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Chapter 009

MGMC02H3 Chapter Notes - Chapter 009: Confirmation Bias, Negativity Bias, Narrative Structure


Department
Management (MGM)
Course Code
MGMC02H3
Professor
Bill Mc Conkey
Chapter
009

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CHAPTER 9:
Judgment & Decision High Effort
Judgments are evaluations of an object or estimates of likelihood of an outcome or event –
input to decision making, do not require a decision (IE: Menu considering items before
making final choice). Decision Making is making a selection among options or courses of
action.
HIGH EFFORT JUDGMENT PROCESS
Judgments based on:
Likelihood – judging how likely something will occur (IE: Likelihood something will break
down, others will like it, satisfy our needs, ad being truthful)
Goodness or badness – judging desirably of something, influenced by attributes and
mood (IE: Weather, expensive, good or bad)
Anchoring and adjustment process is starting with an initial evaluation and adjusting it with
additional information (helps make judgment on likelihood and good or badness) – same anchor
can lead to 2 different judgments depending on how anchor is perceived.
Imagery is imagining an event in order to make a judgment (make it more likely to occur
because of positive bias, overestimate how satisfied they will be with a product or service).
Judgment biases:
Confirmation bias – focus on judgments that confirm what they already believe to hold
judgments with more confidence
Self positivity bias – make judgments to which they or others are vulnerable to having
bad things happen to them (increase in likelihood that bad outcomes will happen to other
people than themselves)
Negativity bias – consumers give negative information more weight than positive
information
Mood bias – mood affects initial anchor for judgment (good = positive), reduce search for
negative information to preserve good mood, overconfident about judgments
Prior brand evaluations – judge based on past exposure, ignore information (blocks
learning)
Marketing Implications
Focus consumer’s attention on attributes best in its class
Brand extension and positive association serve as anchor for judgments of new products
Make consumers feel good – prime consumers
Ask consumers to imagine attributes or benefits of product or service
Family ties – more likely to take financial risk because family can cushion monetary
loss, less likely to take social risk because negative outcome might affect family
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HIGH EFFORT DECISION MAKING PROCESS
Acquisition, usage, and disposition all involve consumer decision (IE: Decision about whether to
buy or not). Decisions about:
What offering (brands)
oInept Set = brands that are unacceptable
oInert Set = brands treated with indifference
oConsideration Set = those chosen among (VERY IMPORTANT TO
MARKETERS)
Attraction Effect = adding inferior brand increase attractiveness of
dominant brand
Marketing Implications
oGetting brand into consumer consideration set = important for chance to be
chosen
oWhen brands easily compared = easier decision
oBrands need to get consumer attention and be more willing to pay for than
alternatives
What factors are important
oGoals affect criteria that drive consumer’s choice (IE: Carrot vs. chips – healthy
or taste)
Goal to make a decision – unique and positive attributes with shared
negative attributes = more favorable than unique and negative attributes
with shared positive attributes
Goals may change during decision process
Promotion goal = maximize gains = emphasis on skill and capacity to use
product
Prevention goal = minimize risk = emphasize efficacy of product
oTime – construal level theory (how we think about an offering: abstract vs.
concrete)
Immediate purchase = low level construal (concrete)
Future purchase = high level construal (abstract)
oDecision Framing is the initial reference point or anchor in decision process
More willing to take risks when choice is framed as avoiding a loss than
acquiring a gain
Framing gains and losses – outcomes equally positive = buyers feel
better about not losing money, seller feels better about achieving gains,
outcomes equally negative = buyers feel worse about losses, sellers feel
worse about gaining anything
Framing time period – health hazards as every day = more immediate,
concrete, every year = less immediate, more abstract
Framing competition negatively – low elaboration = more likely to choose,
high elaboration = tactics are unfair
Marketing Implications
oPosition offering consistent with consumers’ goals
oFrame or reframe the decision – sales promotion more successful when framed
as gain rather than loss (prefer something free rather than discount)
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