Marketing MKT 370 Lecture Notes - Lecture 9: Loss Aversion, Prospect Theory, Test Drive
27 Feb 2017
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Document Summary
People assess options relative to their entire wealth. People pick the best option to maximize utility across all possible actions, times. Heuristics: mental shortcuts to quickly come up with a judgement that otherwise would require long and effortful deliberation. They can lead to systematic patterns of mistakes. Availability heuristic: making a decision based on the one that comes most readily to mind. If something is available to memory, it"s judged to be more likely. It pays to be the most available brand in your product category. Provide customers with frequent positive and vivid product experiences. Shelf-space heuristic: brand with more space on the shelf must be more popular. People insufficiently adjust from a prior anchor number. When units of a good are perfectly equivalent and completely exchangeable. Affect: umbrella term for different emotional (affective) experiences. Integral affect: when the source of emotion is related to the decision. Incidental affect: when the source of emotion is not related to the decision.
