These are all the lectures notes I made of the course Consumer and Economic psychology. This includes the two videos for week 2 (cognition/ words speak louder than actions).
Inhoudsopgave
College 1....................................................................................................... 2
College 2....................................................................................................... 2
Making economic judgments: cognition..........................................................................2
Words speak louder than actions (Bolderdijk).................................................................3
College 3....................................................................................................... 4
Guest lecture 1: social inequality....................................................................................4
Guest lecture 2: poverty and irrational financial behavior..............................................8
College 4..................................................................................................... 10
Guest lecture 1: the adoption of pro-environmental behavior......................................10
Guest lecture 2: the prosocial consumer......................................................................11
College 5..................................................................................................... 13
Guest lecture 1: the circular economy from a psychological perspective.....................13
Guest lecture 2: the circular economy from a psychological perspective.....................14
Guest lecture 3: are you a creature of habit? How good habits can help the
environment................................................................................................................. 15
College 6..................................................................................................... 16
,Consumer and Economic Psychology
College 1
Definitions:
Consumer psychology employs theoretical psychological approaches to
understanding consumers.
Economic psychology is concerned both with the psychological
mechanism.
Consumer psychology = Products Person
Economic psychology = Person Economy
Consumer and economic psychology = Products Person Economy
College 2
Making economic judgments: cognition
How do we make economic judgements?
Using reason and applying logic.
o Maximizing the utility
o Systematic thinking
o Applying logic rules
o Understanding inferences
From a calculated point of view, we expect that half of the people choose not to
play and half of the people toss a coin to receive/lose 100 euros. This is not the
case.
How do we actually make decisions? (prospect theory)
Loss aversion. Asymmetry between perceptions of gains or losses. We like
gaining things, we dislike losing things. That is why most people prefer not to
play. The power of losing is stronger.
Reference points:
Gain = risk aversion
Loss = risk seeking
Prospect theory explains how we actually process economic decisions. We like
getting things, but we dislike losing things even more.
Efficient information processors. Does not always mean we are right. We have
many different shortcuts. We don’t even realize we are making decisions all the
time.
Heuristics = shortcuts or rules of thumb/ simple rules for quick decisions.
Biases = a judgment that does not follow logic/ a bias is usually the outcome of
a heuristic.
Using heuristics, we will either reach the most logical conclusion or be biased.
Does not always mean it is wrong.
Two most available heuristics:
, 1. Availability heuristic. We make decisions based on information. But
some pieces of information can be activated more or less easily. We make
decisions based on easy to access information. Some features are recent,
frequent, extreme and negative.
2. Anchoring heuristic. An initial value is used as a reference point. The
assessment of the value of a product is affected by the anchor. Even when
the anchor is irrelevant for the judgment itself. Experiment with rigged
wheel that has two outcomes 10 or 65. Then question what the proportion
of African countries is that belong to UN. Influences even though they are
unrelated.
Endowment is the likelihood of object retention. Once you perceive you own
something, it has more value to you.
Loss aversion: a loss has a greater psychological impact than a gain.
Psychological ownership: non-transferable positive valence of the object/
self-referential memory effect.
Words speak louder than actions (Bolderdijk)
It is not relevant whether people say they care about the planet. Really the need
is for actions. People are selfish beings. Actions after all speak louder than words.
But this intention-behavior gap is incorrect. Most people care, but face
constraints.
Intention-behavior gap. It seems our actions are not lining up with our words.
Different interpretations:
- The fact that people still fly, despite their intentions, is a testimony of the
hypocrisy of the environmentally friendly individual.
- Cheap talk. People like to say that they care instead of going to the pain
to do so. Stated preferences are what people say. Revealed
preferences are what people actually do.
Are people lacking motivation?
Can’t we just motivate people with rewards and fines. Rewards can motivate
people for specific behavior, but they have little effect if they do not compensate
for the effort that is required. Incentives are often not even needed. People are
intrinsically motivated.
Air advertisements are making people feel less ashamed for flying by using
different persuasive techniques.
We forget that actions are often manifestations of a social practice that has been
shaped by the system we live. This makes it hard to align intentions with
consistent actions. People live in a system that encourage to the opposite of their
intentions. The fact that people report such conflicted feelings, may be a
symptom of impending system change.
Roger’s innovations of diffusion curve.
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