Summary of the mandatory literature from the course: The Psychology of Economic Behaviour. This course is an elective for the Master program at Leiden university. By using this summary, I got an 9.7 for the exam.
Week 1
When choice is demotivating
Studies show that the selection evaluation and integration of informant are affected by the
available amount of options.
- when complexity of making choices rises, people simplify their decision making by
relying on heuristics
- Information overload may produce a chance to non-compensatory but more efficient
decision rate
Choice overload hypothesis
Although extensive choice may seem as initially desirable, this may prove to be demotivating
in the end.
Study 1 - jam
Consumers who encountered the extensive choice condition were more attracted to the booth
but ended up sampling not significant more amount of jams (1.52 vs 1.38)
In limited choice: 30% bought the jam
In extensive choice: 3% bought the jam
So, an extensive array of options may at first seem more appealing to consumers, yet can
reduce their motivation to buy.
Study 2 - essays
6 vs 30 topics
- 6 topics: 74% entered an essay
- 30 topics: 60% entered an essay
Limited choice performed slightly, but significantly better, also had higher grades and better
forms.
Discussion
People seem to prefer to exercise their opportunity to choose in context where their choices
were limited. Thus, extensive choice hampers people interistic motivation.
People encountering extensive choices use a choice making heuristic that necessarily makes
them feel less committed to exercise their preference.
When people have to many options, they strive to end the choir making ordeal by finding a
choice that is merely satisfactionary rather than optimum. Otherwise, the task would demand
more effort than seems justified.
Study 3 - chocolate
People in the extensive choice condition use a satisfying heuristic, where as in the limited
choice people tend to use an optimizing heuristic, but there is no empirical evidence to
support this claim.
,People in extended choice found decision making process hard and also more frustrating
Participants in the limited choice condition reported to be significantly more satisfied with
their choice. People in the limited choice condition were more likely to buy than people in the
extensive choice category.
General discussion
Having more choice may seem desirable at first, but may have detrimental consequences for
human motivation.
Underlaying mechanisms of choice overload
In extensive choice situations people find choosing prices more enjoyable because of the
opportunities it affords, but also feel more responsible of the choices they make. This
responsibility may eventually cause frustration and dissatisfaction.
,Maximizing vs Satisficing
- some people prefer it if other makes choices for them
- Regret aversion is potent force in decision making
- Information problem with extensive choice
Choice & negative affect (Schwarz) —> people may be better of with limited choice
1. Gaining adequate information problem
2. As options expand, standards for acceptable outcomes also rise
3. When choices rise —> unacceptable result is one owns fault
For maximizers, more choice is a problem. They have the goal of successfully maximizing
the outcome, but with more choices the chance that this works decreases
Satisficers => good enough option
Study 1
Maximizers correlate with
- Regret
- Depression
- Happiness (negative correlation)
- Diminished life satisfaction
- Less self-esteem
The relationship between maximizing and both depression and happiness is (partially)
mediated by regret.
Probable basis for maximizers asses is social comparison:
- good enough can be judged in absolute terms
- The best requires social comparison
=> maximizing requires one to be coned with relative (social) positions.
Satisficers —> good relative position, better satisfaction then good absolute position
Study 2
Relation between maximizing tendencies and social comparison, revert and happens with
consumer purchasing decisions.
Maximizers were less happy and showed more regret. Also showed more upward and
downward social comparison. Social comparison was predicted of amount of regret.
- After more analysis upward social comparison predicted regret.
- Upward social comparison predicted decreased happiness
- Downward social comparisons not positively related to happiness
Maximization predicted:
- Product comparison
- Social comparison
- Report of consumer regret
- Recalled more products
, - Taking longer to decide
- More counterfactual thinking
- Diminished positive feelings toward purchase
- More regret towards product
- Rumination
Social and product comparison —> counterfactual thinking —> regret
Study 3
Maximizers are more interested in social comparison feedback. They are also more sensitive
for this feedback.
Hypotheses: moods and self-evaluation of maximizers are more vulnerable/sensitive to social
comparisons information.
Results:
Maximizers had a lower assessment after peer was faster than when peer was slower (in
contrast to self).
- Maximizers had elevated levels of negative affect in the condition with a faster peer than
in the condition with a slower peer in contrast to self
- Satisficers had more equal results between slower and faster peer
This confirmed the hypothesis.
Study 4
Goals:
1. Does the disposition for maximization relate to actual decision making
2. Experimentally explore relationship between maximizing and regret
Satisficers and maximizers tent to adjust offers differently on the basis of whether reservation
prices were shown:
- Satisficers => lower rates of offers with a less than half price when reservation prices were
shown
- Maximizers => higher rates of offers with less than half on trials in which reservation
prices were shown
- Maximizers => lower judgement of satisfaction with result, independent of what the actual
result was.
1. Maximizing is to want the best
2. Process of adaptation makes almost all consumption experiences less satisfying
3. Maximizers are more dependent on social comparison
4. Maximizers have higher expectations than satisficers
Many options
Maximizers and a proliferation of options interact to produce internal causal attribution for
failure on the part of the maximizer.
Proliferation of options:
1. Raises the stand for what is a success
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