1. JUDGMENT AND
DECISION MAKING: HIGH
EFFORT
MARK 3420, Spring 2013
Prof. Rongrong Zhou

2. 2
Exhibit 8.1:
Chapter
Overview:
Judgment and
Decision
Making: High
Consumer
Effort

3. 3
 High-Effort Judgment Processes
 High-Effort Decision-Making Processes
 High-Effort Thought-Based Decisions
 High-Effort Feeling-Based Decisions
 Additional High-Effort Decisions
 What Affects High-Effort Decisions?

4. 4
 Judgment: Estimating the likelihood of an
event (how likely is it to happen?)
OR making an evaluation (how good or bad is it?)
 Decision Making: Making a selection between
options

5. 5
 Estimation of Likelihood: Probability that something will happen
 Judgments of goodness/badness: Evaluation of the desirability of
the offering’s features
 Anchoring and Adjustment
 Anchoring based on initial value
 Updating it with additional information
 E.g. 1 x 2 x 3 x 4 x 5 x 6 x 7 x 8
vs. 8 x 7 x 6 x 5 x 4 x 3 x 2 x 1
 Biases in Judgment Processes
 Confirmation bias
 Self-positivity
 Negativity bias
 Mood
 Prior brand evaluations

6. 6
 Consideration Set: Options that they want
to choose among
 Inept Set: Options that are unacceptable
 Inert Set: Options that the consumer is
indifferent to

7.  Imagine you want to buy a phone with MP3 player and
camera
Camera MP3 player
Brand A 3 Megapixels 4 GB
Brand B 4 Megapixels 3 GB
Brand C 3.8 Megapixels 2.5 GB
7
MP3 player
Camera
A
B
C

8. Camera MP3 player
Brand A 3 Megapixels 4 GB
Brand B 4 Megapixels 3 GB
Brand C 2.8 Megapixels 3.5 GB
8
MP3 player
Camera
A
B
C

9. 9
 Which criteria are importance to choice?
 Goals
 Time: abstract vs. concrete thoughts
 Framing: the way in which the task is defined or
represented

10.  The initial reference point or anchor in the decision process
 Framing the decision as loss vs. gain – loss aversion
 “Asian disease” problem: The US is preparing for the outbreak of a
rare Asian disease, and 600 people are at risk. As the govt official in
charge of health, you have to choose between two proposals:
 Program A: 200 people will be saved
 Program B: 1/3 probability that all 600 people will be saved
 What if the choice was between:
 Program C: 400 people will be killed
 Program D: 2/3 probability that all 600 people will be killed
10

11. 11
 These are “cognitive decision-making
models”
 Types of Decision Processes
Compensatory versus Noncompensatory
Models
Brand versus Attribute Models
 Brand Processing
 Attribute Processing

12. 12
7755
5577
66
44
664477
Philips
Toshiba
Sony
After-sales
service
Ease of
use
Picture
quality

13. 13
Exhibit 8.5: Cognitive Choice Models

14. 14
 Disjunctive: Pass minimum on any one attribute
 Retain good alternatives
 Conjunctive: Only if acceptable on all attributes
 Rule out bad alternatives

15. 15
DISJUNCTIVE AND CONJUNCTIVE
Warranty (yrs) Mileage (mpg) Price
A 2 40 10K
B 1 35 25K
C 4 30 30K
Disjunctive = Pass minimum on any ONE attribute
(Warranty OR Mileage OR Price)
Minimum: 3 45 20K
Choice = ????
Conjunctive = Pass minimum on ALL Attributes
(Warranty AND Mileage AND Price)
OLD MINIMUMS: CHOICE = ???

16. 16
DISJUNCTIVE AND CONJUNCTIVE
Warranty (yrs) Mileage (mpg) Price
A 2 40 10K
B 1 35 25K
C 4 30 30K
Conjunctive = Pass minimum on ALL Attributes
(Warranty AND Mileage AND Price): SO LOWER MINIMUM
Minimum: 1 35 20K
Choice = ????

17. 17
 Both brand based (consider one brand at a time; not
several brands together)
 Usually disjunctive rules set a high minimum
 (because passing any minimum is enough)
 Usually conjunctive rules set a low minimum
 (because all minimums have to be passed)
 Both strategies usually end up selecting more than one
brand (though not always)
 Useful for reducing set of “considered” brands

18. 18
Exhibit 8.5: Types of Choice Models

19. 19
 Lexicographic
Rank attributes
Look for “best” brand on most important attribute
Compare brands on successive attributes if needed
 Elimination-by-Aspects
Rank attributes
Look for “acceptable” brands on most important
attribute
Compare brands on successive attributes if needed

20. 20
LEXICOGRAPHIC
Warranty (yrs) Mileage (mpg) Price
A 1 35 10K
B 2 35 15K
C 1 30 10K
Procedure = a) rank attributes; b) pick best brand on most
important attribute; c) move to next attribute if tied
Step 1: Importance Ranking: 1 = Price; 2 = Mileage; 3 = Warranty
Step 2: Compare on Price : What happens?
Step 3: ????
Usually: only one brand chosen

21. 21
Elimination by Aspects:
Warranty (yrs) Mileage (mpg) Price
A 1 35 10K
B 2 35 15K
C 1 30 10K
Minimum 2 35 15K
Procedure:
a) Rank attributes; b) Decide minimum levels; c) Take all brands that pass
minimum on most important attribute; d) Move to next attribute if tied
Step 1 – Importance Ranking: 1 = Price; 2 = Mileage; 3 = Warranty
Step 2 – Minimum Levels (given above)
Step 3 – Which brands pass minimum on Price??
Step 4 - ???
Usually: only one brand chosen

22. 22
 Both attribute based (consider one attribute at a time;
across several brands)
 Both strategies usually end up selecting just one brand
(though not always)
 Useful for making final selection (after forming a
“consideration set” through conjunctive/disjunctive)
 More effort than disjunctive/conjunctive

23. 23
Exhibit 8.5: Types of Choice Models

24. 24
COMPENSATORY MODEL (BOTH ATTRIBUTES CONSIDERED)
Additive Difference Model
A. How important is calorie content to you?
Not important 1 2 3 4 5 6 7 Very important
What is your belief regarding the calorie content of Classic Coke?
High content 1 2 3 4 5 6 7 Low content
What is your belief regarding the calorie content of Diet Coke?
High content 1 2 3 4 5 6 7 Low content
Calorie Content: Classic – Diet = 3– 5 = -2
B. How important is the taste of the drink?
Not important 1 2 3 4 5 6 7 Very important
What is your belief regarding the taste of Classic Coke?
Bad taste 1 2 3 4 5 6 7 Good taste
What is your belief regarding the taste of Diet Coke?
Bad taste 1 2 3 4 5 6 7 Good taste
Taste: Classic – Diet = 6 – 3 = +3
=> Total difference between Classic and Diet = ??

25. 25
Exhibit 8.5: Types of Choice Models

26. 26
 Ab = Attitude to the brand = Summation (biIi)
 bi = belief regarding brand’s performance on attribute i
 Ii = importance assigned to attribute I
 Summation (biIi) = b1*I1 + b2*I2 +….
 Weakness in one attribute can be offset by strength in another
 Brand based or attribute based ??
 Market research (project!) needed to determine b and I

27. 27
COMPENSATORY MODEL (BOTH ATTRIBUTES CONSIDERED)
A. How important is calorie content to you?
Not important 1 2 3 4 5 6 7 Very important
What is your belief regarding the calorie content of Classic Coke?
High content 1 2 3 4 5 6 7 Low content
What is your belief regarding the calorie content of Diet Coke?
High content 1 2 3 4 5 6 7 Low content
B. How important is the taste of the drink?
Not important 1 2 3 4 5 6 7 Very important
What is your belief regarding the taste of Classic Coke?
Bad taste 1 2 3 4 5 6 7 Good taste
What is your belief regarding the taste of Diet Coke?
Bad taste 1 2 3 4 5 6 7 Good taste
Total Score for Classic = Calorie Importance * Calorie Belief
+ Taste Importance * Taste Belief
Total Score for Diet = Calorie Importance * Calorie Belief
+ Taste Importance * Taste Belief

28. 28
Exhibit 8.5: Types of Choice Models

29. 29
 “Affective Decision Making”, i.e., decisions are not
made only in a rational, sequential manner!
 People do things because it makes them feel better
OR avoid negative feelings
 Appraisal theory: our emotions affect the way we think
about the situation
 Affective forecasting: predictions of how we will feel in
the future
 Consumers often form mental images
of consumption

30. 30
 Consumers may use multiple “phased”
decision-making strategies
 Emotions and imagery often accompany
rational, cognitive analysis
ALL
ALTERNATIVES
NON-
COMPENSATORY
EVALUATION
COMPENSATORY
EVALUATION
SURVIVING
ALTERNATIVES

31.  6 courses to choose from
 First: I will restrict my choice to those courses which are
either offered at a convenient time OR have a small
class size
 3 courses have bad time as well as large size: so eliminate!
 Remaining 3 courses: my most important attribute is
amount of work required
 So I picked the course with the fewest assignments
 What strategy?
31

32. ADDITIONAL HIGH EFFORT
DECISIONS
 Decision Delay
 Decision Making When Alternatives Cannot be
Compared (“Noncomparable decisions”)
Choosing from among products or services from
different categories
Strategies
 Alternative-Based Strategy
 Develop an overall evaluation for each alternative, and then
decide (“top-down”)
 Attribute-Based Strategy
 Use abstract representations of attributes (e.g., fun,
convenience, etc.) and then compare (“bottom-up”) 32

33. WHAT AFFECTS HIGH-EFFORT
DECISIONS?
 Consumer Characteristics:
Expertise: “Consumption vocabulary”
Mood
Time Pressure
Extremeness Aversion
(Skip Metacognitive Experiences)
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34. EXTREMENESS AVERSION
(THE COMPROMISE EFFECT)
 Now imagine these are the available options
Camera MP3 player
Brand A 3 Megapixels 4 GB
Brand B 4 Megapixels 3 GB
Brand C 3.5 Megapixels 3.5 GB
34
MP3 player
Camera
A
B
C

35.  Imagine you want to buy a phone with MP3 player and
camera
Camera MP3 player
Brand A 3 Megapixels 4 GB
Brand B 4 Megapixels 3 GB
Brand C 3.8 Megapixels 2.5 GB
35
MP3 player
Camera
A
B
C
ATTRACTION EFFECT

36. WHAT AFFECTS HIGH-EFFORT
DECISIONS?
 Decision Characteristics:
Information Availability: Amount, relevance,
ambiguity
Information Format: brand vs. attribute?
Trivial Attributes
36

37. WHAT AFFECTS HIGH-EFFORT
DECISIONS?
 Group Context:
Self-presentation: Convey a certain image in a
group
Minimizing regret: Similar choice
Information gathering: Greater variety
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38. Group Exercise 2
Compensatory Model

39.  Read Chapter 9
 Remember, quiz 1 on March 1, 7pm-8:10pm, LTJ
Chapters 1, 2, 7, 8, 9, 10
PLUS All material covered in class
 No class on that day
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