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  • 4A-Four Heuristics

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    The document discusses four heuristics that influence judgments: 1) Availability - easily remembered information is weighted more heavily, 2) Anchoring - initial values influence subsequent judgments but adjustments are insufficient, 3) Framing - negative information is weighted more than positive information, 4) Decoy effect - adding a similar but inferior option increases the attractiveness of other options. Examples are given for each heuristic to illustrate how they can lead to biases in decision-making.

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    The document discusses four heuristics that influence judgments: 1) Availability - easily remembered information is weighted more heavily, 2) Anchoring - initial values influence subsequent judgments but adjustments are insufficient, 3) Framing - negative information is weighted more than positive information, 4) Decoy effect - adding a similar but inferior option increases the attractiveness of other options. Examples are given for each heuristic to illustrate how they can lead to biases in decision-making.

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    4 views25 pages

    4A-Four Heuristics

    Uploaded by

    icbinb1976
    The document discusses four heuristics that influence judgments: 1) Availability - easily remembered information is weighted more heavily, 2) Anchoring - initial values influence subsequent judgments but adjustments are insufficient, 3) Framing - negative information is weighted more than positive information, 4) Decoy effect - adding a similar but inferior option increases the attractiveness of other options. Examples are given for each heuristic to illustrate how they can lead to biases in decision-making.

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    © All Rights Reserved
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    of 25

    Four Heuristics

    Process of searching for satisfactory


    solutions
    Heuristics
    ÞAvailability 9
    ÞAnchoring 1
    Þ Framing Strongly Dislike Strongly Like
    Þ Decoy

    Low & High Involv. Judgments

    Low Involv. Choice Heuristics (if x then y)


    Buy this time

    On Sale, Bought Last Time, Ebert Recommends


    Probability of Events
    • Availability:
    – easily remembered
    information is more
    important
    • airline accidents
    • terrorist attacks
    • Availability Heuristic:
    – easily remembered information
    is more important / true

    “Dove is 99% Pure”


    Black/Hispanic

    Aggressive
    “Framing Effect”

    • Weight Negative > Positive


    – e.g, 75% lean OR 25% fat

    – e.g., 90% effective OR 10% failure


    Negative Frame Positive Frame

    “5% failure rate” VS. “95% success rate”

    “2% fat” VS. “98% fat-free”

    “Free from Defects” VS. “Perfect Performance”


    Anchoring & Inadequate Adjustment
    Population Estimates

    30 Students 30 Students

    “Is the population of “Is the population of


    Turkey greater Turkey greater
    than 35 million?” than 100 million?”

    Average Estimated Average Estimated


    Population of Turkey: Population of Turkey:
    31 million 73 million
    In-Class Exercise
    “For Singles Only”

    • Question 1
    – Approx. how many dates in the last 12 months?

    • Question 2
    – How happy are you with your life right now?

    • Correlation = -.37
    Insert Pictures of Products
    Amount

    • Anchor and don’t Adjust


    – e.g., Population of Turkey?
    – e.g., Price estimates
    Amount

    • Anchor and don’t Adjust


    – e.g., Population of Turkey?
    – e.g., Price?
    Choice
    “Decoy Effect”

    Group 1: 20 students

    Price

    Oven A $109.99

    Oven B $ 179.99
    Decoy Effect

    Group 1: 20 students

    Price
    Choice %
    Oven A $109.99
    80
    Oven B $ 179.99

    60

    Oven A
    40 Oven B

    20

    0
    Group 1
    Decoy Effect

    Group 2: 20 students

    Price

    Oven A $109.99

    Oven B $ 179.99

    Oven C $ 199.99
    Decoy Effect

    Group 1: 20 students Group 2: 20 students

    Price Price
    Choice %
    Oven A $109.99 Oven A $109.99

    Oven B $ 179.99 Oven B $ 179.99

    Oven C $ 199.99
    Flat Screen TV
    Decoy Effect in Politics

    • 3rd. Party Candidate


    High Effort Judgment Heuristics
    • Anchor and don’t Adjust (Anchoring &
    Adjustment)
    – e.g., Population estimates, price discounts

    • Weight Negative > Positive (Framing)


    – e.g, 75% lean or 25% fat?

    • Decoy (Compromise)
    – e.g., middle brand gains market share

    “Bias” = Non-Rational / Non-Logical Judgment

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