Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 1
Memory, Emotions, and Social
Heuristics in Decision Making
All rights reserved © Ye Li
This content is protected and may not be shared, uploaded or distributed.
Agenda
• Memory and consideration sets
• Automatic or mindless behavior
• Embodied cognition
• The influence of affect/emotion
• Social heuristics
1
13
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 2
The difficulty of overriding System 1
• Notice that even after we “see†the illusion it
still fools us
– System 1 (Automatic) is the strong default
– System 2 (Deliberative) must be actively engaged
• This is more than just perceptual illusions
– Today: Interesting roles for memory, affect, feelings in
decision-making
Mindlessness:
More common than you think
• Consequences of dominance of System I :
– The good: Fast and frugal (low cost)
– The bad: We are not aware, can lead to bad decisions
When the decision environment is different
from one for which heuristics were adapted…
– Context dependence encourages myopic behavior
– Systematic patterns are easy to exploit
18
19
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 3
Individual Differences:
REI (Rational-Experiential Inventory)
• Rationality: reliance on and enjoyment of
thinking in an analytical, logical manner
• Experientiality: reliance on and enjoyment of
feelings and intuitions in making decisions
•Higher Rationality
ïƒ More System 2
ïƒ Less reliance on
heuristics
* Lower impulsivity
(r = -.48)
r = â€.10
Individual Differences:
Impulsiveness (and 3 subscores)
• Impulsivity: Extent to which people act on a
whim, without foresight or planning
Average = 2.1Â
(range 1.13â€3.33)
20
21
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 4
Evoked (a.k.a. Consideration) Set
• Of all options available, those that are seriously
considered
• Typical size 2-4… why? (Hauser 1978)
• Cognitive limitations (remember cognitive
overload)
• Satisficing
• Identifying the consideration set is a BIG part
of the choice (remember your ABCâ€s).
Marketing 101
1. Be part of the consideration set
– If you are not in the set, you cannot be chosen
2. Decrease the size of the set
3. “Crowd out†close competitors
22
24
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 5
How are Evoked Sets Formed?
• Stimulus (recognition) based choice:
– Supermarket, online shopping
– Published lists (e.g. New York Magazine), etc.
• Memory (recall) based:
– Where do I take my significant other for Valentineâ€s Day?
– Ordering take-out (without a menu)
– Who to invite to my virtual graduation party? ( =( )
– This is what advertising is all about!
Overcoming Barriers to Entry:
Influencing Customer Memory
• Frequent or recent exposure
to brand name
– Advertising repetition
– Visibility (distribution, PR, …)
• Brand naming
– Simple (easy to pronounce &
spell)
– Distinctive
– Meaningful
– Potential for imagery
– Emotionally rich
– Positive connotation
25
26
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 6
Coors
Imports
Domestic
Bud
Sierra
Nevada
Corona
Dos
Equis
Heineken
Amstel
Harp
Guinness
Miller
Sam
Adams
BEER
Modelo
Spreading activation
Mindless (and hungry) shoppers…
Gilbert, Gill, & Wilson 2002
• Selected people without a list
• Asked to list of intended purchases
– Half given their lists, half werenâ€t
• Ate and rated appeal of muffin
– Before shopping, after shopping
%
 U
n
p
la
n
n
e
d
 P
u
rc
h
a
se
s
31
36
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 7
Mindless Consumption
• How many food
decisions (things
that influence your
caloric intake) do
you make a day?
• Estimate of ~200 food
choices per day
(mostly unconscious)
Container Size
• Free Popcorn
– Medium vs. Large Tubs
– Fresh vs. 14-day-old
popcorn.
37
38
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 8
Embodied Cognition
• Definition: Your thoughts are shaped by
aspects of the body other than the brain
• Example:
– People who commit or think about a moral
transgression like cheating on a test want to wash
their hands or use Purell ïƒ Morality is Clean.
• In other words, automatic (System 1) processes
link your body and mind
Embodied Judgments
• People holding heaving objects judge
their own opinions as more important,
take things seriously
• Holding warm things (e.g., coffee) makes
you judge people as warmer
• Nodding your head (vs. shaking) makes
you more likely to agree
40
41
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 9
Aside: Free Will and Determinism scale
Free will (average = 3.6)
• People have complete control over the decisions theyÂ
make.
• People must take full responsibility for any bad choicesÂ
they make.
• People can overcome any obstacles if they truly wantÂ
to.
• Criminals are totally responsible for the bad things theyÂ
do.
• People have complete free will.
• People are always at fault for their bad behavior.
• Strength of mind can always overcome the bodyâ€sÂ
desires.
Scientific Determinism (average = 3.0)
• Peopleâ€s biological makeup determines their talents andÂ
personality.
• Psychologists and psychiatrists will eventually figure outÂ
all human behavior.
• Your genes determine your future.
• Science has shown how your past environment createdÂ
your current intelligence and personality.
• As with other animals, human behavior always followsÂ
the laws of nature.
• Parentsâ€Â character will determine the character of theirÂ
children.
• Childhood environment will determine your success asÂ
an adult.
Fatalistic Determinism (average = 2.7)
• I believe that the future has already beenÂ
determined by fate.
• No matter how hard you try, you canâ€t change yourÂ
destiny.
• Fate already has a plan for everyone.
• Whatever will be, will be – thereâ€s not much youÂ
can do about it.
• Whether people like it or not, mysterious forcesÂ
seem to move their lives.
Unpredictability (average = 3.4)
• Chance events seem to be the major cause ofÂ
human history.
• No one can predict what will happen in this world.
• Life seems unpredictable – just like throwing dice orÂ
flipping a coin.
• People are unpredictable.
• Life is hard to predict because it is almost totallyÂ
random.
• Luck plays a big role in peopleâ€s lives.
• What happens to people is a matter of chance.
• Peopleâ€s futures cannot be predicted.
System 1: Affect (A.K.A. Emotions)
• Things that make us feel good are good for us ïƒ should be
approached (we want this)
• Things that make us feel bad are bad for us ïƒ should be avoided (we
do not want this)
• Is listening to your emotions a good behavioral and
choice heuristic?
• Examples of relying on affect:
– Approach when attracted to someone
– Stay away from things that scare you
– Visit countries that excite you
– Avoid food that looks or smells disgusting
– Do the things you can be proud of
– Avoid the things that make you feel ashamed
42
50
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 10
Properties of Affect
• Affect is a main driving force of preferences and
hence decisions
– Enormous motivational power
ï‚§ Love, pride, shame, anger, attraction, disgust, fear
– Rings “trueâ€
– Difficult to consciously alter: Battle of the two systems
– Can overwhelm reason
ï‚§ Disregard for other choice criteria
ï‚§ Focus on present; disregard of past and future
• Decisions by System 1 can influence System 2 by
– Creating justifications
– Changing perceptions
Two Types of Affect
• Integral affect: Feelings produced by the
stimulus under consideration or the thought of
it
– Anticipated emotion can be important input to
assessment of subjective utility (even for Homo
economicus)
• Incidental affect: Feelings unrelated to what is
under consideration
– E.g., produced by stubbing your toe
– Should NOT affect your decision
51
52
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 11
Using Affect in Marketing
• Induce positive feelings:
– About the product or service
– In the customers about themselves
– Make the customer anticipate feeling good
– About anything at all while thinking about your
product
• Induce negative affect about the alternative
– Think political attack ads
Sources of Positive Stimulus Affect
• Physically attractive people
– Halo effect (vs. the horn effect). Attractive people rated as
more altruistic, kind, trustworthy, and competent
• People who are similar or have common interests (Bertrand
& Mullainathan 2004)
– Mirroring the speech of another (the chameleon effect;
Chartrand & Bargh 1999)
– Flattery, touching
– Sharing information, stuff
• The decision itself
Which of the above are integral, and which incidental?
56
57
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 12
How credit card companies use affect
• Debt collectors use positive, inclusive language
such as “we,†“us,†and “ourâ€
– e.g., “Letâ€s see how we can work together to get us
out of this jam.â€
• Use the power of liking to increase consumer
purchasing
– Personalized credit cards
Incidental Affect
Positive affect makes people
• Like things more
• More open to new
things and ideas
• More willing to take
risks
• Less detailed in their
evaluations
Negative affect makes people
• Like things less
• Less open to new
things and ideas
• Less willing to take
risks
• More cautious in their
evaluations
These effects are:
• Global
• Usually occur without awareness
58
59
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 13
Cialdiniâ€s Social Heuristics
• Like other heuristics, NOT mindful decisions
– Automated: Very well (over-)learned
– Assumption: Generally useful to society
• Econs are not easily persuaded
– You can provide facts but talk is cheap
ï‚§ Why should I believe you if our incentives arenâ€t aligned?
– Incentives are all that really matters
• Humans
– The merits of an issue are not the only (or necessarily most
important) factor determining persuasion
What influences people beyond the merits of an issue?
Evolved heuristics for effective
co-opetition in social domains
• Gaining influence by
understanding use of
social heuristics
– Reciprocity
– Consistency
– Social proof
– Authority
– Scarcity
– Liking (affect)
ï‚§ Already talked about this
65
66
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 14
Rule I: Reciprocity
• You feel obligated to repay the person who gave
you access to resources (or a gift)
– This is true even when gift is not requested!
• Why?
– Society encourages cooperation and reciprocation
– Efficient over long term
Influence Principle
• (Even unsolicited) overtures create
perceived obligation
• Why does it work?
– Obligation not only to repay, but also to accept
initial favor
– Indebtedness is very unpleasant
– Fear of shame if no reciprocation
67
68
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 15
Applications
• Charities that send you (unsolicited) gifts
– E.g. Address labels
– Realtors, too…
• Free samples (e.g., grocery store or dentists)
• Salespeople “wine & dineâ€
• What other examples have you
encountered?
Rule II: Consistency
• Because we do not constantly want to make
decisions, we tend to behave in a way that is
consistent (see video for example)
• Not only does inconsistency take extra thought, it
also looks and feels bad!
– Example: You go to the gym but snack afterward
• Why?
– Society sees consistency is a sign of mental strength
and perseverance
– Inconsistent are harder to predict
69
70
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 16
The “foot in the doorâ€
• Condition 1
– Will you fill out the
questionnaire?
• Acceptance rate: 52%
• Condition 2
– Can you do me a favor?
• A: Yes or No
– Will you fill out the
questionnaire?
• Acceptance rate: 84%
• Frank Flynnâ€s Penn Station Study:
• Approached people with a 2-page questionnaire:
Using Consistency
• Encourage commitment before behavior
– Related to self-commitment devices (Week 5)
• Best commitment strategies:
– Personal
– Public
– In writing
• Other examples of consistency youâ€ve
encountered??
71
73
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 17
Rule III: Social Proof
• To avoid making decision, look at what others do
• Social norms are more influential…
– If more people follow them (descriptive norm)
– The more people doing the behavior are like us, or the
more we would like to be like them (prescriptive norm)
– The more novel or uncertain the situation/product
• Why?
– Rational: Information-based.
ï‚§ What if first person had bad information?
– Semi-rational: Coordination
ï‚§ Hard to go against the norm
Right vs. wrong ways to
convey social proof
• Describing a problem as widespread might work
when seeking funding from donors or investors
• BUT, important to not use negative social proof
in messages sent to the general public
– They may interpret such descriptions as popularizing
and legitimizing the undesirable activity
– It is MUCH better to convey positive social
proof to public
76
81
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 18
Rule IV: Authority
• Follow directives, advice and instructions
if given by proper/legitimate authority
– Experts
– Authority figures (e.g., CEOs, deans)
• Why?
– Rational: information-based (efficient form of social
influence)
Influence Principle
• Signal authority
– Framed awards, degrees, etc.
– Professional clothing (suits!), uniforms
– Physical characteristics (example on next slide)
• Any interesting examples from your
experience?
83
84
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 19
Rule V: Scarcity
• Rare things are often valuable, and valuable
things are often rare
– Notice link to loss aversion: I donâ€t want to be the one
without (FOMO!)
• Why?
– Social proof: We infer true value (both information and
preference) from market value
– Markets often a correlation between prices and
quantity.
ï‚§ Art
ï‚§ Luxury products
ï‚§ Misprints
ï¶â€œInverted Jenny†stamp
» One sold for $977,500!
Manipulating scarcity
• Increase perceived value by limiting availability
– Limited supply (e.g., Gilt, Woot, first 100 customers,
“only 100 made!â€)
– Limited time (“offer expires todayâ€)
– Non-fungible Tokens (NFT) – Blockchain for creating
scarcity
• Increase the perception of competition for your
goods and services
– Common tactic for Realtors to have “another
buyerâ€
87
88
Topic 6 – Mindless Decisions
© Ye Li 2022. This content is protected and may not be shared, uploaded or distributed. 20
Yeâ€s Keys
21. Many choices are not much of a choice at all.
Controlling automatic (System 1) responses
such as affect and embodied cognition can
control choice.
22. Even when choices are conscious, the evoked
set is small. Increase “mind share†by boosting
brand memory and crowding out competitors.
23. Humans are social animals and our behaviors
are driven by automatic usage of social rules:
– Reciprocity: Create sense of obligation
– Consistency: Elicit commitment
– Social proof: Provide proof (or illusion) of validation
– Authority: Show your expertise
– Scarcity: Create exclusivity and artificial deadlines
89
The post question answering first appeared on Economics Write.
WE’VE HAD A GOOD SUCCESS RATE ON THIS ASSIGNMENT. PLACE THIS ORDER OR A SIMILAR ORDER AND GET AN AMAZING DISCOUNT