in= the=c~se=of=pricingI= it= is=e~sier= to=~nchor= the=

preference=on= the=p~yoffsK=qh~t= isI= r~ther= th~n= integr~ting= the=p~yoffs=

~nd= prob~biäitiesI= p~rticip~nts= prim~riäy= use= the= inform~tion= th~t=

requires= the= äe~st= ment~ä= tr~nsform~tion= to= ~nswer= the= experiment~ä=

questionK=^s=it=m~y=be=more=effortfuä=to=integr~te=~cross=mod~äities=th~n=

within= mod~äitiesI= p~rticip~nts= reduce= effort= by= integr~ting= äess=

inform~tion=~cross=mod~äitiesK=

OWSWR bxamining cewer Alternatives

eeuristics= th~t=ex~mine=or=comp~re= fewer=~ätern~tives=~re=p~rticuä~räy=

suited= for= reducing= the= effort= ~ssoci~ted= with= m~king= choicesK=

eeuristics=of= this= type=c~n=work= in= three=w~ysK=cirstI=decision=m~kers=

c~n= use= heuristics= th~t= äimit= the= number= of= ~ätern~tives= th~t= ~re=

comp~red=simuät~neousäyK=cor=ex~mpäeI=the=~forementioned=m~jority=of=

confirming=dimensions=heuristic=Eousso=C=aosherI=VUPF=m~kes=use=of=

p~ir=wise=comp~risonsI=where=~n=~ätern~tive=from=e~ch=p~ir=is=ret~ined=

untiä= onäy=one=~ätern~tive= rem~insK=m~ir=wise=comp~risons=signific~ntäy=

reduce=the=number=of=~ätern~tives=th~t=must=be=kept=in=working=memory=

~t=onceI=which=reduces=the=dem~nd=on=cognitive=resourcesK=m~ir=wise=

comp~risons=underäie=other=heuristicsI=such=~s=the=elimin~tion=by=le~st=

~ttr~ctive= ~spect= heuristicµwhich= removes= the= ~ätern~tive= with= the=

äowest= over~ää= cue= v~äueµ~nd= the= choice= by= most= ~ttr~ctive= ~spect=

heuristicµ= which= ret~ins= the= ~ätern~tive= with= the= highest= over~ää= cue=

v~äue=EpvensonI=NVTVFK=

pecondI=heuristics=of= this=type=might= reduce=effort=by=gr~du~ääy=p~ring=

down= the= number= of= ~ätern~tives= in= the= setK= cor= ex~mpäeI= qversky’s=

ENVTOF= eäimin~tion= by= ~spects= heuristic= ~nd= other= äexicogr~phic=

heuristics= initi~ääy= incäude=~ää= ~ätern~tives=but= ruäe= out= ~ätern~tives= th~t=

f~ää=beäow=~=minimum=threshoäd=for=~=p~rticuä~r=cueK=^s=more=cues=~re=

ev~äu~tedI=fewer=~ätern~tives=wiää=rem~in=in=the=set=of=~v~iä~bäe=optionsK=

_ec~use= the= cues= of= onäy= ~= äimited= number= of= ~ätern~tives= ~re=

thoroughäy=se~rchedI=these=processes=wiää=reduce=effort=comp~red=with=

~=process=th~t=ex~mines=~ää=cues=for=~ää=~ätern~tivesK=

eeuristics= th~t=ex~mine= fewer=~ätern~tives=might=~äso= reduce=effort=by=

immedi~teäy= eäimin~ting= some= ~ätern~tives= from= the= over~ää= set= of=

~v~iä~bäe=~ätern~tivesK=puppose=you=~re=se~rching=for=~=new=ceää=phone=

providerI= for=ex~mpäeK= ^äthough=you=might= know=of= m~ny=comp~niesI=

you=might=just=consider=the=first=two=providers=th~t=come=to=mindK=fn=this=

w~yI= other= providers= h~ve= quickäy= been= eäimin~ted= from= the= decision=

setK= lnce= you= h~ve= n~rrowed= your= decision= setI= you= m~y= w~nt= to=

consider= other= cuesI= such= ~s= cover~ge= ~re~I= number= of= c~ääing=

minutesI=priceI=~nd=so=forthK=

qhis=ch~pter=expä~ins=the=use=of=heuristics=by=individu~äsLconsumers=in=

their= decision= m~king= processesK= rse= of= heuristics= c~n= be= good= ~t=

times=~s=they=simpäify=compäex=~ägorithms=in=decision=m~king=processK=

eum~n= memory= ~äso= h~s= äimit~tions= to= conduct= cognitive= processes=

such=~s=processing=the=d~t~I=which=compeäs=the=individu~äs=to=resort=to=

heuristicsK==

Ch~pter=P=

iiter~ture=oeview=m~rt=J=ff=

_r~nd=Choice=jodeäs=

PWN===fntroduction=

PWO===aom~in=of=Choice=oese~rch=

PWP===mrogress=

PWQ===i~tent=s~ri~bäes=

PWR===Combining=oeve~äed=C=pt~ted=mreferences=

PWS===_~yesi~n=mrocedure=

PWT===_eh~vior~ä=ayn~mics=C=fnter~ction=

PWU===a~t~=fmput~tion=

PWV===aiscrete=C=Continuous=jodeäs=

PWNM=poftw~re=

PWNN=Ch~ääenges=

PWNO=jodeä=cormuä~tion=C=bstim~tion=

PWNP=Ch~ääenges=

PWNQ=oese~rch=d~p=

Ch~pter=P=

iiter~ture=oeview=m~rt=J=ff=

_r~nd=Choice=jodeäs=

PWN fntroduction

qhe= ~ppro~ch= in= this= study= is= to= ~ddress= heuristics= in= the= choice=

processK=qo=do=thisI=review=of=the=reäev~nt=äiter~ture=on=choice=modeäs=

is=done=in=three=~re~sK=

NK= o~ndom= rtiäity= jodeäs= EorjF= –= qhe= existing= prob~biäistic=

modeäs=~re=reviewedK=

OK= msychometric= jodeäing= –= qo= oper~tion~äize= ~nd= qu~ntify=

unobserv~bäe= concepts= such= ~s= soci~ä= cä~ssI= pubäic= opinionI=

person~äityI=inteääigence=etcKI=psychometrici~ns=h~ve=pioneered=~=

cä~ss=of=modeäs=c~ääed=~s=the=ä~tent=structure=modeäsK=

PK= eeterogeneity=in=Choice=mrocesses=J=qhese=modeäs=c~ptures=the=

heterogeneity=in=the=choice=processesK=

PWNWN oandom rtility jodels EorjF

bxtensive= discussions= of= the= m~croJeconomic= ~nd= psychoäogic~ä=

underpinnings=of=the=r~ndom=utiäity=modeäs=c~n=be=found=in=jc=c~dden=

ENVTPFI= j~nski= ENVTTF= ~nd= ierm~n= ENVUTFK= qhe= modeä= is= b~sed= on=

notion= th~t= consumers= derive= utiäity= by= buying= or= choosing= ~n=

~ätern~tive= ~nd= the= consumer= is= postuä~ted= to= pick= th~t= ~ätern~tive=

which=m~ximizes=hisLher=utiäityK=pince=the=utiäities=~re=not=known=to=the=

rese~rchersL~n~äystsI= they= ~re= termed= ~s= r~ndom= v~ri~bäesK= jore=

specific~ääy= the= r~ndom= utiäity= of= ~n= ~ätern~tive= Ebr~ndF= c~n= be=

expressed=~s=~=sum=of=observ~bäe=~nd=unobserv~bäe=components=~s==

rin=Z=sin=H=εin=for=~ää=i=є=Cn==

rin== Z=r~ndom=utiäity=of=~ätern~tive=i=for=consumer=nX=

sin== Z=system~tic=component=of=utiäityX=

Cn= = Z=choice=set=~v~iä~bäe=to=consumer=nX=

εin= Z=r~ndom=component=of=utiäity=

the=system~tic=component=is=given=by=

sin=Z=sEuinI=βFK=

there=uin= = Z=~ttributes=of=~ätern~tive=i=~nd=ch~r~cteristics=of=

===Consumer=n=

Β= = Z=p~r~meter=vector=

curther=under=m~ximum=utiäity=decision=ruäeI=the=event=th~t=~ätern~tive=i=

is=chosen=is=äinked=to=the=r~ndom=utiäities=~s==

{i=chosen}= = = = = Erin ≥=rjnI=for=~ää=jF=

Consequentäy=the=prob~biäity=th~t=~n=~ätern~tive=i=is=chosen=by=~=

consumer=n=is=given=~s==

mEi=chosenF=Z=mErin ≥=rjnI=for=~ää=jF=

^=cä~ss=of=prob~biäistic=choice=modeä=c~n=be=constructed=by=~ppropri~te=

specific~tions= of= the= joint= prob~biäity= density= of= EεNnI =εOnI= … =εjnFK= cor=

ex~mpäe= if= it= is= ~ssumed= th~t= εin= ~re= iKiKd= dumbeä= ~cross= ~ätern~tives=

~nd=consumers=with=~=sc~äe=p~r~meter=set=to=N~nd=äoc~tion=p~r~meter=

set= to= MI= one= c~n= obt~in= the= choice= prob~biäity= in= ~= cäosed= form=

expression=referred= to=~s=juätinomi~ä=iogit=jodeä= referred= to=~s=jki=

with==

==========expEsinF=mEyin=ZN|=unX=βF=Z==

= = = = = ==================Σ===expEsjnF = == = = = = = ======jєCn=

there==

= N=if=~ätern~tive=i=is=chosen=by=the=individu~ä=

yin==Z=

= M=otherwise=

un=Z={uin=for=~ää=i=є=Cn}=

curther= if= the=system~tic= utiäity= function=sEKF= is=~= äine~r= function=of= the=

p~r~metersI= modeä= äikeäihood= estim~tion= of= the= modeä= p~r~meters= is=

e~sy=through=the=gr~dient=methods=due=to=the=gäob~ä=conc~tivity=of=the=

äog= äikeäihood= function= m~king= the= jki= the= most= wideäy= used=

prob~biäistic=choice=modeäK=

lne= of= the= import~nt= properties= of= the= jki= modeä= is= termed= the=

“independence= of= irreäev~nt= ~ätern~tives≤= Eff^F= in= th~t= for= ~= specific=

consumer= the= r~tio= of= choice= prob~biäities= of= ~ny= two= ~ätern~tives= is=

entireäy= un~ffected= by= the= system~tic= utiäities= of= ~ny= other= ~ätern~tiveK=

^n=import~nt=m~nifest~tion=of=this=property=is=th~t==

PWNWO msychometric jodeling

fn=recent=ye~rsI=there=h~ve=been=~ttempts=to=shift=the=focus=to=~=more=

beh~vior~ääy= rich= p~r~digm= of= choice= modeäingK= qhe= m~in= fe~tures= of=

this=new=p~r~digm=~reW=

NK= bxpäicit= tre~tment= of= the= psychoäogic~ä= f~ctors= th~t= ~ffect= the=

decision=m~king=process=

OK= a~t~= sources= other= th~n= reve~äed= preferences= d~t~= such= ~s=

st~ted= preferences= c~n= be= effectiveäy= utiäized= in= the= modeä=

deveäopmentK=

_en= ^kiv~= ~nd= _occ~r~= ENVUTF= used= four= types= of= psychoäogic~ä=

f~ctorsW=

NK= ^ttitudesI=needs=~nd=beäiefs=

OK= merceptions= =

PK= mreferences= =

QK= _eh~vior~ä=intentions=

_eh~vior~ä=intentions=~re=m~nifested=through=st~ted=preferences=d~t~K=

cor= ex~mpäe= ~= popuä~r= method= for= me~suring= preferences= in= m~rket=

rese~rch=studies=is=conjoint=~n~äysisK=fn=conjoint=~n~äysis=respondents=

~re= presented= with= descriptions= of= sever~ä= hypothetic~ä= ~ätern~tivesI=

e~ch= of= which= h~ve= different= ~ttributesK= qhe= respondents= wouäd= be=

~sked= to= indic~te= hisLher= reä~tive= preference= tow~rd= e~ch= of= the=

~ätern~tivesK=qhe=responses=~re=used=to=infer=~bout=the=impäicit=weights=

respondents=m~y=use=on=e~ch=of=the=~ttributes=whiäe=expressing=their=

preferencesK= o~ndom= utiäity= modeäs= h~ve= been= ~ppäied= to= st~ted=

preferences=d~t~=to=modeä=individu~ä=choice=beh~viorK=

PWNWP jodeling heterogeneity

qhe= signific~nce= of= heterogeneityI= especi~ääy= the= v~ri~tions= in=

individu~ä’s=sensitivity= to= ~ttributes=of= ~ätern~tivesI= in= choice= processI=

~nd= th~t= choice= is= ~ffected= by= = individu~ä’s= ~ttitude= tow~rds= ~nd=

perception=~bout=~ätern~tives=~nd=their=~ttributesI=is=recognized=by=the=

rese~rchersK=curther=consumers=m~y=~dopt=different=decisionsJm~king=

protocoäs=~s=weää=~s=differ=in=the=utiäity=derived=from=nomin~ääy=identic~ä=

~ätern~tivesK= ft= must= be= noted= th~t= such= v~ri~tions= ~re= different= from=

observed= v~ri~tions= such= ~s= incäusion= of= socioJeconomic= ~nd=

demogr~phic=ch~r~cteristics=in=tr~dition~ä=choice=modeäsK=oese~rchers=

~re=nowJ~Jd~ys=~ttempting= to=modeä= this=heterogeneity=of= the=choice=

process=th~t=stems=from=v~ri~tions=in=the=consumers’=ch~r~cteristicsK=

PWO aomain of Choice oesearch

aomain of Choice oesearch

cig PWN

j~ny= discipäines= ~re= interested= in= the= choice= processI= incäuding=

economistsI=engineersI=psychoäogistsI=m~rketersI=~nd=pä~nnersK=cigure=

PWN=iääustr~tes=the=dom~in=of=choice=rese~rchK=mredictive=choice=modeäs=

emph~size= the= reguä~rities= of= choice= beh~vior= in= qu~ntit~tive= modeäs=

th~t=c~n=be=used=for=prediction=in=the=discipäines=äisted=~boveK=qhis=view=

emph~sizes= the= system~ticI= inv~ri~nt= fe~tures=of=choice=beh~vior= th~t=

c~n= be= used= for= forec~stingK= ln= the= other= h~ndI= beh~vior~ä= choice=

~n~äysis=deconstructs=the=choice=process=by=concentr~ting=on=reve~äing=

irreguä~rities= ~nd= idiosyncr~tic= fe~tures=of= choice=beh~viorK= qhe= views=

~re= differentI= prim~riäy= due= to= the= differences= in= rese~rch= objectivesI=

prediction= EeconomicsI= m~rketingI= pä~nning= ~nd= engineeringF= versus=

deconstruction= EpsychoäogyFK= eoweverI= strong= crossJfertiäiz~tion= h~s=

occurred=~mong=these=fieädsK==

tithin= the= dom~in= of= predictive= choice= modeäs= is= the= r~ndom= utiäity=

modeä=EorjFI=~=powerfuä=tooä=for=~pproxim~ting=the=system~tic=~spects=

of= choice= beh~viorK= qhere= is= incompäete= overä~p= between= beh~vior~ä=

~nd= predictive= ~ppro~ches= to= ~n~äyzing= choiceI= ~nd= there= ~re= good=

re~sons=for=pursuing=e~ch=in=p~r~ääeä=without=necess~riäy=trying=to=force=

integr~tionK= eoweverI= e~ch= ende~vor= c~n= benefit= from= the= other’s=

resuätsI=~nd=the=end=go~ä=is=~n=integr~ted=tre~tment=of=choice=beh~vior=

th~t= incorpor~tes= the= inv~ri~nt=eäements=obt~ined=by=deconstructionist=

study= of= choice= processes= ~nd= is= predictive= for= pr~ctic~ä= ~ppäic~tionsK=

^n= import~nt= objective= of= the= rese~rch= efforts= presented= here= is= to=

deveäop= pr~ctic~ä= modeäs= th~t= go= beyond= the= orj= modeä= in= its=

n~rrowest= formuä~tion= ~nd= incorpor~te= eäements= of= cognitive= process=

th~t=h~ve=been=identified=~s=import~ntK=qhis=view=b~sed=on=~=beh~vior~ä=

~ppro~ch=is=summ~rized=in=cigure=PWOK=fn=the=p~stI=the=soäid=~rrows=in=

this= figure= were= mostäy= ex~minedX= now= the= d~shed= ~rrows= h~ve=

growing=import~nceK=

qhe=exp~nded=beh~vior~ä=fr~mework=emph~sizes=th~tW=

|= Choice= is= governed= by= perceptionsI= inform~tion= processing= ~nd=

cognitive=processesK=

|=eistory=m~ttersI= for= ex~mpäeI= infäuencing=context= Emotiv~tionI=~ffectI=

etcKFI=st~tus=quoI=~nd=st~te=dependenceK=

|=eeterogeneity=~cross=decisionJm~kers=due=to=different=~ttitudes=~nd=

perceptions=is=import~ntK=

|=qhere=~re=import~nt=ä~tent=constructs=Esuch=~s=perceptions=~nd=ä~tent=

cä~ssesF= th~t= ~re= infäuenced= by= psychoäogic~ä= f~ctors= ~nd= extern~ä=

constr~intsK=

PWOWO eybrid Choice jodels

eybrid= Choice= jodeä= EeCjF= is= ~n= integr~ted= tre~tment= of= choice=

beh~vior= th~t= incorpor~tes= the= inv~ri~nt= eäements= obt~ined= by=

deconstructionist= study= of= choice= processes= ~nd= is= predictive= for=

pr~ctic~ä= ~ppäic~tionsK= ^n= import~nt= objective= of= the= rese~rch= efforts=

presented= in= this= study= is= to=deveäop=pr~ctic~ä=modeäs= th~t=go=beyond=

the=orj=modeä= in= its=n~rrowest=formuä~tion=~nd=incorpor~te=eäements=

of=cognitive=process=th~t=h~ve=been=identified=~s=import~ntK==

qhe= objective= is= to= expäicitäy= modeä= the= choice= beh~vior= reä~tionships=

depicted= in= cigure= PWOK= qo= do= thisI= ~n= exp~nded= discrete= choice=

fr~mework=is=proposedI=termed=the=hybrid=choice=modeä=EeCjFI=which=

integr~tes= m~ny= types= of= discrete= choice= modeäing= methodsK= qhe=

fr~mework=for=the=eCj=is=shown=in=cigure=PWPK=qhe=tr~dition~ä=orj=is=

shown= on= the= vertic~ä= ~xis= of= this= figureW= observ~bäe= expä~n~tory=

v~ri~bäes=Eincäuding=ch~r~cteristics=of=the=decisionK=

Choice Behavior Epource - jccadden OMMNF

cigK PWO

fn=such=tr~dition~ä=qu~ntit~tive=choice=modeäsI=the=emph~sis=h~s=been=

on= the= system~ticI= inv~ri~nt= ~spects= of= choice= beh~viorI= which= ~re=

~ssumed=to==

eybrid Choice jodel Epource tlaker and Ben AkivaOMMNF

cigKPWP

m~ker=~nd=~ttributes=of=the=~ätern~tivesF=domin~te=the=choice=processK=

oese~rchers=h~ve=äong=been=focused=on=improving=the=specific~tion=of=

the= tr~dition~ä= orjI= ~nd= numerous= enh~ncements= h~ve= been=

deveäoped= th~t= ~id= in= predicting= re~äiz~tions= of= the= choice= beh~vior=

depicted=in=cigure=PK=qhese=methods=~re=integr~ted=in=the=gener~ä=eCj=

by= reä~xing= the= b~sic= orj= coreI= such= ~s= incorpor~ting= nonJorj=

decision= protocoäsI= in= ~n= effort= to= reä~x= simpäifying= ~ssumptions= ~nd=

enrich=underäying=beh~vior~ä=ch~r~cteriz~tionsK=qhe=extensions=incäudeW=

·= qhe= ~ddition= of= fäexibäe= disturb~nces= EeKgKI= f~ctor= ~n~äyticF= to=

mimic= ~ny= desir~bäe= error= structures= Esuch= ~s= reä~xing= the= ff^=

structure=of=äogit=or=specifying=r~ndom=p~r~metersFK=

·= qhe= expäicit= modeäing= of= ä~tent= psychoäogic~ä= f~ctors= such= ~s=

~ttitudes=~nd=perceptions= Eä~tent= v~ri~bäesFK=qh~t= isI= combining=

‘‘h~rd= inform~tion’’= Esuch= ~s= re~son~bäy= weää= me~sured= socioJ

economic= ch~r~cteristicsF= with= ‘‘soft= inform~tion’’= on= popuä~tion=

heterogeneity= Esuch= ~s= indic~tors= for= psychoäogic~ä=

ch~r~cteristics= th~t= ~re= difficuät= to= me~sureI= for= ex~mpäeI= risk=

~ttitudesI= imp~tienceI= ~nd= seäf= controäF= in= discrete= choice=

modeäsK= qhe= ~im= is= to= ‘expä~in’’= seemingäy= irr~tion~ä= beh~viorI=

th~t= isI= modeä= structur~ääy= using= economic= ~nd= psychoäogic~ä=

d~t~I= ~= subst~nti~ä= p~rt= of= the= unobserved= heterogeneityK= qhe=

incäusion= of= ä~tent= segment~tion= of= the= popuä~tion= Eä~tent=

cä~ssesFI= which=~ääows= for= different= decision=protocoäs= incäuding=

nonJorjI=m~rket=segment~tionI=~nd=choice=set=formuä~tionK==

·= qhe= incäusion= of= ä~tent= segment~tion= of= the= popuä~tion= Eä~tent=

cä~ssesFI= which=~ääows= for= different= decision=protocoäs= incäuding=

nonJorjI=m~rket=segment~tionI=~nd=choice=set=formuä~tionK=

ft= is=often=difficuät= to=estim~te=such=~=modeä=with= reve~äed=preferences=

Eth~t= isI= m~rket= beh~viorF= ~äoneI= ~nd= therefore= other= indic~tors= ~re=

incorpor~ted= into= the= fr~mework= to=~id= in=estim~tion=of= the=beh~vior~ä=

reä~tionshipsK= qhese= ~ddition~ä= indic~tors= incäude= st~ted= preferences=

~nd= psychometric= me~surements= EeKgKI= survey= questions= reg~rding=

~ttitudes=~nd=perceptionsFK=

kote= th~t= the= eCj= does= not= require= the= ~ssumption= of= orj= since=

eCj= c~n= ~ääow= for= the= incorpor~tion= of= nonJorj= decision= protocoäsI=

~nd =orjJb~sed =eCj =is =~ =restricted =form =of =~ =gener~ä =eCjK =ff =the =

modeä=of= interest= is=not=orjI=then=the=utiäity=modeä=c~n=be=used=~s=~=

p~r~morphic=represent~tion=of=nonJorj=beh~viorI=with=the=~dv~nt~ge=

of=inference=through=the=use=of=~=st~tistic~ä=modeäK=

PWP mrogress

^=more=äimited=version=of=the=~bove=eCj=fr~mework=w~s=considered=~t=

the= previous= Choice= pymposiumX= see= _enJ^kiv~= et= ~äK= ENVVVFK= jore=

recentäyI= t~äker= ~nd= _enJ^kiv~= EOMMNFOO= demonstr~ted= the= extended=

eCj= fr~meworkK= qhey= estim~ted= tr~veä= mode= choice= modeäs= using=

reve~äed=~nd=st~ted=preference=d~t~I=ä~tent=perceptions=of=comfort=~nd=

convenienceI= ~nd= t~ste= heterogeneity= in= the= form= of= r~ndom=

p~r~meters=~nd=ä~tent=cä~ss=segment~tionK=bstim~tion=of=the=eCj=w~s=

shown= to= be= pr~ctic~äI= ~nd= the= resuäting= modeä= incorpor~ted= the=

benefits=of=e~ch=individu~ä=methodK=qhe=~ddition=of=st~ted=preferences=

m~de= ~= key= poäicy= v~ri~bäe= signific~nt= th~t= w~s= insignific~nt= in= the=

reve~äed=preference=modeäK=ft=~äso=~ääowed=estim~tion=of=coefficients=for=

v~ri~bäes= not= incäuded= in= the= reve~äed= preference= d~t~= Ein= this= c~seI=

‘~menities’FK= qhe= ä~tent= f~ctors= provided= for= ~= richer= beh~vior~ä=

represent~tion= of= the= choice= process= E~äthough= not= ~= signific~nt=

improvement= in= over~ää= modeä= fitFX= ~nd= the= incäusion= of= t~ste=

heterogeneity=improved=the=expä~n~tory=power=of=the=modeäK=diven=th~t=

the=eCj=fr~mework=is=constructed=by=integr~ting=moduä~r=components=

such=~s=ä~tent=v~ri~bäe=modeäsI=fäexibäe=disturb~ncesI=gener~ä=orj=~nd=

nonJ=orj=modeä=coresI=disp~r~te=sources=of=preference=d~t~I=etcKI=the=

deveäopment= of= eCj= h~s= been= c~t~äyzed= by= technic~ä= deveäopments=

~nd= growing= pr~ctic~ä= experience= with= e~ch= of= the= moduä~r=

componentsK= ^äsoI= deveäopments= in= simuä~tionJb~sed= estim~tion=

techniques=~nd=_~yesi~n=procedures=for=compäex=modeä=systems=such=

~s=eCj=m~ke=eCj=more=fe~sibäe=~nd=pr~ctic~äK==

PWQ iatent sariables

oese~rchers= ~re= investig~ting= the= benefits= of= incorpor~ting= ä~tent=

psychoäogic~ä= constructsI= such= ~s= ~ttitudes= ~nd= perceptionsI= into=

choice=modeäsK=bym~nnI=_oerschJpup~n=~nd=buw~äs=EOMMNFOR=modeäed=

the=effect=of=risk=~ttitudes=on=portfoäio=choiceK=pt~nd~rd=portfoäio=modeäs=

~ssume= th~t= the= househoäd’s= choice= ~mong= ~ssets= is= guided= by= the=

~ssets’= risk= ~nd= return=~nd=by= individu~ä= risk=~versionK=qhese= modeäs=

usu~ääy=predict=th~t=every=individu~ä=hoäds=~=positive=percent~ge=of=risky=

fin~nci~ä=~ssetsK=qhis=predictionI=howeverI=is=in=st~rk=contr~st=to=~ctu~ä=

~sset=choiceW=most=househoäds=do=not=hoäd=risky=~ssets=such=~s=stockK=

Cäe~räyI= ~sset= choice= is= ~äso= infäuenced= by= credit= constr~intsI= income=

uncert~intyI= inform~tion= costsI= risk= ~versionI= imp~tienceI= ~nd= seäfJ

controäµ~ää= concepts= th~t= ~re= difficuät= to= me~sure= ~nd= prob~bäy= quite=

heterogeneous=in=the=popuä~tionK=qhe=key=contribution=of=this=rese~rch=

is= the=deveäopment=of= ~= joint= choice= ~nd= ä~tent= v~ri~bäe=modeä= Eusing=

the= fr~mework=presented= in=_enJ^kiv~=et=~äK=NVVVFOSI =in =which =~ =nonJ

äine~r= jfjCJtype= ä~tent= v~ri~bäe= modeä= is= used= to= reä~te= ä~tent=

individu~ä= tr~its= to= observ~bäe= determin~ntsK= qhey= found= th~t= the=

structur~ä=equ~tions=modeä=is=superior=to=the=more=convention~ä=‘‘proxy=

v~ri~bäe= specific~tion’’= in= terms= of= its= predictive= ~ccur~cyK= bstim~tion=

resuäts= ~äso= show= th~t= individu~äs= differ= in= their= ~ttitudes= tow~rds= risk=

~nd= timeX= ~nd= such= t~ste= v~ri~tions= ~re= system~tic= r~ther= th~n=

stoch~sticK=eenceI=there=is=consider~bäe=g~in=in=expäicitäy=modeäing=the=

heterogeneityK=

PWR Combining oevealed and ptated mreferences

mrocedures= for= combining= reve~äed= ~nd= st~ted= preference= d~t~= h~ve=

been= deveäoped= in= the= ä~te= NVUM’s= ~nd= ~re= being= wideäy= ~ppäied= E~s=

discussed= in= ~= previous= Choice= pymposium= p~perW= _enJ^kiv~= et= ~äK=

NVVQFK=jore=recentäyI=_h~t=~nd=C~steä~r=EOMMOFOTI=_rownstoneI=_unchI=

~nd=qr~in= EOMMMFOU=~nd=t~äker=~nd=_enJ^kiv~= EOMMNF=h~ve= integr~ted=

reve~äed=~nd=st~ted=preference=d~t~=whiäe=~äso=utiäizing=the=fäexibiäity=of=

mixed= äogits= to= obt~in= more= re~äistic= represent~tions= of= differences=

~cross=v~rious=sources=of=d~t~K=

PWS Bayesian mrocedures

qhe= existing= äiter~ture= predomin~ntäy= uses= the= m~ximum= simuä~ted=

äikeäihood= estim~tor= EjpibFK= ^s= described= by= qr~in= EOMMNFOUI= the=

simuä~ted= me~n= of= the= _~yesi~n= posterior= EpjmbF= provides= ~n=

~ätern~tive=estim~tor=to=jpibK=pjmb=is=consistent=~nd=efficient=under=

äess= stringent= conditions= th~n= jpib= ~nd= ~voids= the= numeric~ä=

difficuäties=~ssoci~ted=with=äoc~ting=the=m~ximum=Eincäuding=the=issue=of=

whether= ~= äoc~ä= m~ximum= is= gäob~äKF= Countering= these= ~dv~nt~gesI=

pjmb=usu~ääy= reäies=on=iter~tive=s~mpäing=proceduresI=n~meäy=jCjC=

methodsI= under= which= it= c~n= be= difficuät= to= determine= whether=

convergence= h~s= been= ~chievedK= qhe= rese~rcher’s= choice= between=

jpib=~nd=pjmb=often=hinges=on=their=reä~tive=convenience=in=terms=of=

progr~mming= ~nd= computer= timeK= _oäducI= cortin= ~nd= dordon= ENVVTF=

comp~red=the=two=procedures=for=probit=modeäs=~nd=found=run=times=to=

be=consider~bäy=äower=for=pjmbK=qr~in=EOMMNF=comp~red=run=times=~nd=

progr~mming=issues=for=mixed=äogit=under=v~rious=specific~tionsK=then=

~ää= coefficients= ~re= independentäy= norm~äI= the= two= procedures= ~re=

simiä~r= in= terms= of= run= time= ~nd= progr~mming= difficuätyK= Correä~ted=

coefficients= ~nd= äognorm~ä= distributions= ~re= more= e~siäy= h~ndäed= by=

pjmbK= ff= the= modeä= is= specified= to= incäude= fixed= ~nd= r~ndom=

coefficients= ~nd= or= uses= distributions= with= bounded= supportI= such= ~s=

tri~nguä~rI= jpib= is= f~ster= ~nd= e~sierK= qhese= comp~risons= were=

conducted=using=r~ndom=dr~ws=in=both=proceduresK=

PWT Behavioral aynamics and fnteractions

aiscrete= choice= modeäs= h~ve= m~inäy= been= used= in= ~= st~tic= contextK=

eoweverI= repetitive= choices= ~re= best= modeäed= by= tr~nsition=

prob~biäitiesK= ae= m~äm~= ~nd= hiä~ni= EOMMNF= deveäoped= such= dyn~mic=

discrete= choice= modeäsK= qhey= considered= ~= twoJperiod= modeäI= ~nd=

found=th~t=for=~dditive=r~ndom=utiäity=modeäsI=~n~äytic~ä=expressions=of=

the=tr~nsition=prob~biäities=c~n=be=derived=for=ch~nges=in=the=system~tic=

utiäity= Efor=ex~mpäe= price= or= qu~äity= ch~ngeFK= fn= the= simpäest= c~seI= the=

r~ndom= disturb~nces= rem~in= the= s~me= before= ~nd= ~fter= the= ch~ngeK=

cor=this=c~seI=the=tr~nsition=prob~biäities=c~n=be=computed=up=to=~=one=

dimension~ä=integr~ä=for=the=dbs=modeäI=whiäe=they=h~ve=~=cäosed=form=

expression=for=~=äogit=modeäK=jonteJC~räo=simuä~tions=for=~=äogit=modeä=

show=th~t=using=inform~tion=on=the=tr~nsitions=r~ther=th~n=on=the=st~tic=

choices=improves=the=~ccur~cy=of=p~r~meter=estim~tesK=

PWU aata fmputation

aiscrete= choice= modeäs= ~re= frequentäy= estim~ted= using= proxy= or=

imputed=v~ri~bäesK= fn= these=situ~tionsI= the= inevit~bäe= imput~tion=errors=

c~use= bi~sed= inferenceK= _rownstone= et= ~äK= EOMMNF= deveäoped= ~nd=

demonstr~ted= ~= technique= to= perform= consistent= inference= without=

fitting=~=compäic~ted=joint=imput~tion=~nd=choice=modeäK=qhe=procedure=

buiäds= upon= oubin’s= ENVUTF= muätipäe= imput~tion= methodI= which= is= ~=

_~yesi~n= technique= with= good= cä~ssic~ä= inference= propertiesK= juätipäe=

imputed= v~äues= ~re= gener~ted= for= e~ch= observ~tionI= ~nd= sep~r~te=

choice= modeä= estim~tes= ~re= m~de= for= e~ch= set= of= imput~tionsK= qhe=

resuäts= from= these= sep~r~te= choice= modeä= estim~tes= ~re= e~siäy=

combined=to=yieäd=fin~ä=estim~tesK=qhis=muätipäe=imput~tion=technique=is=

p~rticuä~räy=v~äu~bäe=when=v~äid~tion=d~t~=~re=~v~iä~bäe= to=~ääow=direct=

observ~tion=of=the=imput~tion=errorK=_rownstone=et=~äK=EOMMNF=use=d~t~=

from= driving= c~rs= down= ~= corridor= to= ~ssess= the= error= in= tr~veä= time=

comput~tions= from= äoop= detectors= imbedded= in= the= ro~dw~y= surf~ceK=

qhey= find= th~t= the= äoop= detector= d~t~= ~re= downw~rd= bi~sed= by= RMBK=

juätipäe= imput~tions= of= the= correct= tr~veä= times= is= used= to= estim~te=

v~äue=of=timeJs~vings=from=t~king=~=toää=ro~dK=bven=though=the=muätipäe=

imput~tion= procedure= incre~ses= the= st~nd~rd= errors= of= the= p~r~meter=

estim~tesI=the=correction=signific~ntäy=äowered=v~äue=of=time=estim~tesK=

PWV aiscreteLContinuous jodels

then= ~= continuous= v~ri~bäe= depends= on= the= outcome= of= ~n=

endogenous=discrete=choiceI= the= regression=modeä= for= the= continuous=

v~ri~bäe= c~n= be= estim~ted= by= instrument~ä= v~ri~bäe= EfsF= inste~d= of=

ordin~ry= äe~st= squ~resI= to= ~void= endogeneity= bi~s= in= the= estim~ted=

coefficientsK= eoweverI= ~djustments= ~re= ~äso= needed= for= hypothesis=

testingK=_oäducI=hh~ä~f=~nd=joyneur=EOMMNF=demonstr~ted=theoretic~ääy=

~nd= through= jonte= C~räo= experiments= th~t= st~nd~rd= ~symptotic= tests=

overJreject= the= nuää= hypotheses= in= ~= regression= modeäs= with= discrete=

endogenous= regressorsK= qhey= extended= the= ex~ct= späitJs~mpäe= fsJ=

b~sed= tests= proposed= by= aufour= ~nd= g~si~k= EOMMMF= to=

discreteLcontinuous=modeäs= ~nd= showed= th~t= this= procedure=~chieves=

perfect=type=f=error=controäK=qhese=späit=s~mpäe=tests=~re=str~ightforw~rd=

to=impäementK=

PWNM poftware

qhe=~v~iä~biäity=of=estim~tion=procedures=is=critic~ä=for=the=deveäopment=

of= hybrid= choice= modeäsK= j~ny= ~dv~nced= discrete= choice= techniques=

~re=now=~v~iä~bäe=in=commerci~ä=st~tistic~ä=p~ck~gesK=qechniques=h~ve=

been= deveäoped= so= th~t= joint= estim~tion= with= reve~äed= ~nd= st~ted=

choice= d~t~= c~n= be= performed= with= nested= äogit= softw~reK= pever~ä=

commerci~ä=discrete=choice=softw~re=vendors=h~ve=recentäy=introduced=

routines= for= mixed= äogit= ~nd= probitX= ~nd= rese~rchers= ~re= m~king= their=

code= ~v~iä~bäe= on= the= webK= cor= ex~mpäeI= henneth= qr~in= provides=

d~ussJb~sed= code= for= mixed= äogitI= deveäoped= by= jicheä= _ierä~ireI= is=

designed=for=m~ximum=äikeäihood=estim~tion=of= the=dbs=modeä= f~miäyK=

_~sed= on= ~n= efficient= optimiz~tion= ~ägorithmI= this= softw~re= ~ääows= for=

sever~ä=modeäing=optionsI=such=~s=sc~äed=utiäity=functionsI=_oxJCox=~nd=

_oxJqukey=tr~nsformsI=~nd=performs=constr~ined=estim~tionK=

qhe=~v~iä~biäity=of=such=~=tooä=wiää=heäp=investig~te=v~rious=members=of=

the=dbs=f~miäy=E_ierä~ireI=^xh~usen=~nd=^b~y=OMMNFK=qhe=softw~re=is=

now=being=extended=to=mixed=dbs=modeäsK=

PWNN Challenges

qhe=~v~iä~biäity=of=the=new=comput~tion~ä=tooäs=provides=~=wide=~rr~y=of=

opportunities= for= estim~ting= hybrid= choice= modeäsK= eoweverI= compäex=

issues=~rise=with=respect=to=~=number=of=f~cetsK=qhis=section=highäights=

p~rticuä~r=ch~ääengesI=~nd=presents=ex~mpäes=of=reä~ted=rese~rchK=

PWNO jodel cormulation and bstimation

aetermining= wh~t= is= aeterministic= ~nd= wh~t= is= o~ndomK= ft= is= often=

difficuät= to=distinguish=where= to=buiäd= the=compäexity=in= the=modeäI= th~t=

isI=by=using=~=compäex=error=structure=or=by=buiäding=up=the=system~tic=

portion=of=the=utiäityK=qhe=consensus=is=th~t=~=good=error=is=~=zero=errorX=

th~t= isI= it= is= desir~bäe= to= exp~nd= on= the= system~tic= term= thereby=

reducing= the= disturb~nce= termK= eoweverI= v~rious= äimit~tions= Efor=

ex~mpäeI= d~t~F= pä~ce= restrictions= on= this= objectiveK= curthermoreI= ~=

compäex= but= incorrect= specific~tion= of= the= system~tic= portion= c~n= be=

worse= th~n= impäementing= ~= simpäe= system~tic= term= ~nd= compäex=

disturb~nce=termK=

PWNP The oesearch dap

qhere= ~re= m~ny= underrese~rched= ~re~s= in= consumer= beh~viorI=

p~rticuä~räy=in= terms=of=need=~rous~äI= inform~tion=integr~tionI=~nd=post=

purch~sing= infäuencesK= ^s= the= extern~ä= environment= ch~nges= ~t= ~n=

incre~sing=r~te=~nd=the=product=äife=cycäes=become=shorterI=the=current=

consumer=beh~vior=modeäs=~re= äikeäy= to=become= äess=popuä~rK=oecent=

rese~rch= in= the= ~re~s= of= psychoäogy= into= bi~ses= ~nd= heuristics= th~t=

consumers=use= to=simpäify=decisions= is= äikeäy=to=modify=the=strict=utiäity=

m~ximiz~tion=modeäsK=qversky=~nd=h~hnem~n=identified=heuristics=~nd=

bi~sesI= peopäe= Eincäuding= consumersF= use= in= their= decision= m~king=

processK= qhree= bi~ses= identified= were= represent~tiveness= Ein= which=

perceived=ide~s=~nd=stereotypes=obstruct=äe~rning=of=new=inform~tionFI=

~v~iä~biäity= Ein= which= respondents= seäect= events= or= outcomes= th~t= ~re=

f~miäi~r= to=themI=even= in=defi~nce=of=true=prob~biäitiesFI=~nd=~nchoring=

Ein= which= respondents= ~re= reäuct~nt= to= ~djust= ~dequ~teäy= from= their=

preconceived=ide~sFK==

qhe= roäe= of= memory= h~s= been= shown= to= be= import~nt= in= consumer=

beh~vior= experimentsK= fnform~tion= once= remembered= wiää= not= be=

necess~riäy= rec~ääedK= ^= consider~bäe= äiter~ture= exists= on= how=

consumers=re~ct=when=there= is= incompäete= inform~tionI=or=when=there=

is=too=much=inform~tionK==

fn=~ddition=to=the=intern~ä=eäements=of=consumer=beh~viorI= there=~re=~=

number= of= extern~ä= ones= incäuding= contextK= qhe= r~nge= of= ~ätern~tives=

~v~iä~bäe=is=import~nt=in=choiceK=qh~äer=ENVURF=suggested=th~t=there=~re=

two= forms= of= ~ction= utiäity= ~ssoci~ted= with= every= consumer= decisionW=

~cquisition=utiäity=~nd=tr~ns~ction=utiäityK=qhere=~re=m~ny=modeäs=b~sed=

on=~cquisition=utiäityK=qr~ns~ction=utiäity=is=p~rticuä~räy=tied=to=the=concept=

of=f~irness=~nd=~ppropri~tenessK==

qhere= ~re= modeäs= for= predicting= br~nd= choiceI= inform~tion= se~rchI=

preference= form~tionI= purch~se= incidenceI= ~nd= post= purch~se=

feedb~ckK= qhese= modeäs= ä~ck= in= ~ccommod~ting= heuristics= th~t=

consumers=uses= in= the=buying=processK=iittäe=work=h~s=been= done= to=

modeä= ~nd= deveäop= ~n= error= theory= ~nd= the= ment~ä= process= for= the=

simpäifying=heuristics=th~t=consumers=use=to=m~ke=decisionsK=

qhe Br~nd Choice jodel

cig PWQ

mromotion mrice Advertising

fnform~tion pet of Consumer

bxperience

mrevious murch~se

Current murch~se cuture murch~se

jent~l process th~t uses heuristics

oese~rch d~p

=Ch~pter=Q=

pt~tement=of=mrobäem=

=QWN=lbjective=of=ptudy=

QWO=qhe=mrobäem=pt~tement=

QWP=fmport~nce=of=ptudy=

QWQ=_enefits=of=ptudy=

QWR=qhe=eypothesis=

Ch~pter=Q=

pt~tement=of=mrobäem==

QWN lbjectives of ptudy

qhe= prim~ry= objective= of= this= work= is= to= deveäop= ~= fr~mework= for=

beh~vior~ä= theoriesI= emph~sizes= ~= c~us~ä= structur~ä= formuä~tionI=

m~them~tic~ääy=tr~ct~bäe=~nd=empiric~ääy=verifi~bäeK=qhe=study=shouäd=be=

fäexibäe= enough= to= c~pture= unobserved= heterogeneity= in= the= choice=

beh~vior=stemming=from=

qo= eä~bor~te= furtherI= the= study= sh~ää= expäore= the= possibiäity= of=

consumers=using=heuristics= in= their=decision=m~king=process=of=br~nd=

choiceK= qhe= study= shouäd= heäp= to= underst~nd= the= dyn~mics= of= the=

choice=modeäs=m~rketers=use=to=predict=future=choice=prob~biäities=with=

speci~ä=reference=to=cjCdK==

oecent= rese~rch= indic~te= th~t= consumers= frequentäy= do= not= h~ve=

needed= to= m~ke= their= choiceK= qo= construct= these= preferencesI=

consumers=use=~=v~riety=of=choice=ruäesK=lne=b~sic=ruäe=is=to=ev~äu~te=

~ää=the=br~nds=in=the=consider~tion=set=on=the=~ctu~ä=~ttribute=v~äue=~nd=

the=br~nd=with=the=highest=v~äue=is=chosenK=ff=~=consumer=oper~tes=in=

this=f~shion=to=m~ke=br~nd=choice=decisionsI=then=heLshe=is=s~id=to=be=

in=~ttribute=v~äue=b~se=mode=E^s_jFK==

then=it=comes=to=routine=purch~sesI=consumers=h~rdäy=invest=time=~nd=

efforts= to= choose= their= br~ndsK= merh~ps= consumers= might= h~ve=

ev~äu~ted= every= br~nd= in= the= consider~tion= set= e~räier= ~nd= h~ve= f~ir=

experience= with= the= br~ndX= they= then= h~rdäy= t~ke= ~ny= efforts= to= reJ

ev~äu~te=them=for= the=next=purch~seK=Consumers=m~ke=use=of=cert~in=

ruäes= to= convert= these= ~ctu~ä= ~ttribute= v~äues= to= more= psychoäogic~ääy=

me~ningfuäI= better=–= defined=ordered= v~äuesK=Choices= ~re= then=b~sed=

on= these= ordered= v~äuesK= Consumers= ~re= then= s~id= to= oper~te= in= ~=

psychoäogic~ä=mode=known=~s=ordered=v~äue=b~se=mode=Els_jFK==

qhe= m~in= issue= of= study= is= whether= such= psychoäogic~ä= modes= exist=

~nd=if= they=existI=wh~t=is=the=imp~ct=of=heuristics=used=by=consumers?=

C~n=the=existence=of=these=modes=be=proved=st~tistic~ääy?=ff=modes=do=

existI= then= how= äong= consumers= oper~te= in= the= psychoäogic~ä= mode=

whiäe=m~king=~=decision=in=br~nd=choice?===

qhe=äist=of=objectives=is=mentioned=beäowK=

NK= qo= ex~mine= the= possibiäity= of= consumers= using= heuristics= in=

br~nd=choice=in=the=cjCd=c~tegoryK=

OK= qo=ex~mine= in=which=psychoäogic~ä=mode=consumers=oper~te=–=

~ttribute=v~äue=b~se=mode=E^s_jF=or=ordered=v~äue=b~se=mode=

Els_jF=whiäe=m~king=~=decision=on=br~nd=choiceK==

PK= qo= ex~mine= the= dur~tion= for= which= ~= consumer= oper~tes= in= ~=

p~rticuä~r=psychoäogic~ä=modeK=

QK= qo= expäore= the= possibiäity=of=deveäoping=~=st~tistic~ä= modeä= th~t=

c~n=eä~bor~te=the=äogic=of=existence=of=the=psychoäogic~ä=modesK=

RK= qo= expäore= the= possibiäity= of= whether= the= st~tistic~ä= modeä= c~n=

c~äcuä~te=future=choice=prob~biäities=in=e~ch=of=the=psychoäogic~ä=

modes=–=^s_j=or=ls_j=or=bothK=

SK= qo= ~dopt= ~= st~tistic~ä= ~ppro~ch= to= postuä~te= th~t= the= observed=

choice=beh~vior=is=the=outcome=of=~=prob~biäistic=d~t~=gener~ting=

processK==

QWO The mroblem ptatement

aue= to= constr~ints= imposed= by= äimited= cognitive= resources= ~nd= t~sk=

environmentI= consumers= m~y= empäoy= methods= ~nd= str~tegies= th~t=

reduce= efforts= they= expend= on= comput~tions= for= decision= m~kingK=

o~ther=ev~äu~ting=the=~ttributes=of=~ää= the=br~nds=in=their=consider~tion=

setI= they= reäy= on= short= cuts= to= decide= up= on= ~= br~nd= for= purch~seK=

eeuristics=m~y=be=good=~t=times=when=consumers=end=up=choosing=the=

m~rketer’s= br~ndI= but= the= b~d= side= of= it= is= when= they= choose=

competitor’s= br~nd= ~nd= äe~d= the= m~rketer= ~str~yK= qhis= is= when=

heuristics= infäuence= consumer’s= judgment= to= the= point= of= bi~sK= ^=

m~rketer= needs= to= underst~nd= such= bi~s= whiäe= computing= future=

prob~biäities=of=br~nd=choice=~nd=m~rket=sh~reK==

qhe=recent= rese~rch= in= the=~re~=of=psychoäogy= into= the=heuristics=~nd=

bi~ses=th~t=consumers=use=to=simpäify=decisions=is= äikeäy=to=modify=the=

strict=utiäity=m~ximiz~tion=modeäs=th~t=one=often=~ppäy=to=c~äcuä~te=future=

choice=prob~biäitiesK==

QWP fmportance of ptudy

qhe=m~rketing=pä~n=of=~ny=firm=st~rts=with=consumers=~t=its=~pexK=qhe=

psychoäogy= of= consumer= h~s= ~= direct= imp~ct= on= the= br~nd= choiceK=

rnderst~nding=consumer=psychoäogy=is=~s=good=~s=winning=h~äf=of=the=

competitionK= ^n= insight= into= consumer’s= buying= beh~vior= is= expected=

from=the=studyK==

qhis= modeä= is= buiät= on= simpäicity= of= m~croeconomic= theoryI= ~nd=

incorpor~tes= the= key=psychoäogic~ä= f~ctors= which= ende~vor= to= expä~in=

~nd= qu~ntify= seemingäy= irr~tion~ä= or= inconsistent= beh~vior= of=

consumersK=

QWQ Benefits of ptudy

qhe=study=shouäd=identify=the=v~rious=psychoäogic~ä=modes=consumers=

c~n=be=inI=whiäe=m~king=~=decision=on=br~nd=choiceK=qhe=psychoäogic~ä=

modes= identified= ~re= b~sed= on= the= use= of= cert~in= heuristics= by=

consumersK= = ^= m~rketer= c~n= underst~nd= how= consumers= t~ke=

decisions= by= rem~ining= in= ~= p~rticuä~r= psychoäogic~ä= modeK=

^ccommod~ting= heuristics= ~nd= bi~ses= in= comput~tion= of= future=

prob~biäities= of= br~nd= choice= c~n= heäp= m~rketer= to= ~chieve= better=

~ccur~cyK=j~rketers=c~n=design=better=m~rketing=pä~ns=~nd=str~tegies=

b~sed=on=the=knowäedge=of=heuristicsK==

QWR The eypotheses

nualitative

eMNW= Consumers= do= not= m~ke= use= of= fuää= inform~tion= they= receive= on=

br~nds= to= ev~äu~te= themK= eeuristics= ~re= uncommon= phenomenon= in=

consumers=br~nd=choice=processK=

eNNW= Consumers= do= not= m~ke= use= of= fuää= inform~tion= they= receive= on=

br~nds= to= ev~äu~te= themK= eeuristics= ~re= common= phenomenon= in=

consumers=br~nd=choice=processK=

eMOW=eeuristics=do=not=m~ke=~ny=imp~ct=on=br~nd=choice==

eNOW=eeuristics=m~ke=imp~ct=on=br~nd==

eMPW= Consumers= ~re= not= in= ~= psychoäogic~ä= st~te= of= ^ttributes= s~äue=

^ttribute=_~se=jodeI=th~t=isI=they=do=not=ev~äu~te=the=~ttributes=of=the=

br~nds= which= ~re= in= their= consider~tion= set= whiäe= m~king= ~= br~nd=

choiceK==

eNPW=Consumers=~re=in=the=psychoäogic~ä=st~te=of=^ttributes=s~äue=_~se=

jodeI= th~t= isI= they=ev~äu~te= the=~ttributes=of= the=br~nds=which=~re= in=

their=consider~tion=set=whiäe=m~king=~=br~nd=choiceK=

eMQW=Consumers=~re=not= in=psychoäogic~ä=st~te=of=lrdered=s~äue=_~se=

jodeI=th~t=isI=they=do=not=put=the=br~nds=in=their=consider~tion=set=in=~=

p~rticuä~r=order=of=their=preferences=whiäe=m~king=~=choiceK=

eNQW=Consumers=~re=psychoäogic~ä=st~te=of=lrdered=s~äue=_~se=jodeI=

th~t= isI= they= put= the= br~nds= in= their= consider~tion= set= in= ~= p~rticuä~r=

order=of=their=preferences=~nd=then=m~ke=~=br~nd=choice=

eMRW=Consumers=~re=in=singäe=st~te=of=modeI=th~t= isI=either=in=^ttribute=

s~äue= _~se= jode= or= in= lrdered= s~äue= _~se= jode= whiäe= m~king= ~=

br~nd=choiceK=

eNRW=Consumers=~re=in=hybrid=st~te=of=modeI=th~t=isI=in=both=the=st~tes=

of=modes=–=^ttribute=s~äue=_~se=jode=or=lrdered=s~äue=_~se=jode=

whiäe=m~king=~=br~nd=choiceK=

nuantitative

eMSW= mrob~biäities= of= br~nd= choice= c~n= be= c~äcuä~ted= for= e~ch=

eNSW= mrob~biäities= of= br~nd= choice= c~nnot= be= c~äcuä~ted= for= e~ch=

Ch~pter=R=

mä~n=of=ptudy==

RWN=rnderst~nding=the=fssue=

RWO=a~t~=Coääection=

RWP=fnstrument=of=a~t~=Coääection=

RWQ=p~mpäing=mä~n=

RWR=pt~tistic~ä=qooäs=

RWS=poftw~re=rsed=

RWT=iimit~tions=of=ptudy=

Ch~pter=R=

mä~n=of=ptudy=

=RWN rnderstanding the fssue

qhis=study= is= to= know=how=consumers=use=heuristics= in= their=decision=

process= of= br~nd= choiceK= j~ny= times= heuristics= äe~d= to= bi~s= in= the=

decision= m~king= process= of= br~nd= choice= th~t= m~y= äe~d= m~rketers=

~str~yK=oese~rch=tiää=this=d~te=indic~tes=th~t=consumersI=whiäe=m~king=~=

decision= on= br~ndI= ev~äu~te= ~ää= the= inform~tion= they= receive= on= the=

~ttributes= of= ~ää= the= br~nds= they= h~ve= in= their= consider~tion= setK= _ut=

rese~rch=on=heuristics=indic~tes=th~t=~ää= the=inform~tion=is=not=used=by=

consumers= in= the= ev~äu~tion= of= the= br~ndsK= qhen= c~me= the= concept=

th~tI= consumers= convert= these= ~ctu~ä= ~ttributes= v~äue= to= more=

psychoäogic~ääy= me~ningfuäI= better= defined= ordered= v~äuesK= qh~t= is=

consumers=put=the=br~nds=in=order=of=their=preference=with=reference=to=

some= ~ttribute= sc~äeK= qhe= two= b~sic= modes= consumers= ~re= s~id= to=

oper~te= whiäe= m~king= ~= br~nd= choice= ~re= termed= ~s= ^ttribute= s~äue=

_~se= jode= E^s_jF= ~nd= lrdered= s~äue= _~se= jode= Els_jFK= qhe=

issues=for=study=~re=in=which=psychoäogic~ä=mode=consumers=st~y=whiäe=

t~king=~=decision=on=br~nd=choiceK=eow= äong= the= order=of= the=br~nds=

rem~in=unch~nged=~nd=whyI=if=the=consumer=is=oper~ting=in=the=ordered=

v~äue=mode?=^re=heuristics= responsibäe= to=keep= the=order=unch~nged=

for=äong?==

^nother= import~nt= issue=is= to= find=whether=choice=prob~biäities= c~n=be=

c~äcuä~ted=for=e~ch=psychoäogic~ä=mode=~fter=~ccommod~ting=heuristics=

in=the=choice=processK=qhe=study=is=conducted=with=speci~ä=reference=to=

cjCdK=

RWO aata Collection

mrim~ry=d~t~=on=the=purch~se=of=three=detergent=br~nds=were=coääected=

from= the= st~te= of= j~h~r~shtr~= POR= househoäds= p~rticip~ted= in= the=

surveyK= b~ch= househoäd= w~s= monitored= for= three= months= for= the=

purch~se= of= detergent= powder= of= the= three= br~ndsK= qhe= prim~ry= d~t~=

were= used= for= the= execution= of= the= br~nd= choice= modeä= which= is=

deveäoped=in=this=studyK=

pecond~ry= d~t~= were= rese~rch= p~persI= m~g~zines= ~nd= reference=

booksK= qhe= foääowing= web= sites= were= used= for= the= second~ry= d~t~=

coääection=

NK= ppok=Epoci~ä=pciences=oese~rch=ketworkF==

OK= teb=site=of=e~rv~rd’s=rniversity=

PK= teb=site=of=^meric~n=j~rketing=^ssoci~tion=

QK= = b_pCl=

qhe=foääowing=journ~äs=were=referred=for=the=study=

NK= qhe=gourn~ä=of=j~rketing=oese~rch=

OK= qhe=gourn~ä=of=Consumer=_eh~vior=

PK= e~rv~rd=_usiness=oeview=

QK= oese~rch= p~pers= compiäed= by= C~mbridge= rniversity= mress=

“gudgment=rnder=rncert~inty=–=eeuristics=~nd=_i~ses=

RWP fnstrument of aata Collection

a~t~= on= purch~ses= of= detergent= br~nds= by= POR= househoäds= were=

coääected= with= the= heäp= of= ~= questionn~ireK= b~ch= househoäd= w~s=

monitored= for= detergent= purch~ses= for= three= months= which= m~kes=

PxPOR=Z=VTR=observ~tionsK=qhe=questionn~ire=comprised=of=questions=

m~inäy= to=coääect=d~t~=on= the=purch~se=of= the=br~nds=~nd= the=price=~t=

which= they= were= purch~sedK= ft= ~äso= h~d= provisions= to= find= whether=

consumers=were=exposed=to=~dvertisements=which=sign~äed=the=receipt=

of= ~ttributes= Efe~turesF= inform~tion= ~nd= whether= the= br~nds= were=

purch~sed=under=~ny=promotion=done=either=by= the=ret~iä=outäet=or= the=

comp~ny=owning=the=br~ndK=

qhe=br~nd=choice=modeä=deveäoped=is=b~sed=on=~=utiäity=function=using=

juätinomi~ä= iogistic= oegressionK= qhree=br~nds=of= detergents= EcjCdF=

considered=for=study=~re=purfI=^rieä=~nd=oinK=qhe=utiäity=function=in= the=

modeä=used=five=~ttributes=~=dummy=term=for=br~ndO=~nd=br~ndP=e~chI=

price=term=giving=the=price=in=rupeesI=~=fe~ture=term=th~t=w~s=“N≤=when=

the= respondents= were= exposed= to= ~dvertisements= of= the= br~nds=

otherwise=“M≤=w~s=~ssignedK=qhe=promotion=term=t~king=v~äue=“N≤=when=

the=br~nd=w~s=especi~ääy=promotedLnot=promotedK==

RWQ The pampling mlan

a~t~=were=coääected=from=POR=househoäds=who=were=monitored=for=their=

detergent= purch~ses= for= three= monthsK= qhis= g~ve= POR= u= P= Z= VTR=

observ~tions=for=the=studyK==

5:4:1rniverse of ptudy

qhe=universe=of=study=w~s=the=househoäds=th~t=use=detergent=powders=

~nd= those= who= h~ve= purch~sed= the= three= br~nds= in= the= ä~st= three=

monthsK==

5:4:2 pampling crame

qhe= s~mpäing= fr~me=consists=of= the= househoäds=who=purch~sed= N=kg=

p~ck=of=~ny=of=the=three=br~nds=of=detergents=in=the=ä~st=three=monthsK=

5:4:P marameters for Choosing the pample

qhe= respondents= were= middäe= income= äiter~tes= who= h~ve= purch~sed=

~ny=of=the=three=br~nds=in=previous=three=months=from=the=d~te=of=the=

visit=

5:4:4 pample pize

qhe= s~mpäe= size= c~äcuä~ted= is= three= hundred= ~nd= twenty= five=

househoädsK=

p~mpäe=size=is=determined=~s=foääows=

= = = p=Z=xzO=EpEN=–=pFFz=L=eO=

cor=VRB=äeveä=of=signific~nce=z=Z=NKVS=

mroportion=of=popuä~tion=to=be=s~mpäed=Z=PMB=Z=MKP=

e=Z=the=proportion=of=error=Z=RB=Z=MKMR=

= = = p=Z=xNKVSO=EMKPEN=–=MKPFFz=L=EMKMRFO=

= = = ====

= = = ===Z=POOKSV=rounded=off=to=POR=

5:4:5 The pample

prK no kame of mlace koK of households

participated

N= _eed= OR=

O= m~rbh~ni= OR=

P= hoäph~pur= OR=

Q= phoä~pur= OR=

R= ^ur~ng~b~d= OR=

S= ^mr~v~ti= OR=

T= mune= OR=

U= jumb~i= TR=

V= k~gpur= OR=

NM= qh~ne= OR=

NN= i~tur= OR=

= Total POR

Table RWN pampling plan for data collection

RWR ptatistical Tools

qhe=b~sis=for=deveäoping=the=st~tistic~ä=br~nd=choice=modeä=is=the=utiäity=

function= b~sed= on= juätinomi~ä= iogistic= oegressionK= qhe= foääowing=

st~tistic~ä=functions=~re=used=in=the=deveäopment=of=the=four=moduäes=of=

the=br~nd=choice=modeäK==

juätiv~ri~te=korm~ä=aistribution=

C~tegoric~ä=aistribution=

tish~rt=aistribution=

airichäet=aitribution=

pignum=function==

RWS poftware rsed

qhe=four=moduäes=of=the=br~nd=choice=modeä=were=converted=into=~=

softw~re=code=~nd=executed=in=tin_rdpK=tin_rdp=is=softw~re=which=

st~nds=for=tindow’s=sersion=for=_~yesi~n=fnference=rsing=dibbs=

p~mpäingK==

RWT iimitations of ptudy

NKqhe= study= considers= onäy= the= br~nd= choice= decision= ~nd=

ignores=the=other=~spects=of=buying=beh~viorK=ft=is=not=cäe~r=how=

ordered=v~äue=processing=~ffects=these=other=decisionsK=curther=

rese~rch=is=necess~ry=to=investig~te=thisK=

OK= qhe= modeä= ~ääows= for= onäy= m~in= effects= of= price= ~nd= other=

predictor=termsK=qhere=~re=other=v~ri~bäes=Ewhich=~re=ignored=in=

this= studyFI= such=~s=purch~se= incidenceI=qu~ntity=decisions=etc=

in=the=situ~tion=th~t=m~y=~ffect=br~nd=choiceK=

PK=jore=rese~rch=is=necess~ry=to=specify=the=f~ctors=th~t=c~use=

consumers= to= b~se= their= choice= on= ~ttribute= versus= ordered=

v~äue=inform~tionK=j~rketing=mix=f~ctors=~nd=consumer=specific=

f~ctors= wouäd= be= expected= to= infäuence= consumers’= use= of=

~ttribute= inform~tionK= cor= ex~mpäeI= m~rketing= communic~tions=

th~t= fix~tes= on= specific= ~ttribute= v~äues= r~ther= th~n= ~ttribute=

import~nce=might= äe~d=consumers= to= focus=on= products’=~ctu~ä=

r~ther= th~n= ordered= v~äuesK= pignific~nt= price= v~ri~tions= might=

äe~d=consumers=to=focus=on=product’s=~ttribute=v~äuesK==

Chapter S

Constructing=the=_r~nd=Choice=jodeä=m~rt=–=f==

rse=of=eeuristics=in=_r~nd=Choice=aecisions==

=SWN===qhe=Choice=mrocess

SWO===Ch~r~cteristics=of=Choice=mrocess

SWP===thy=ao=Consumers=rse=eeuristics?=

SWQ===d~thering=C=rsing=fnform~tion=

SWR===bxtern~ä=fnform~tion=pources=

SWS===k~ture=of=fnform~tion=qr~nsferred=

SWT===pystem~tic=aifferences=

SWU===bffects=of=aifferences=in=bxperience=of=Consumers=

SWV===bffect=of=aifferences=in=aur~biäity=of=mroduct=

Chapter S

Constructing=the=_r~nd=Choice=jodeä=m~rt=–=f==

rse=of=eeuristics=in=_r~nd=Choice=aecisions=

=SWN The choice process

fn=m~rketing=the=cäoser=study=of=consumer=beh~vior=st~rted=in=the=e~räy=

NVSMsI=~nd=peopäe=st~rted=pointing=to=the=individu~äism=of=the=decisions=

right= ~w~yK= qhey= ~rgued= th~t= decisions= m~de= by= ~= consumer= were=

he~viäy= infäuenced= by= her= perception= of= the= environment= ~nd=

underst~nding=of= sep~r~te=eventsI=which=~re=highäy= individu~äistic=~nd=

~gentJspecificK=cor=ex~mpäe=_~uer= ENVSMF=cä~imed= th~t=wh~t=m~ttered=

in=consumer=choice=w~s=the=‘perceived=risk’=of=the=purch~se=Eg~coby=et=

~äKI=NVVQFK=i~ter=eoäbrook=~nd=eirschm~n=ENVUOF=emph~sized=the=roäe=

of=the=emotion~ä=st~te=of=the=consumer=when=m~king=the=decision=EeoätI=

NVVRFK= fn= psychoäogy= _~rtäet= ENVPOF= cä~imed= the= individu~äity= of= the=

decisions=much=before=th~t=E_ettm~n=~nd=winsI=NVTTFK=ee=~rgued=th~t=

memory= retriev~ä= w~s= b~sed= on= the= individu~ä’s= underst~nding= of= the=

eventK= jore= recentäyI= creimuth= ENVVOF= ~nd= tright= ~nd= iynch= ENVVQF=

h~ve=emph~sized=the=roäe=of=the=fit=of=one’s=perception=~bout=the=woräd=

with= the=re~äity=~nd= the=uniqueness=of=ones=beäiefs=respectiveäyK=^ää=of=

these=consider~tions=point=to=the=uniqueness=of=the=expect~tions=~bout=

the=goods=for=different=consumers=Ephir~i=~nd=jeyerI=NVVTFK=

^ää=these=consider~tions=~bout=individu~äity=~re=niceäy=summed=up=in=the=

discussion=~bout=the=uniqueness=of=the=consumer’s=environment=EeKgK=

pimonson=~nd=qverskyI=NVVO=~nd=m~yne=et=~äKI=NVVOFK=qhis=~ppro~ch=

emph~sizes= the= roäe= of= the= consumers’= individu~ä= perception= of= the=

surrounding= environmentI= ~nd= ~rgues= th~t= decisions= ~re= contingent=

upon=these=individu~ä=perceptions=EeKgK=m~yneI=NVUO=~nd=joorthy=et=~äKI=

NVVTFK= qhe= discussion= ~bove= emph~sizes= the= heterogeneity= of= the=

consumers= invoäved= ~nd= heäps= to= underst~nd= the= äeveä= of= difficuäty= of=

the= choice=processK=lne=c~n=~äso= e~siäy= im~gine= how=difficuät= it= is= to=

t~ke=the=ch~nging=environment=into=~ccount=whiäe=m~king=choicesK=poI=

it= is= interesting= to= see= how= consumers= h~ndäe= this= compäic~ted= t~skK=

th~t= do= they= do= first?= th~t= do= they= do= ~fter?= fn= foääowing= two=

subsectionsI=the=evidence=~bout=the=structure=~nd=ch~r~cteristics=of=the=

choice= process= ~re= discussedK= qhere= ~re= m~ny= different= goods= ~nd=

e~ch= of= them= h~s= sever~ä= Emost= of= them= tens= ofF= br~ndsK= eow= do=

consumers= choose= ~mong= so= m~ny= options?= ao= they= consider= ~ää= of=

them?=fn=m~rketing=there=is=evidence=th~t=peopäe=go=through=~=specific=

kind= of= seäection= processK= ^s= w~s= proposed= by= m~yne= ENVTSF= the=

choice= process= consists= of= muätipäe= st~gesK= fn= his= semin~ä= ~rticäeI=

m~yne= ENVTSF= eä~bor~ted= on= the= structure= of= the= choice= processK= ee=

cä~imed= th~t= the= number= of= different= br~nds= ~v~iä~bäe= on= the= m~rket=

m~de= it= h~rd= to= process= ~ää= the= inform~tion= ~bout= ~ää= of= themK= m~yne=

ENVTSF= suggested= th~t= pooä= of= possibäe= purch~se= ~ätern~tives= w~s=

shrinking= ~s= the= choice= process= w~s= proceeding= untiä= there= w~s= onäy=

one= product= äeft= in= the= pooä= of= ~ätern~tivesI= which= eventu~ääy= w~s=

purch~sedK= ^= bit= ä~ter= iussier= ~nd= läsh~vsky= ENVTVF= proposedI= ~nd=

supported= with= empiric~ä= evidenceI= ~= more= specific= structure= of= the=

choice=processK=qhey=proposed=th~t=the=process=h~d= two=st~gesK=qhe=

first=w~s=gener~ä=screeningI=where=consumers=went=through=descriptive=

inform~tion= ~v~iä~bäe= ~bout= ~ää= the= goodsI= or= ~t= äe~st= ~bout= most= of=

themI= ~nd= seäected= sever~ä= suit~bäe= c~ndid~tes= for= further=

consider~tionK= qhe= second= st~ge= w~s= fin~ä= choiceI= where= consumers=

were=choosing=one=out=of= the=sever~ä=br~nds=seäected=during= the= first=

st~geK=qhis= type= of= “phortJäisting=~nd= fin~ä= choice≤= is= very= common= in=

v~rious= other= choice= processes= EeKgK= job= hiringI= lsc~rsI= kobeä= ~nd=

other=types=of=prizesFK=i~ter=studies=by=_eih~ä=~nd=Ch~kr~v~rti= ENVUSF=

~nd=ousso=~nd=iecäerc=ENVVQF=~äso=find=robust=empiric~ä=support=to=this=

biJst~ge=structure=of= the=choice=processI=~äthough=they=~äso=specuä~te=

~bout=the=existence=of= intermedi~te=st~gesI=where= the=choice=set=gets=

more=~nd=more=distiääedK=

_ettm~n= ~nd= m~rk= ENVUMF= t~ke= the= muätist~ge= n~ture= of= the= choice=

process=~s=given=~nd=~n~äyze= the=reäi~nce=on=extern~ä= inform~tion=on=

different=st~gesK=^äthough=inform~tion=use=wiää=be=discussed=in=det~iä=in=

the=next=section=it=worth=mentioning=hereI=th~t=the=findings=of=_ettm~n=

~nd=m~rk=ENVUMF=point=to=the=difference=in=extent=of= inform~tion=us~ge=

~cross=different=st~ges=of= the=choice=processK=qhey=present=evidence=

th~t= more= extern~ä= inform~tion= is= used= during= the= first= st~ge= of= the=

choice=process=comp~red=to=the=second=st~geK=meopäe=tend=to=choose=

the=sm~ää=set=of=sever~ä=br~nds=for=further=consider~tion=with=the=heäp=of=

extern~ä=inform~tionI=whiäe=b~sing=the=fin~ä=choice=on=person~ä=feeäings=

~nd=interpret~tionsK=

SWO Characteristics of the choice process

eow=do=peopäe=use=the=inform~tion=coääected?=ao=they=use=it=directäyI=or=

do=they=h~ve=some=kind=of=~ägorithm=for=deducing=~=specific=~ction=pä~n=

from= different= pieces= of= inform~tion?= qhere= is= extensive= evidence= in=

m~rketing= EeKgK= _ettm~nI= NVTN= ~nd= ieongI= NVVPF= ~s= weää= ~s= in=

psychoäogy= EeKgK= Ch~ikenI= NVUM= ~nd= phir~i= ~nd= jeyerI= NVVTF= th~t=

consumers= use= heuristics= in= the= choice= processK= eeuristics=~re= some=

kind= of= simpäified= ruäes= for= h~ndäing= the= ~v~iä~bäe= inform~tionK= qhusI=

consumers= do= not= use= inform~tion= in= its= r~w= formK= qhere= is= ~=deb~te=

whether= those= ruäes=~re=storedLperm~nent=or= they=~re=constructed=on=

the=spot=~s=the=consumer=f~ces=the=probäemK=_ettm~n=ENVTTF=contr~sts=

these= two= views=~bout= the= heuristics=used= in= the= choice=process=~nd=

tries= to= identify=which=of= them=is= correct= by=using=wide= r~nge=of= nonJ

dur~bäe= goodsK= qhe= concäusion= he= ~rrives= to= is= th~t= constructive=

heuristics= ~re= usu~ääy= used= when= consumers= h~ve= äittäe= experience=

orL~nd= when= the= choice= is= difficuätK= tiäe= stored= heuristics= ~re= used=

when= consumers= ~re= ~äre~dy=experts= or= the=choice=probäem= is= trivi~äK=

qhis= is= very= intuitiveI= ~s= in= the= first= two= c~ses= Einexperienced=

consumers=~nd=difficuät=choiceF=consumers=ä~ck=high=qu~äity=E“intern~ä≤F=

in= form~tion= ~bout= ~= productK=thiäe= in= the= ä~tter= two= c~ses= “intern~ä≤=

inform~tion= is= presentI= or= not= requiredK= qhere= is= ~äso= ~= discussion=

whether= simpäe= heuristics= ~re= used= ~ää= the= timeI= during= every= choice=

processK= qhe= ‘function~ä= perspective’= formuä~ted= in= Ch~iken= ENVUMF=

decomposes=purch~se=concerns=into=two=Ereäi~biäity=of=the=product=~nd=

priceF= ~nd= cä~ims= th~t= simpäe= heuristics= wiää= onäy= be= used= if= price=

concerns=~re=predomin~nt=Eusu~ääy=with=che~pI=nondur~bäe=goodsF=~nd=

th~t= if=reäi~biäity=concerns=~re=predomin~nt=peopäe=wiää=eng~ge=in=more=

system~tic= processing= of= the= inform~tionK= jore= recent= studies= äike=

phir~i=~nd=jeyer=ENVVTF=~nd=a~hr=et=~äK= EOMMMF=~n~äyze=the=n~ture=of=

heuristicsK= a~hr= et= ~äKEOMMMF= ~re= concerned=with= the= effort= put=by= the=

consumers= into= the= choice= process= ~nd= the= äeveä= of= sophistic~tion= of=

heuristics=used=in=consumer=dur~bäe=purch~sesK=qhey=find=th~t=peopäe=

~re=using=quite=compäic~ted=heuristicsI=which=~re=perm~nentäy=upd~ted=

~nd= modifiedI= thusI= these= heuristics= incäude= system~tic= inform~tion=

processingK= phir~i= ~nd= jeyer= ENVVTF= ~n~äyze= the= dyn~mics= of= the=

sophistic~tion= äeveä= of=heuristics=~äong= the=consumer=expertise=on= the=

ex~mpäe= of= ~= mount~in= bike= ~nd= concäude= th~t= heuristic= ruäes= get=

simpäer= ~s= consumers= ~cquire= more= experienceK= pimiä~r= resuäts= ~re=

presented=by=Coupey=ENVVQF=who=finds=th~t=simpäe=heuristics=~re=used=

onäy= by= experienced= consumersK= poI= it= seems= th~t= peopäe= use=

compäic~ted= constructive= heuristicsI=which=get= simpäified=~nd= turn= into=

stored=ruäes=~s=consumers=~cquire=experienceK=

SWP thy do consumers use heuristics?

qhe= m~in= justific~tion= c~n=be= found= in= psychoäogy= ECh~ikenI= NVUMFOVK=

Cognitive=psychoäogy=cä~ims=th~t=peopäe=~re=not=~bäe=to=process=~ää=the=

~v~iä~bäe= inform~tion= system~tic~ääyK= qhe= costs= of= inform~tion=

processing=become=so=high=th~t=peopäe=~re=forced=to=se~rch=for=simpäe=

methods= to= h~ndäe= the= inform~tionK= ^n= ~ätern~tive= expä~n~tion= is=

jcduire’s= ENVSVF= principäe= of= the= ‘ä~zy= org~nismK’= eere= the= mess~ge=

recipient= tries=to=utiäize=the=inform~tion=~bout=the=inform~tion=source=in=

order= to= ev~äu~te= the= reäi~biäity= of= inform~tion= itseäfI= r~ther= then=

system~tic~ääy= processing= the= piece= of= inform~tion= receivedK= cor=

ex~mpäeI= peopäe=usu~ääy=e~siäy=~ccept=the=piece=of= inform~tion= th~t= is=

coming= from= their= friends= to= be= trueI= comp~red= to= the= inform~tion=

coming=from=~dvertisingK=fn=this=c~seI=~gents=~ppe~ä=on=the=intention=of=

the=source=of=inform~tion=to=infäuence=~=receiver=Ee~nsenI=NVTOFK=qo=cut=

the=äong=story=shortI=use=of=heuristics=is=the=s~ving=of=energy=which=is=

extensiveäy=done=by=consumers=where=~ppropri~teK=fnform~tion=us~ge=

~nd= tr~nsfer= whiäe= m~king= choices= consumers= f~ce= ~n= inform~tion=

overfäowK=fn=the=previous=section=it=is=seen=how=they=use=inform~tion=in=

the= choice= processI= but= how= do= they= g~ther= inform~tion?= qo= wh~t=

extent= do= they= reäy= on= thisI= extern~äI= inform~tion?= th~t= type= of=

inform~tion= do= they= receive= ~nd= send= further?= qhese= topics= ~re=

discussed=in=foääowing=subsectionsK=

SWQ dathering and using information

^s=observedI=peopäe=use=extern~ä=inform~tion=~bout=~v~iä~bäe=products=

in=order=to=reduce=the=uncert~inty=~bout=the=outcomes=they=~re=f~cing=

E~äthough= they= do= not= try= to= reduce= th~t= uncert~inty= to= zero= even= if=

possibäe= Eg~coby= et= ~äKI= NVVQFFPMK= _ut= how= extensiveäy= do= consumers=

use= th~t= inform~tion?=qhe= findings= in= the= äiter~ture=on= this= m~tter=~re=

inconsistent= E_ruksI= NVUR= ~nd= o~ju= et= ~äKINVVRFPNK= ^ää= the= äiter~ture=

~grees=th~t=extern~ä=inform~tion=use=h~s=to=be=reä~ted=with=the=äeveä=of=

expertise=of=the=consumer=with=reg~rd=to=the=good=under=consider~tionK=

_ut= the= form= of= reä~tionship= between= these= v~ri~bäes= is= uncäe~rK= cor=

ex~mpäeI= in= m~rketing= _ettm~n= ~nd= m~rk= ENVUMFPO= h~ve= conducted= ~=

study= invoäving= ä~rge= number= of= consumers= EhousewivesF= ~nd=

microw~ve= oven= being= ~= choice= productK= qhey= h~ve= grouped=

housewives= in= three= c~tegories= b~sed= on= their= experience= with= the=

product=~nd=conducted=~n=interviews=with=protocoä=~n~äysis=in=order=to=

eäicit= the= sh~pe= of= the= extern~ä= inform~tion= use= ~äong= the= expertise=

äeveäK= qhe= resuät= is= th~t= the= reä~tion= is= of= ~n= invertedJr= sh~pe= th~t=

me~ns= th~t= novices= ~nd= experts= use= äess= extern~ä= inform~tionI= whiäe=

consumers=with=intermedi~te=äeveäs=of=expertise=use=moreK=pome=other=

rese~rchers= EeKgK= kewm~n= ~nd= pt~eäinI= NVTNFPP= h~ve= found=

monotonic~ääy= neg~tive= reä~tionship= whiäe= m~ny= of= the= rese~rchers=

interested=in=the=issue=EeKgK=Cä~xton=et=~äK=NVTQF=J=no=reä~tionship=~t=~ääK=

oese~rch= in= psychoäogy= EeKgK= ^äb~= ~nd= eutchinsonI= NVUT= ~nd=

j~hesw~r~n= et= ~äKI= NVVSFPQ= provides= the= re~sons= why= more=

experienced= consumers= wiää= be= using= äess= extern~ä= inform~tion=

comp~red= to=novicesK=qheir=~rgument= is= th~t=experience= is= tr~nsä~ted=

into= the= inform~tion= th~t=consumer=stores= in=mindK=qhusI= for=decisionJ

m~king= expertsI= who= h~ve= richer= knowäedgeX= need= äess= extern~ä=

inform~tion=EChi=et=~äKI=NVUNFK=qhis=~rgument=justifies=the=monotonic~ääy=

neg~tive= reä~tionshipI= whiäe= äess= use= of= inform~tion= by= novices= is=

justified=by=their=äower=~biäity=of=processing=it=Eo~ju=et=~äKI=NVVRFK=

qhe= import~nce= of= the= extern~ä= inform~tion= c~n= be= understood= by=

äooking=~t=the=effort=äeveä=put=in=se~rch=processK=qhere=~re=two=views=on=

how= consumers= put= effort= into= se~rch= processK= lne= is= the= effortJ

~ccur~cy=fr~mework= th~t=cä~ims=th~t=effort=Ewhich=is=usu~ääy=me~sured=

by=the=se~rch=time=EeKgK=lk~d~=~nd=eochI=OMMQFF=is=costäy=~nd=peopäe=

try=to=m~ke=~=tr~deJoff=between=effort=~nd=~ccur~cy=of=their=choiceK=qhe=

second=is=the=conceptu~ä=fr~mework=th~t=cä~ims=th~t=peopäe=focus=on=~=

cert~in=~spect=of=the=~ätern~tives=th~t=is=p~rticuä~räy=s~äient=in=the=choice=

process= Ea~hr= et= ~äK= OMMMFK= fn= gener~ä= evidence= supports=

consider~tions=~bout=notJveryJextensive=inform~tion=se~rch=even=in=the=

c~se= of= dur~bäe= good= purch~ses= EeKgK= _e~tty= ~nd= pmithI= NVUTFPRK=

joorthy= et= ~äK= ENVVTFPS= conducted= ~= surveyJb~sed= study= of= extern~ä=

inform~tion= se~rch= beh~vior= of= new= c~r= buyers= ~nd= ~rrived= ~t= the=

simiä~r= concäusion= th~t= “Consumers= exhibit= very= äimited= prepurch~se=

inform~tionJse~rch= ~ctivityI= even= for= highJticket= dur~bäe= goodsK≤= _ut=

there=~re=differences=~cross=the=different=ch~r~cteristics=of= the=se~rch=

process=E_e~tty=~nd=pmithI=NVUTFK=jost= import~nt=~mong=them=is= the=

difference=in=se~rch=effort=~cross=the=difference=in=experience=EieongI=

NVVPFK=jost=of=the=studies=find=th~t=novices=exhibit=higher=effort=äeveä=in=

inform~tion= se~rch= comp~red= to= experts= EeKgK= CoupeyI= NVVQ= ~nd=

_ettm~n=~nd=winsI=NVTTFK=qhis= is= in= äine=with=the=consider~tions=~bout=

the= us~ge= of= the= extern~ä= inform~tion= sources= discussed= ~boveK= _ut=

there= is= ~äso= ~= study= by= _ennett= ~nd= j~ndeää= ENVSVF= which= presents=

evidence= on= no= decre~se= in= extern~ä= inform~tion= se~rch= ~äong= the=

expertise=incre~se=for=dur~bäe=purch~sesK=qhis=~spect=of=the=consumer=

beh~vior=wiää= be=discussed=more=extensiveäy= in= subsectionI=where= the=

effects=of=difference=in=experience=of=consumers=on=the=choice=process=

is=discussedK=

SWR bxternal fnformation pources

qhere= ~re= ~ää= sorts= of= different= inform~tion= sources= ~v~iä~bäeK= ao=

consumers= use= ~ää= of= them= to= equ~ä= extent?= ao= they= trust= extern~ä=

inform~tion=~s=much=~s=“intern~ä≤=inform~tion=~ccumuä~ted=through=own=

experience?= iiter~ture= in= psychoäogy= Ec~zio= ~nd= w~nn~I= NVTUFPTI= ~s=

weää=~s=in=m~rketing=Epmith=~nd=pwiny~rdI=NVUPF=suggests=th~t=weights=

put=on=the=inform~tion=obt~ined=through=the=immedi~te=experience=~re=

higher=then=those=of=inform~tion=obt~ined=through=~ny=type=of=extern~ä=

source=Ejuthukrishn~nI=NVVRFK=_utI=do= the=consumers=trust=equ~ääy=to=

the= inform~tion= obt~ined= through= different= extern~ä= sources?= qhere=

exist= some= oäd= m~rketing= studies= presenting= the= evidence= ~bout= the=

r~nking=of=extern~ä= inform~tion=sources=by=the= intensity=of= their=us~ge=

EeKgK= _ennett= ~nd= j~ndeääI= NVSV= ~nd= aunc~n= ~nd= läsh~vskyI= NVUOFK=

qhese= studies= consider= consumer= reports= ~nd= de~äer= visits= to= be= the=

most= wideäy= used= source= of= inform~tionK= kext= come= experts’= ~nd=

friends’= opinions= E_e~tty= ~nd= pmithI= NVUTFK= ^dvertising= ~nd= m~ss=

medi~= score= consider~bäy= äower= on= these= sc~äesK= qhis= r~nking= is= by=

frequency= of= us~geI= this= does= not= teää= much= ~bout= which= sources= do=

consumers= re~ääy= trustK= msychoäogy= offers= ~= hint= ~bout= which=

inform~tion= sources= c~n=be= reg~rded= the= most= trustworthyK= pummers=

~nd= hing= ENVSVF= ~nd= jyers= ~nd= oobertsen= ENVSVF= cä~im= th~t=

consumers= judge=~bout= inform~tion=sources=~ccording= to=the=source’s=

intention= to= infäuence= the= inform~tion= receiverK= ln= this= sc~äe=person~ä=

communic~tion=~mong=consumers=scores= the=highest= Ee~nsenI=NVTOI=

pK= QNNFK= jyers= ~nd= oobertsen= ENVSVF= ~s= weää= ~s= pummers= ~nd= hing=

ENVSVF= ~rrive= to= this= concäusion= ~fter= c~refuääy= ~n~äyzing= the= opinion=

äe~dership=process=in=sm~ää=groups=of=peopäeK=jore=recent=studies=find=

th~t= interperson~ä= reä~tions= ~re= so= import~nt= th~t= consumers= exhibit=

more= f~ith= in= inform~tion= obt~ined= through= their= friends= th~n= the=

re~son~bäe= äeveä= Edershoff= et= ~äKI= OMMSFPUK= poI= interperson~ä= reä~tions=

~mong= consumers= Ecommunic~tion= with= friendsF= ~re= ~= very= import~nt=

inform~tion= sourceK=_ut=how=shouäd=one=choose=whom=to= receive= the=

inform~tion= from=~mong=~ää= her= friends?=pimon= ENVRUF= ~nd=Cyert=~nd=

j~rch= ENVSPF= h~ve= suggested= th~t= consumers= foääow= the= äe~st= effort=

ruäeK=qhis=me~ns=th~t=consumers=~re=minimizing=the=over~ää=inform~tion=

se~rch=effort=given=the=tr~deJoff=between=se~rch=~nd=inform~tion=qu~äity=

receivedK=jore=specific~ääyI=consumers=~re=~sking=the=friends=who=~re=

the=most=knowäedge~bäe=~bout=~=cert~in=good=~nd=who=wiää=give=them=~=

piece= of= inform~tion= th~t= needs= äe~st= compäement~tion= from= other=

inform~tion=sourcesI=so=th~t=they=c~n=termin~te=their=se~rch=effort=right=

~w~y= ~fter= receiving= this= p~rticuä~r= piece= of= inform~tionK= jore= recent=

consumer=beh~vior=modeäs=EeKgK=dershoff=et=~äKI=OMMNF=suggest=th~tI=for=

the=s~ke=of= se~rch=effort=minimiz~tion=~äong=with= the=wiää= of=obt~ining=

high=qu~äity=sign~äsI=consumers=shouäd=~sk=for=the=inform~tion=~=friend=

who= wouäd= give= ~= fuää= r~nking= of= the= br~nds= of= ~= cert~in= good= under=

consider~tionK=

SWS kature of information transferred

meopäe= receive= inform~tion= from= their= friendsI= but= wh~t= type= of=

inform~tion= do= they= receive?= fs= it= det~iäed= inform~tion= ~bout= different=

ch~r~cteristics=of=~=good?=lrI=is=it=~=gener~ä=ev~äu~tion=of=~=good?=qhis=

obviousäy=depends=on=wh~t=ex~ctäy=peopäe=remember=~bout=the=goods=

they= consumeK= qhe= e~räy= work= in= psychoäogy= on= this= topic= Egohnson=

~nd= oussoI= NVTUF= h~s= presented= evidence= th~t= peopäe= remember= ~=

gener~ä= impression=~bout= the=goods=more=e~siäyK=bven= if= immedi~teäy=

~fter=consumption=peopäe=remember=ex~ct=fe~tures=of= the=productI=~s=

time=goes=by=they=tend=to=forget=the=ch~r~cteristics=of=the=good=~nd=the=

inform~tion= distiääs= to= gener~ä= impression= ~bout= the= good= E_ieh~ä= ~nd=

Ch~kr~v~rtiI= NVUPFK_ieh~ä= ~nd= Ch~kr~v~rti= ENVUPF= ~rrived= to= this=

concäusion= by= ex~mining= ~= beh~vior= of= f~iräy= ä~rge= s~mpäe= of=

consumers=of=pocket=c~äcuä~tors=in=experiment~ä=settingK=qhe=group=of=

consumers= who= w~s= ~ääowed= to= choose= one= out= of= Q= br~nds= ~nd=

consume= on= the= first= st~ge= of= experiment= ~s= ~n= ~ätern~tive= to= äe~rn=

~bout=the=sep~r~te=ch~r~cteristics=of=different=br~ndsI=memorized=onäy=

~=gener~ä=impression=~bout=the=good=they=h~ve=consumed=on=the=first=

st~geI= in= contr~st= to= the= group= who= did= not= h~ve= consumption=

~ätern~tive=on=the=first=st~geK=qhenI=it=seems=str~it=forw~rdI=th~t=most=of=

the= inform~tion= received= by= the= ~gents= through= the= interperson~ä=

communic~tion=is=in=form=of=~=gener~ä=ev~äu~tion=of=the=goods=th~t=their=

friends= h~ve= consumedK= ^= bit= ä~terI= other= cognitive= psychoäogistsI=

working= on= memory= retriev~ä= found= ~nother= expä~n~tion= of= the=

phenomenonK= tyer= ~nd= pruää= ENVUVF= h~ve= presented= the= modeä= of=

impression= form~tionK= fn= this= modeäI= ~= consumer= gets= inform~tionI=

~bout= the= product= she= is= consumingI= in= piecesK= bvery= piece= of=

inform~tion= is= tr~nsferred= into= ~= speci~ä= ‘bin’= in= memory= of= ~n= ~gent=

upon= its= ~rriv~äK= ^nd= the= inform~tion= retriev~ä= from= this= memory= bin=

works=in=~=w~y=th~t=it=is=e~sier=to=get=the=piece=of=inform~tion=ä~ter=you=

h~ve= put= it= in= the= binK= mäusI= the= gener~ä= impressions= ~bout= ~= cert~in=

product= ~re= formed= b~sed= on= the= ~ää= inform~tion= ~v~iä~bäe= in= the= binI=

~nd=this= impression=~äso=goes=to=the=bin=~s=~=piece=of=inform~tionK=lf=

courseI=it=is=stored=on=the=top=of=the=binI=~nd=thus=is=e~siest=to=retrieveK=

crom= this= theory= it= is= e~sier= to= sh~re= gener~ä= impressions= ~bout= the=

goodsI= bec~use= th~t= piece= of= inform~tion= is= e~sier= ~v~iä~bäe= in= the=

memory= of= ~= communic~torK= m~rk= ~nd= tyer= ENVVQF= h~ve= empiric~ääy=

ex~mined= the= theory= by= studying= the= inform~tion= remembering= ~bout=

the=qs=sets=by=~=ä~rge=s~mpäe=of=~gentsK=qhey=späit=the=s~mpäe=in=two=

subs~mpäes= ~ssigning= säightäy= different= t~sks= to= e~ch= of= two= ~nd=

concäuded=th~t=gener~ä=impressions=~re=not=~äw~ys=formed=in=minds=of=

peopäeK=qhey=~re=onäy=formed=if=there=is=~=purpose=to=do=soK=_ut=when=

they= ~re= formedI= indeed= they= ~re= e~siest= pieces= of= inform~tion= to=

retrieve=~nd=communic~teK=

SWT pystematic aifferences

^äthough= the= choice= process= is= very= individu~äistic= ~nd= uniqueI= there=

~re= some= simiä~rities= ~cross= ~ää= the= consumers= documented= in= the=

äiter~ture= reviewed= hereK=qhere= ~re= ~äso= system~tic= differences= in= the=

choice=process=depending= on= cert~in= ch~r~cteristics=of= the= consumer=

EeKgK= äeveä= of= expertiseF= or= the= good= EeKgK= dur~biäityF= under=

consider~tionK= fn= the= foääowing= subsections= these= system~tic=

differences=~re=discussedK=

SWU bffects of aifferences in bxperience of a Consumer

aifferent= consumers= h~ve= different= äeveäs= of= expertise= with= reg~rd= to=

different= goods= ~v~iä~bäe= on= the= m~rketK= bxpertise= c~n= be= bro~däy=

defined=~s=the=inform~tion=~bout=the=ch~r~cteristics=of=the=goodI=either=

obt~ined=through=immedi~te=experience=or=some=otherI=highäy=reäi~bäeI=

sourcesK=k~rrower=definitions=excäude=sources=of=inform~tion=other=th~n=

experience= E_ettm~n= ~nd= winsI= NVTTFK= eere= the= ä~tter= definition= is=

consideredI=which=c~n=be=rephr~sed=~s=the=f~miäi~rity=of=the=consumer=

with= the= good= ECoupeyI= NVVQFPVK= fn= the= äiter~ture= it= is= common= not= to=

discuss= the= choice= process= ~cross= the= continuous= expertise= v~ri~bäeI=

but=r~ther=to=divide=the=pooä=in=twoW=experts=~nd=novices=EeKgK=^äb~=~nd=

eutchinsonI=NVUT=~nd=joorthy=et=~äK=NVVTFK=fn=this=c~se=the=difference=

in=beh~vior=shouäd=be=e~siäy=visibäeK=

qhe= m~jor= difference= between= experienced= ~nd= nonJexperience=

consumers= is= th~t= they= ~re= using= different= choice= mech~nismsK=

_ettm~n=~nd=wins= ENVTTF=conducted=~n=expäor~tory=study=using= thinkJ

~äoud=protocoäs= of=~= f~iräy= ä~rge=s~mpäe= of=grocery= shoppers=who=did=

not=know=the=true=~im=of=~n=experimentI=thus=beh~ved=n~tur~ääy=enough=

with=reä~tion=to=the=use=of=~v~iä~bäe=inform~tionK=fn=the=beginning=of=the=

study= the=s~mpäe= w~s=divided= in= twoW= experienced=~nd= inexperienced=

consumersK=qhe=resuät=of=the=study=is=th~t=experienced=consumers=use=

the= mech~nisms= th~t= utiäize= the= inform~tion= they= h~ve= stored= in=

memoryI= whiäe= novices= use= different= mech~nisms= due= to= the= ä~ck= of=

high= qu~äity= inform~tion= ~cquired= person~ääy= through=experienceK= qhis=

ä~ck= of= ‘intern~ä’= inform~tion= induces= novices= to= use= constructive=

mech~nisms= more= intensiveäy= ~nd= reäy= more= on= ‘environment~ä=

inform~tion’= Ee~nsenI= NVTOI= ppK= NUMJNUNFK= b~räier= work= by= t~rneryd=

ENVSNFI=who=studied=dur~bäe=goods= Ec~rsF= in= contr~st= to= _ettm~n=~nd=

wins= ENVTTFI= confirms= the= s~me= p~ttern= of= choice= mech~nisms=

Ee~nsenI=NVTOFK= ff=one=~ssumes=th~t=experience=provides=high=qu~äity=

inform~tion= ~bout= the= ~v~iä~bäe= products= ~s= weää= ~s= ~biäity= of= better=

processing= the= extern~ä= inform~tionI= then= it= is= obvious= th~t=

inexperienced= consumers= ~re= f~cing= ~= more= compäex= t~sk= th~n=

experienced=consumers=Eiussier=~nd=läsh~vskyI=NVTVFQMK=

qhe= ä~ck= of= experience= ~äso= indirectäy= ~ffects= the= novice’s= choiceK= ^=

poor=knowäedge=b~se=~bout=~=cert~in=good=m~kes= it=difficuät= to=digest=

the=inform~tion=~v~iä~bäe=through=extern~ä=sources=Ej~hesw~r~n=et=~äKI=

NVVSFK=qh~t=is=why=inform~tion=processing=t~kes=more=time=for=novices=

th~n=it=t~kes=for=experts=Ee~nsenI=NVTOFK=aue=to=th~tI=nonJexperienced=

consumers=mostäy=~ppäy=constructive=heuristics=to= the=choice=processI=

for=ex~mpäe=they=judge=depending=whether=they=h~ve=he~rd=the=br~nd=

n~me= or= notI= whiäe= in= the= expert’s= c~se= the= f~me= of= the= br~nd= n~me=

does= not= pä~y= signific~nt= roäe= Em~rk= ~nd= tyerI= NVVQFQNK= ^fter= this=

discussion=it=sh~ää=not=be=surprising=th~t=it=is=e~sier=for=experts=to=form=

expect~tions= ~bout= the= s~tisf~ction= äeveä= they= ~re= ~bout= to= derive=

through= the= consumption= of= ~= cert~in= good= ~nd= th~t= usu~ääy= their=

predictions=~re=more=~ccur~te=comp~red=to=those=of=novicesI=which=~re=

b~sed= pureäy= on= extern~ä= EthusI= more= noisyF= inform~tion= Ephir~i= ~nd=

jeyerI=NVVTFK=qhusI=the=consumer’s=str~tegy=to=stick=with=the=good=th~t=

he= h~s= experience= with= EeKgK= g~cobyI= NVTNF= sh~ää= not= be= surprising=

eitherK= p~mueäson= ~nd= weckh~user= ENVUUF= present= the= s~me= type= of=

evidence=confirming= the= äoy~äty=of= the=consumers= to=br~nds= th~t= they=

h~ve=consumedK=qheir=study=confirms=th~t=there=is=~=“st~tus=quo=bi~s≤=

in=decision=m~king=even=~fter=controääing=for=number=of=v~ri~bäesK=

SWV bffects of aifferences in aurability of a mroduct

qhere= is=evidence=of= differences= in= consumer= beh~vior= depending= on=

the= dur~biäity= of= ~= product= purch~sedK= qypic~ääy= one= think= of= twoW=

dur~bäe=~nd=nondur~bäe=goods=Ee~nsenI=NVTOFK=e~nsen=ENVTOF=reviews=

numerous= e~räy= studies= presenting= evidence= documenting= th~t= the=

choice= str~tegies= ~re= different= in= c~se= of= nonJdur~bäes= comp~red= to=

dur~bäesK=qhe=difference=äies=in=the=extent=of=inform~tion=coääected=~nd=

processedK=thiäe=in=the=c~se=of=nonJdur~bäes=the=process=is=more=äike=

tri~ä=~nd=error=EeKgK=pt~ffordI=NVSS=~nd=pheth=~nd=senk~tes~nI=NVSUFI=

e~nsen=ENVTOF=~rgues=th~t=dur~bäes=~re=too=import~nt=to=be=purch~sed=

in= ~= simiä~r= m~nner= Ech~pter= NRF= ~nd= th~t= consumers= ~re= trying= to=

~n~äyze= more= extern~ä= inform~tion= inste~dK= qhis= is= f~iräy= intuitive= ~s=

dur~bäes=~re=reä~tiveäy=expensive=comp~red=to=nonJdur~bäe=goods=~ndI=

by=definitionI=they=~äso=h~ve=äonger=service=timeK=qhere=is=gre~t=body=of=

indirect= evidence= on= this= m~tterK= pome= rese~rchers= investig~te= the=

effect= of= ~ccount~biäityP= Eee~th= et= ~äK= NVVQF= ~nd= invoävement= EieongI=

NVVPF=on=choice=processK=ft=is=quite=obvious=th~t=shopping= for=dur~bäe=

goodsI=which=usu~ääy=h~ve=higher=prices=~nd=äonger=periods=of=serviceI=

wiää= resuät= in=higher=~ccount~biäity=~nd= invoävement= Elk~d~=~nd=eochI=

OMMQFK= qhenI= there= is= ~= quite= robust= finding= Eee~th= et= ~äKI= NVVQF= th~t=

higher= ~ccount~biäity= äe~ds= to= more= ~ccur~te= processing= of= the=

inform~tion= for=better=justific~tion=of= the=choice=to=be=m~deK=pimonson=

ENVUVF=~äso= finds= the=s~me=p~ttern=of=beh~vior=~fter=~n~äyzing=~=wide=

r~ge=of=dur~bäe=~nd=nondur~bäe=goods=EeKgK=beerI=mouthw~shI=qs=setsI=

c~äcuä~torsI=~p~rtmentsFW=in=c~se=of=high=~ccount~biäity=Edur~bäe=goodsF=

consumers= eng~ge= in= more= det~iäed= ~nd= timeJconsuming= inform~tion=

processingK= _esidesI= there= is= ~äso= evidence= th~t= in= c~se= of= high=

~ccount~biäity= E~nd= more= competitive= setupI= me~ning= more= options=

~v~iä~bäeF= invoäved= in= the= choice= process= some= ch~r~cteristics= of= the=

extern~ä=inform~tion=source=EeKgK=‘spokesperson’s=f~me’F=become=more=

import~nt=EeKgK=ee~th=et=~äKI=NVVQ=~nd=ee~th=~nd=Ch~tterjeeI=NVVRFK==

^s= ~bout= invoävement= äeveäI= there= is= evidence= consistent= with= th~t= of=

~ccount~biäityK= Ch~iken= ENVUMF= presents= the= evidence= th~t= high=

invoävement= in= the= choice= process= resuäts= in= consumers= eng~ging= in=

more=system~tic=inform~tion=processingI=whiäe=äow=invoävement=resuäts=

in= higher= reäi~nce= on= simpäe= heuristicsK= qhere= is= ~äso= evidence= on=

difference=in=ch~r~cteristics=of=the=product=th~t=consumers=with=different=

invoävement= äeveäs= concentr~te=onK=wh~ng=~nd=j~rkm~n= EOMMMF=show=

th~t= in= äowJinvoävement=c~se= the=~äign~bäe= fe~tures= Efe~tures= th~t=~re=

present=in=~ää=of=the=products=in=the=choice=setF=of=the=product=~re=more=

import~ntI= whiäe= in= highJinvoävement= c~se= non~äign~bäe= fe~tures=

become= cruci~äK= koteI= th~t= ~n~äysis= b~sed= on= ~äign~bäe= fe~tures= is=

much=simpäer=~nd=requires=äess=time=comp~red=with=the=~n~äysis=b~sed=

on= non~äign~bäe= fe~turesK= qhis= me~ns= th~t= peopäe= ~re= spending= äess=

time=on=the=choice=process=for=nondur~bäes=th~n=for=dur~bäes=~nd=th~t=

they= h~ve= different= str~tegies= for= ~n~äyzing= extern~ä= inform~tion= in=

these= two= c~sesI= which= is= ~g~in= consistent= with= the= evidence= from=

rese~rch= discussed= ~boveK= qhere= is= ~äso= evidence= on= differences=

depending= on= whether= the= choice= is= m~de= ~t= home= or= in= the= store=

Ee~nsenI=NVTOI=ch~pter=VFK=qhis=~spect=seems=to=~ffect=the=size=of=the=

choice=set=considered=for=the=fin~ä=choiceW=of=courseI=in=c~se=of=inJstore=

decision=m~king=the=choice=set=is=consider~bäy=sm~ääer=~s=it=is=äimited=to=

the=products=~v~iä~bäe= in= th~t= storeK= ff= one=~rgues= th~t= choices= ~bout=

dur~bäes=~re=usu~ääy=m~de=~t=homeI=whiäe=most=of=the=time=the=choice=

~bout=nondur~bäes= t~kes=pä~ce= in= storesI= this=c~n=be= reg~rded= ~s=~n=

indirect=evidence=for=differences=in=dur~biäity=tooI=me~ning=th~t=in=c~se=

of= dur~bäe= goods= initi~ääy= peopäe= consider= ~= wider= r~nge= of= possibäe=

~ätern~tives=Edifferent=br~ndsF=comp~red=to=nondur~bäe=goodsK=

Consumers’=purch~sing=decisions=~re=often=b~sed=on=perceptions=~nd=

predictions= of= product= qu~äityK= qhese= qu~äity= judgments= ~re= in= turn=

dependent=on=product=~ttributes=~nd=their=reä~tion=to=the=potenti~ä=utiäity=

~= consumer= m~y= derive= from= th~t= productK= thiäe= most= consumers=

wouäd= ~gree= th~t= it= is= the= more= fund~ment~äI=underäying= physic~ä= ~nd=

reput~tion~ä=ch~r~cteristics=th~t=determine=~=product’s=v~äueI=it=is=often=

~n= unwieädy= t~sk= for= consumers= to= process= ~ää= the= ~v~iä~bäe= ~ttribute=

inform~tionK=

qhereforeI=consumers=often= reäy=on=simpäe=decisionJm~king=str~tegies=

when= ev~äu~ting= productsK=cor=ex~mpäeI= consumers= m~y= infer= from=~=

product’s= price= th~t= its= physic~ä= ~ttributes= ~re= of= higher= qu~äity= Esince=

the= inputs= to= production= m~y= be= more= expensiveFK= ^ätern~teäyI=

consumers=m~y=consider=~=br~nd=n~me=~s=~n=umbreää~=concept=under=

which=v~rious=~ttributes=~re=~ssumed=to=~ccomp~ny=the=productK=^s=~=

resuät=of= these=inferred=~ttributesI=consumers=often=use=br~nd=or=price=

inform~tion=in=m~king=product=~ssessmentsK=

ConsequentäyI= consumers’= ~ttention= to= br~nd= ~nd= price= inform~tion=

m~y=bäock=the=use=of=other=Epotenti~ääy=more= fund~ment~äF= inform~tion=

in= judging=~=product’s=qu~äityK=qo=this=endI=expäore=how=the=process=of=

~ttention= bäocking= ~nd= the= sequenti~ä= order= in= which= inform~tion= is=

received= ~ffect= judgments= ~bout= product= qu~äityK= lne= find= th~t= initi~ä=

br~nd=~nd=price=inform~tion=c~n=not=onäy=bäock=~ttention=to=subsequent=

inform~tion= ~bout= product=qu~äityI=but= th~t= this= inform~tion= m~y=~ffect=

judgments=reg~rding=simiä~r=productsK==

jost=consumers=~gree=th~t=it=is=not=br~nd=n~me=or=price=th~t=in=~nd=of=

themseäves= determine= qu~äityK= ft= is= therefore= puzzäing= th~t= m~ny=

consumers’=decisions=reäy=on=this= inform~tion=even=in=the=presence=of=

~v~iä~bäeI= often= contr~dictoryI= inform~tion= on= more= qu~äity= reäev~nt=

product= ~ttributesK= fn= essenceI= br~nd= ~nd= price= inform~tion= ~re= often=

heuristic~ääy= used= in= ev~äu~ting= products= ~nd= bäock= consumers’=

~ttention= to= other= qu~äityJdetermining= product= ch~r~cteristicsK= ^s= ~=

resuätI=consumers=often= f~iä= to=correctäy=differenti~te=between=products=

of=v~rying=qu~äitiesK=qhis=f~iäure=m~y=h~ve=signific~nt=weäf~re=effects=vi~=

the=direct=cost=of=the=product=EeKgK=p~ying=~=premium=for=br~nded=goods=

over= identic~ä= generic= products= or= äesser= known= br~ndsF= ~nd= the=

indirect= costs= of= products= not= fuääy= s~tisfying= ~= consumers= utiäity=

expect~tions= EeKgK= the= product= m~y= not= effectiveäy= m~tch= with= ~=

consumer’s= preferencesFK= pince= consumers= often= reäy= on= br~nd= ~nd=

price= inform~tion=~s= ers~tz= ruäes= of= decisionJm~kingI= consumers= m~y=

never= devi~te= from= these= purch~sing= str~tegiesI= impäying= th~t= the=

~ttributeLqu~äity=reä~tionship=of=other=substitute=products=m~y=never=be=

fuääy=äe~rnedK=qhis=type=of=decisionJm~king=m~y=be=p~rticuä~räy=reäev~nt=

in= contexts= where= consumers= ~re= initi~ääy= inexperienced= or= h~ve= äittäe=

inform~tion=~bout=~=product’s=~ttributes=~nd=their=reä~tion=to=qu~äityK=

oese~rch=in=psychoäogy=h~s=demonstr~ted=th~t=individu~äs=often=reäy=on=

heuristics=when=coping=with=even=moder~teäy=compäex= äe~rning= t~sksK=

lne= consequence= of= heuristic= b~sed= äe~rning= is= the= phenomenon=

known= ~s=~ttention=bäockingW=once=~n= individu~ä= äe~rns= to=~ssoci~te= ~=

cue= with= ~n= outcomeI= this= ~ssoci~tion= tends= to= bäock= subsequent=

~ttempts=to=p~ir=new=cues=with=th~t=s~me=outcomeK=qhis=phenomenon=

h~s= been= reported= in= experiments= with= ~nim~äs= Eh~minI= NVSVF= ~nd=

more= recent= studies= with= hum~ns= Eaickinson= et= ~äKI= NVUQX=t~ädm~nn=

~nd= eoäyo~kI= NVVOFK= bssenti~ääyI= bäocking= ~rises= from= individu~äs’=

reäi~nce=on=“first=impressions≤=r~ther=th~n=eng~ging=more=sophistic~ted=

äe~rning=str~tegiesK=

ft= is= suggested= th~t= this= ~ttention= bäocking= is= present= in= consumer=

decisionJm~kingK= ppecific~ääyI= once= consumers= äe~rn= ~n= initi~ä=

~ttributeLqu~äity= ~ssoci~tion= reg~rding= ~= p~rticuä~r= productI= this=

~ssoci~tion= subsequentäy= bäocks= consumers’= ~ttention= to= otherI= more=

fund~ment~ä= ~ttributeLqu~äity= reä~tionshipsK=cor= ex~mpäeI= if= consumers=

initi~ääy= ~ssoci~te= ~= p~rticuä~r= br~nd= n~me= with= high= qu~äityI= this=

~ssoci~tion= m~y= bäock= consumers= from= identifying= the= physic~ä=

ch~r~cteristics= of= competing= products= th~t= ~re= ~äso= indic~tive= of= high=

qu~äityK= qhis= impäies= th~t= firms= m~y= utiäize= ~ttention= bäocking= in= their=

m~rketing=str~tegiesW=if=bäocking=exists=in=consumer=choice=contextsI=~=

firm= c~n= p~ir= ~= unique= ~ttribute= of= its= productI= for= ex~mpäe= ~= br~nd=

n~meI= with= EperceivedF= high= qu~äityK= qhis= ~ssoci~tion= bäocks=

competitors’= ~ttempts= to= ~ssoci~te= other= ~ttributes= Ep~rticuä~räy= those=

f~voring= their= productsF= with= high= qu~äity= in= the= minds= of= consumersK=

^ttention=bäocking= in= ~= consumer= äe~rning= context=h~s= been= expäored=

by=other=rese~rchersK=

cor=ex~mpäeI=in=~=series=of=experiments=s~nlsseä~er=~nd=^äb~=EOMMMF=

demonstr~ted=th~t=if=~=consumer=äe~rns=to=~ssoci~te=~=p~rticuä~r=br~nd=

with= ~= qu~äity= äeveäI= subsequent= inform~tion= combining= more= reäi~bäe=

physic~ä=~ttributes=with=~=qu~äity=äeveä=~re=often=ignoredK=fn=other=wordsI=

~= properäy= pä~ced= br~nd= mess~ge= EeKgK= br~nd= u= is= high= qu~äityF= c~n=

bäock=subsequent=äe~rning=~bout=product=~ttributes=EeKgKI=~ttribute=^=is=

~=ch~r~cteristic=of=~=high=qu~äity=productFK=

Ch~pter=T=Constructing=the=_r~nd=Choice=jodeä=m~rt=–=ff=

qhe=_~ckground=for=_r~nd=Choice=jodeä=

=TWN B~yesi~n fnference

TWO aefinition of pt~tistic~l jodel

TWP B~ye’s qheorem

TWQ jodel B~sed B~yesi~n fnference

TWR fnference rsing Conjug~te mrior aistribution

TWS j~rkov Ch~in jonte C~rlo Algorithm in B~yesi~n fnference

TWT jCjC

TWU dibbs p~mpling

TWV aevi~nce fnform~tion Criterion

TWNM tinBrdp poftw~re

Ch~pter=T

Constructing=the=_r~nd=Choice=jodeä=m~rt=–=ff=

qhe=_~ckground=for=_r~nd=Choice=jodeä=

qhe= br~nd= choice= modeä= th~t= is= deveäoped= in= this= study= is= b~sed= on=

_~yesi~n= fnference= ~nd= j~rkov= Ch~in= jonte= C~räo= jethodsK= qhis=

ch~pter=is=to=cre~te=~=b~ckground=for=the=choice=modeäK=

TWN Bayesian fnference qhe= beginning= of= the= ONst= century= found= _~yesi~n= st~tistics= to= be=

f~shion~bäe= in= scienceK= _ut= untiä= ä~te= NVUMsI= _~yesi~n= st~tistics= were=

considered=onäy=~s=~n= interesting=~ätern~tive= to= the= “cä~ssic~ä≤= theoryK=

qhe=m~in=difference=between=cä~ssic~ä=st~tistic~ä= theory=~nd=_~yesi~n=

~ppro~ch= is= th~t= the= ä~tter=considers=p~r~meters=~s= r~ndom=v~ri~bäes=

th~t= ~re= ch~r~cterized= by= ~= prior= distributionK= qhis= prior= distribution= is=

combined= with= the= tr~dition~ä= äikeäihood= to= obt~in= the= posterior=

distribution= of= the= p~r~meters= of= interest= on= which= the= st~tistic~ä=

inference= is= b~sedK= _~yesi~n= st~tistics= suddenäy=bec~me= f~shion~bäeI=

opening= new= highw~ys= for= st~tistic~ä= rese~rchK= rsing= j~rkov= Ch~in=

jonte=C~räo=simuä~tionI=one=c~n=now=set=up=~nd=estim~te=compäic~ted=

modeäs=th~t=couäd=not=be=soäved=by=tr~dition~ä=methodsK==

pince= NVVMI= when= jCjC= first= ~ppe~red= in= st~tistic~ä= scienceI= m~ny=

import~nt=reä~ted=p~pers=h~ve=~ppe~red=in=the=äiter~tureK=auring=NVVM=J

NVVRI=jCjC=–reä~ted=rese~rch=focused=on=the=impäement~tion=of=new=

methods=in=v~rious=popuä~r=modeäs=xfor=ex~mpäe=deäm~I=oubin=ENVVOFI=

deäf~ndI=pmith=~nd=iee=ENVVOFI=aeää~port~s=~nd=pmith= ENVVPFK=auring=

the=s~me=period=~n=e~räy=version=of=tn_rdp=softw~re=~ppe~redK=_rd=

w~s= computingJä~ngu~geJoriented= softw~re= in= which= the= user= onäy=

needed= to= specify= the=structure=of= the=modeäK=qhen=_rdp=w~s=using=

jCjC=methods=to=gener~te=s~mpäes=from=the=posterior=distribution=of=

the= specified= modeäK= Currentäy= tin_rdp= NKQKP= is= ~v~iä~bäe= on= the=

internetK= qhe= deveäopment= of= tin_rdp= h~s= proved= v~äu~bäe= for= the=

impäement~tion= of= _~yesi~n= modeäs= in= ~= wide= v~riety= of= scientific=

discipäinesK= tin_rdp= is= the= key= f~ctor= in= the= growing= popuä~rity= of=

_~yesi~n=methods=in=scienceK=

TWO aefinition of ptatistical jodel lne=of= the= import~nt= steps= in= st~tistic~ä= science= is= the=construction=of=