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Chapter 9

MGMC02H3 Chapter Notes - Chapter 9: Negativity Bias, Confirmation Bias, Prospect Theory

Management (MGM)
Course Code
Kyeongheui Kim

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Ch9: Judgment and Decision Making Based on High
Decision-Making Processes
Cognitively based, Affectively based
Judgment Processes
Contextual Effects
Decision characteristics
Other people
High-Effort Judgment Processes
Judgments/decisions consumers make when MAO to process info relevant to
the decision is high
Judgments evaluations or estimates regarding the likelihood that
products/services possess certain features or will perform in a certain
manner. Judgments do not require a decision
Decision making making a selection among options or courses of action
Estimations of likelihood judging how likely it is that something will
occur (e.g. likelihood that a product will break down, will be liked by others
upon purchase, or will satisfy our needs. Likelihood that an ad is truthful)
Judgments of goodness/badness evaluating the desirability of the
offerings features, and is affected by product attributes as well as the
intensity and direction of affective responses
Anchoring and Adjustment starting with an initial evaluation and
adjusting with additional information. This initial value can be info or an
affective response available from memory; it can be attribute info from
external environment encountered first; consumer values and normative
influences are strong determinants of initial value
Imagery (visualization) imagining an event in order to make a judgment
oPlays major role in judgment of likelihood and goodness/badness
oCan make event seem more likely to occur since consumers form a
positive bias
oConsumers may overestimate how satisfied they will be with a product
oMay cause consumers to focus on vivid attributes & weigh them more
Biases in Judgment Processes: biases may compromise quality of
consumers decision

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oConfirmation bias overweighting confirming info & underweighting
contrary info in forming judgments can reduce consumers tendencies
to search for more info, leading to less-than-optimal choices
oSelf-positivity bias believing that bad things are more likely to
happen to other people than to themselves; might not process messages
that suggest they might be vulnerable to risks > bad news for health-
care or insurance marketers
oNegativity bias giving negative info more weight than positive info
when forming judgments, especially when forming opinions about
something very important and an accurate judgment is necessary. But
consumers dont engage in negativity bias when already committed to
a brand.
oMood and bias:
Mood can serve as initial anchor for a judgment (e.g. when
shopping for a CD in a good mood, youll likely respond positively
to any music you hear)
Moods can reduce consumers search for and attention to
negative info; consumers want to preserve their good mood by
ignoring negative info
Moods can make consumers overconfident about judgments they
oPrior brand evaluations: when the favourable brand name based on
past exposure blocks new learning about quality-revealing product
attributes that should affect consumers judgments
Marketing Implications
oEnsure the brand serves as a positive anchor by:
Focusing consumers attention on those attributes that place the
brand as best in its class > your brand becomes an anchor
Trying to affect the set of other products that consumers use in
their adjustment, in relation to the anchor
The existing brand name in a brand extension or a products
country of origin can serve as an anchor to influence subsequent
oAffect judgments of goodness/badness by:
Making consumers feel good (by manipulating their moods or
priming consumers with positive feelings before giving them
info) will lead them to evaluate the offering more positively
Asking consumers to imagine the attributes/benefits of a
oAffect likelihood estimates. (e.g. consumers primed to consider family
ties are more likely to take a financial risk because they realize family
can help cushion a monetary loss. But less likely to take a social risk
since negative outcome might affect their family)

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oTry to reduce consumers self-positivity bias (e.g. ad shows
susceptibility to AIDS)
High-Effort Decisions and High-Effort Decision-Making Processes
Types of decisions consumers face in high-effort situations:
Deciding which brands to consider
oDeciding whether a brand falls into an inept set (options that are
unacceptable), inert set (options they treat with indifference), or
consideration set (options they want to choose among)
oConsideration set is important to marketers because it shows
competing brands
oEvaluation of a brand depends on other brands in consideration set >
Attraction effect when adding of an inferior brand to a consideration
set increases the attractiveness of the dominant brand
oMarketing implications
Critical to get your brand into the consumers consideration set
Repetition of brand name/messages to ensure brand is top of
Promote comparisons of brand with inferior rather than
equal/superior competitors (maximizes attraction effect)
Increase sales of high-margin item by offering a higher-priced
option (the original item will look like a good deal in comparison
to the new offering)
Deciding what is important to the choice relevance and importance of
various decision criteria depend on:
If the goal is:
- To make a decision > products with unique, positive attributes
& shared negative attributes are more favourable than products
with unique negative attributes & shared positive attributes
- Flexibility in choice > consumer will seek a large assortment of
- To simplify the choice > consumer will seek out a small
Consumers goals may change during decision process
Promotion-focused consumers will focus on whether they think
they have the skills/capacity to use the product to achieve the
goal they seek, focus less on effectiveness of product itself VS.
Prevention-focused consumers focus on products’ efficacy than
their own skills to use it
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