CiteULike: Group: ACS-Basel - with tag consumer-behavior

Neural Predictors of Purchases

Brian Knutson — 2007-01-05T09:42:11-00:00

Neuron, Vol. 53, No. 1. (4 January 2007), pp. 147-156.

SummaryMicroeconomic theory maintains that purchases are driven by a combination of consumer preference and price. Using event-related fMRI, we investigated how people weigh these factors to make purchasing decisions. Consistent with neuroimaging evidence suggesting that distinct circuits anticipate gain and loss, product preference activated the nucleus accumbens (NAcc), while excessive prices activated the insula and deactivated the mesial prefrontal cortex (MPFC) prior to the purchase decision. Activity from each of these regions independently predicted immediately subsequent purchases above and beyond self-report variables. These findings suggest that activation of distinct neural circuits related to anticipatory affect precedes and supports consumers' purchasing decisions.

Bankruptcy Policy in Light of Manipulation in Credit Advertising

Ron Harris — 2006-03-17T11:35:51-00:00

Theoretical Inquiries in Law (September 2005)

This article argues that when credit suppliers market and advertise their credit products, they utilize and enhance consumers' cognitive biases, particularly their optimism bias and illusion of control. We apply the concept of manipulation to this practice. The biased and manipulated debtors attribute unrealistically low probability to negative life events, and high probability to positive life events. As a result of the manipulation, the biased debtors are triggered to borrow more than they would have borrowed otherwise. This additional borrowing may contribute to the default of these debtors and to their eventual bankruptcy. Empirical studies of the causes of bankruptcy show that before their default, bankrupts often experience negative life events such as loss of job, illness, accident or divorce, which decreased income, increased expenses, or both. The bias and its manipulation justify legal intervention. The first justification is the restoration of debtors' autonomy and the rationality of their decision-making and choice. The second justification is distributive. Sophisticated, repeat, diversified, superiorly informed and non-biased institutional suppliers of credit gain from it. This is evident in the more aggressive marketing of credit in recent years to lower income deciles. The debtors lose as they suffer the stigma of failure, the higher costs of post-bankruptcy borrowing, possible loss of residence and job, and some of the direct monetary costs of bankruptcy. The third justification is externalities to the state, to non-manipulating creditors of any manipulated debtor, and to the debtor's family. Running the bankruptcy system imposes costs on the state. Maintaining asset-less, job-less or low-income discharged debtors is also borne in part by society and its tax payers. The more restrictive the exemption and discharge rules in a legal system and the more generous the safety net in different welfare states, the higher the externalities. Bankruptcy imposes externalities to family and other dependants of the bankrupt. Further, manipulative lenders increase their share of the bankrupt's assets at the expense of non-manipulative lenders. This constitutes an externality from one creditor to another. Intervention can take place at two distinct stages. The first is the pre-landing-transaction stage. Here intervention can take the form of "asymmetric paternalism": regulation that prohibits manipulative practices and regulation that discloses information and de-biases potential borrowers. The use of tax and insurance is also considered. The second stage is the bankruptcy process stage. This can be general, dealing with exempt assets, discharge and fraud policies. It can be case specific, developing doctrines that would allow the rejection or demoting of specific claims by manipulating creditors in specific cases. The relative advantages and disadvantages of each stage and each type of regulation are discussed. The prescriptions for intervention in this article are tentative and partial. Its main contribution is bringing together bodies of literature on cognitive biases, consumer decision making, lifetime cycle, social influence, advertising and marketing, behavioral law and economics, economic analysis of bankruptcy and socio-legal studies of bankruptcy. By combining these bodies of literature, the article provides a new perspective on bankruptcy and credit and offers a promising framework for future work.

A consumer behavior approach to modeling monopolistic competition

Antony Davies — 2005-11-01T13:45:54-00:00

Journal of Economic Psychology, Vol. 26, No. 6. (December 2005), pp. 797-826.

In this paper, we attempt to integrate research on consumer information processing and the consumer choice process with the goal of proposing a general framework for modeling consumer behavior in monopolistically competitive industries. Following a pattern of inductive reasoning, we posit a set of consumer behavior propositions that is consistent with observed results from context effects experiments and the phased decision-making literature. We propose that, faced with many competing brands in a monopolistically competitive environment, consumers can be said to construct consideration sets on the basis of non-compensatory rules and subsequently to choose from among competing brands within a consideration set on the basis of compensatory rules. We identify five product-market characteristics that consumers use as heuristics to maximize the probability of making the optimal brand choice while minimizing the cost of acquiring and processing information about competing brands. We propose that consumers use memory and stimuli based information to evolve their unique perceptions of these product-market characteristics. As a follow-up to our inductive approach, we show that the empirically documented context effects are consistent with our behavioral propositions. Finally, we use the propositions to explain several classic cases of consumer behavior observed in the beer, ice cream, and automobile industries.

Violence and Sex in Television Programs Do Not Sell Products in Advertisements

Brad Bushman — 2005-08-24T16:49:39-00:00

Psychological Science, Vol. 16, No. 9. (September 2005), pp. 702-708.

Adults (N= 336) 18 to 54 years old watched a television program containing violence, sex, both violence and sex, or no violence and sex. Programs were shown in a comfortable room containing padded chairs and tasty snacks. Each program contained the same 12 ads. Embedding an ad in a program containing violence or sex reduced (a) viewers' likelihood of remembering the advertised brand, (b) their interest in buying that brand, and (c) their likelihood of selecting a coupon for that brand. These effects occurred for males and females of all ages, regardless of whether they liked programs containing violence and sex. These results show that violence and sex in television programs do not sell products in advertisements.

A behavioral window on the mind of the market: An application of the response time paradigm

Fred Mast — 2005-07-12T11:43:10-00:00

Brain Research Bulletin, Vol. In Press, Uncorrected Proof

This article focuses on the role of implicit knowledge consumers have about particular brands, products or names. The major findings of several studies, conducted at the Mind of the Market Laboratory at Harvard Business School, are presented with specific emphasis on studies in which response time measurements were the core method. The results revealed that implicit measures provide a rich understanding of the meaning conveyed by a product or brand. Moreover, there is also considerable evidence that implicit measures may be better than traditional explicit measures as predictors of consumer behavior. We discuss the implications for the study of consumer behavior and the importance of combining several methods including neuroimaging, which has received recent attention by marketers, economists and social scientists.

Reasoning or reacting to others? How consumers use the rationality of other consumers

Linda Pelzmann — 2005-07-12T11:42:42-00:00

Brain Research Bulletin, Vol. In Press, Uncorrected Proof

Consumers adapt their behavior to the structure of the information available in the environment where they form expectations. One factor in people's environments is other people. "Others" are a significant source of information and means of orientating oneself. In conditions such as uncertainty, insecurity, anxiety but also euphoria, it is "the others" who provide market participants with coordinates. The purpose of this paper is to pass forward an approach that relates to consumers' other-directedness and to demonstrate in what ways consumers use the rationality of other consumers.