New Directions in Behavioral Decision Theory: Implications For Consumer Choice


Ravi Dhar (1995) ,"New Directions in Behavioral Decision Theory: Implications For Consumer Choice", in NA - Advances in Consumer Research Volume 22, eds. Frank R. Kardes and Mita Sujan, Provo, UT : Association for Consumer Research, Pages: 203.

Advances in Consumer Research Volume 22, 1995      Page 203


Ravi Dhar, Yale University

Most conceptions of rational choice assume that individual preferences are well defined and ordered. The field of descriptive decision theory has attempted to document evidence to define more precisely the bounds on human rationality. This viewpoint of consumers' decision making is also consistent with the emerging consensus among consumer decision researchers that preferences are often fuzzy, unstable, and inconsistent (Tversky, Sattah, and Slovic 1988; Payne, Bettman, and Johnson 1992). Consumers are depicted as constructing and expressing rankings with respect to possibilities that they have actually considered.

While the constructive view of individual decision making is becoming well established within consumer research, its focus has been somewhat narrow. Most of the previous research examines decision making within a cost-benefit framework trading off effort and accuracy in choice. The neglected role of other psychological variables on constructive preferences raises interesting questions. How do consumers value the processes that determine the outcomes of their decisions? Would these psychological processes imply a preference for a specific type of alternative? Such an approach to consumer behavior assumes that people are not just concerned with the objective consequences of decisions, but also with the affective consequences and psychological states that ameliorate or intensify these consequences.

A number of psychological variables that influence the construction process and are the focus of the present session. One set of problem depends on the uncertainty of preferences. Consumers often arrive at choice situations with no clear idea of their preferences finding it difficult to face multiple options. A second source of uncertainty arises when the choice situation involves self control that may threaten values that are important to consumers. The manner in which choices affected by such variables are resolved may result in systematic deviation from the normative standpoint. In such circumstances, the process of decision making is prone to various distortions and errors that can act as powerful barriers to rational thought.

The four papers in the session differ in their focus on the psychological variables that are examined. The first paper makes substantive contribution to our understanding of the manner in which preferences are constructed (Simonson and Tversky). Using the compromise effect as an illustration, the authors explore various influences on the magnitude of the context effects. They show that the magnitude of the compromise effect can be systematically influenced by the manipulations of the manner in which the choice sets are evaluated. The authors also examine the hypothesis that context effects can be obtained without providing any information about the absolute values of the alternatives. They argue that consumers can predict very accurately the likelihood whether or not they will choose a compromise option in a particular category.

The second paper (Sen and Johnson) explore the causes, effects, and the process underlying the mere ownership effect in consumer choice. Several different explanations have been suggested by social and cognitive psychologists, decision researchers, and economists. In a number of laboratory studies using simple choice sets, the authors find support for loss aversion as the key mechanism. They also obtain some evidence for a "gain-seeking" strategy, where consumers deviate from their endowment only if one of the remaining options provides a sufficiently positive incentive to do so.

The third paper (Wertenbroch) examines how consumer self-control influences the manner in which information is processed and its subsequent influence for marketing, an under researched area. The authors propose and test a framework for understanding these effects using data from laboratory tasks and scanner panel analysis. The results indicate that consumer price sensitivity depends, in part, on the degree to which package size can be instrumental for exercising self-control. The results suggest implications for segmentation, pricing, and packaging policies.

The fourth paper examines the effect of common and shared features among a set of alternatives under consideration on pre- and post-decisional processes (Dhar and Sherman). The authors proposed that the feature matching model of similarity (Tversky 1977) can be extended to understand how consumers decide among alternatives in a given choice context. In particular, they focus on the notion that features common to more than one alternative in the choice set are canceled or receive less weight. The authors conduct a series of experiments in order to specify both the causes, specific effects, and mediating processes that surround the changes in preference as function of the common and unique features. For example, the weighting of good and bad features can be systematically manipulated by the context that allows them to be seen as common or unique. The findings find strong support for the feature-matching model of preferences.

Given the diversity of the papers, the direction of the discussion was to arrive at a unifying force rather than a session summary. When taken as a group, the papers in the session helped to highlight some of the promising avenues that are emerging in the area of decision research.



Ravi Dhar, Yale University


NA - Advances in Consumer Research Volume 22 | 1995

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