To study: Make sure you can accurately define & explain these concepts. Test yourself by providing a written explanation & check it against your notes & text.
Context & Framing Effects: How options are described & alternatives are presented (what happens under gains versus losses, how is vivid/case information versus base rate data used) & the context in which they are embedded
Ex: organ donation: opt-in (US), opt-out (UK), fruit in attractive bowls in the cafeteria at the front of the line
Presenting options so that the “easy” choice is indeed the “best one”
Vividness in descriptions- describing options (options described vividly are seen as more likely, evaluated more extremely…). Numeric illiteracy, conjunction fallacy
1. Adjustment from an anchor-
a. Ex: Pricing (providing a comparison price)
b. Comparative and TV advertising (choosing a comparison brand, patterning a commercial)
2. Refining Anchoring & Adjustment-
a. Ex: Ad claims & disclaimers (writing brand claims & disclaimers)
b. Pricing (surcharges, discounts, payment, & refund schedules that optimize satisfaction)
c. Anchoring & Adjustment: Individuals anchor perceptions around a reference point. Preferences are then made relatively rather than on an absolute basis
i. Purchase an item for 30 (120) or 10 (100) at another store. Do you drive? Yes for the small $ amount. ii. “Original price” provides an anchor against which to assess “our price” iii. Anchors in Advertising- comparative ads (choosing a comparison brand, patterning a commercial), emotional patterns for TV commercials- Prices (providing a comparison price) iv. The 3 brand context increases the likelihood of preferring the higher priced options
v. The Samsung provides the anchor that makes the JVC appear to be reasonably priced vi. Comparative Advertising- Comparative brand is the referent. 2 objectives in using an anchor in comparative ads: (Upward adjustment is better!)
1. Assimilation or “in” with the anchor, &
2. Contrast or “out” & diff. From the anchor vii. Outcomes over Time & Satisfaction (A retrospective feeling): Cons want smaller pay then larger pay to save the best for last. Pay then eat. Also looking forward chose to eat than pay is like pudding then carrots
1. Current position serves as anchor- only know if you’re happy if things improve
2. Economic theories based on NPV vs. theories of psychological well being make opposite predictions. That people are impatient about outcomes. Theories from Psychology predict savoring, or keeping the best to the last.
3. Individuals can only evaluate outcomes based on an anchor. Improvements from the anchor are preferred. People like happy endings viii. Affective Patterns in Ads: The most affective is the story [linear] (keeps attn.) vs. the flat or u shaped.
1. Determine moment-by-moment affective reaction using an “emotion monitor” & measure overall ad evaluations
2. Ad length unrelated to ad evaluations
3. Linear Trend, Peak, & Time from Peak to End, determine ad evaluations
4. Linear Trend & Peak positively, related to evaluations
5. Time from Peak to End negatively related to evaluations
a. The Previous moment provides the anchor in the commercial. Commercials with a story line that builds rapidly to a crescendo & end on a high note create the most affective involvement & liking for the commercial
b. Brand ID should be embedded NOT at the end.
c. Each point in the ad should anchor for the next point
d. Ex: Taster’s Choice commercial ix. Anchors in Shelf Placements, Catalog, Web-Page Design
x. Framing – Gain & Loss Frames/Quadrants, How you describe options and the framing/context in which you imbed them (the larger frame in which you position it judgmental choice)
1. Gain & Loss Utility Slopes & Marginal Utilities- loss of utility = gain of utility (linear), Marginal utility diminishes
a. Upper right hand corner is gain (risk-averse) and lower left hand is loss (risk-seeking- willing to gamble to avoid