In 1974 an article appeared in Science magazine with the dry-sounding title “Judgment Under Uncertainty: Heuristics and Biases” by a pair of psychologists who were not well known outside their discipline of decision theory. In it Amos Tversky and Daniel Kahneman introduced the world to Prospect Theory, which mapped out how humans actually behave when faced with decisions about gains and losses, in contrast to how economists assumed that people behave. Prospect Theory turned Economics on its head by demonstrating through a series of ingenious experiments that people are much more concerned with losses than they are with gains, and that framing a choice from one perspective or the other will result in decisions that are exactly the opposite of each other, even if the outcomes are monetarily the same. Prospect Theory led cognitive psychology in a new direction that began to uncover other human biases in thinking that are probably not learned but are part of our brain’s wiring.

Thinking fast and slow.

The author systematically examines one of the important issues of information — establishing the market price. He introduces the concept of «search» — where a buyer wanting to get a better price, is forced to question sellers. The article deals with various aspects of finding the necessary information.

Economics of Information

NUDGE: IMPROVING DECISIONS ABOUT HEALTH, WEALTH, AND HAPPINESS by Richard H. Thaler and Cass R. Sunstein Penguin Books, 2009, 312 pp, ISBN 978-0-14-311526-7This book is best described formally as a general explanation of and advocacy for libertarian paternalism, a term coined by the authors in earlier publications. Informally, it is about how leaders, systems, organizations, and governments can nudge people to do the things the nudgers want and need done for the betterment of the nudgees, or of society. It is paternalism in the sense that "it is legitimate for choice architects to try to influence people's behavior in order to make their lives longer, healthier, and better", (p. 5) It is libertarian in that "people should be free to do what they like - and to opt out of undesirable arrangements if they want to do so", (p. 5) The built-in possibility of opting out or making a different choice preserves freedom of choice even though people's behavior has been influenced by the nature of the presentation of the information or by the structure of the decisionmaking system. I had never heard of libertarian paternalism before reading this book, and I now find it fascinating.Written for a general audience, this book contains mostly social and behavioral science theory and models, but there is considerable discussion of structure and process that has roots in mathematical and quantitative modeling. One of the main applications of this social system is economic choice in investing, selecting and purchasing products and services, systems of taxes, banking (mortgages, borrowing, savings), and retirement systems. Other quantitative social choice systems discussed include environmental effects, health care plans, gambling, and organ donations. Softer issues that are also subject to a nudge-based approach are marriage, education, eating, drinking, smoking, influence, spread of information, and politics. There is something in this book for everyone.The basis for this libertarian paternalism concept is in the social theory called "science of choice", the study of the design and implementation of influence systems on various kinds of people. The terms Econs and Humans, are used to refer to people with either considerable or little rational decision-making talent, respectively. The various libertarian paternalism concepts and systems presented are tested and compared in light of these two types of people. Two foundational issues that this book has in common with another book, Network of Echoes: Imitation, Innovation and Invisible Leaders, that was also reviewed for this issue of the Journal are that 1 ) there are two modes of thinking (or components of the brain) - an automatic (intuitive) process and a reflective (rational) process and 2) the need for conformity and the desire for imitation are powerful forces in human behavior. …

Nudge: Improving Decisions about Health, Wealth, and Happiness

Sensory expectations based on product-extrinsic food cues: An interdisciplinary review of the empirical evidence and theoretical accounts

Two studies were conducted to examine whether shopping values are affected by perceived retail crowding, and whether shopping values mediate the relationship between perceived retail crowding and shopping satisfaction. Results of the first study show that perceived retail crowding affects shopping values, albeit not very strongly. However, the effects appear to be moderated by factors such as personal tolerance for crowding, time spent shopping, shopping intention, and whether a purchase was made. Study 2 indicates that the impact of perceived crowding on shopping value is mediated by emotions experienced by the shopper. The emotions and shopping value reactions, in turn, mediate the effect of spatial crowding on shopping satisfaction. Interestingly, the results show that when these mediating variables are accounted for, human crowding positively affects shopping satisfaction. These findings provide support for the inverted U explanation in the general crowding literature, and suggest new avenues of future research in the context of retail crowding.

Perceived retail crowding and shopping satisfaction: The role of shopping values

Tough package, strong taste: The influence of packaging design on taste impressions and product evaluations

The importance of lighting for performance in human adults is well established. However, evidence on the extent to which lighting affects the school performance of young children is sparse. This paper evaluates the effect of lighting conditions (with vertical illuminances between 350 lux and 1000 lux and correlated colour temperatures between 3000 and 12 000 K) on the concentration of elementary school children in three experiments. In the first two experiments, a flexible and dynamic lighting system is used in quasi-experimental field studies using data from 89 pupils from two schools (Study 1) and 37 pupils from two classrooms (Study 2). The third experiment evaluated two lighting settings within a school-simulating, windowless laboratory setting (n = 55). The results indicate a positive influence of the lighting system on pupils’ concentration. The findings underline the importance of lighting for learning. Several suggestions are made for further research.

Lighting affects students’ concentration positively: findings from three Dutch studies

Previous research in environmental psychology and consumer behavior has demonstrated mostly negative effects of human density on consumer experience in retail settings. The effects of spatial density, however, have received scant attention. Results from previous studies show that retail density affects shoppers' emotional and behavioral responses through perceived control.Work in social psychology, however, indicates that there are differences in the extent to which people strive for control, suggesting that having control in retail settings may be more important to some consumers than to others. In the experimental study reported in this paper, the effects of both forms of retail density were studied as a function of consumers' desire for control. Results indicate that the effects of human and spatial density vary with consumers' desire for control. Theoretical and managerial implications are discussed.

Human and spatial dimensions of retail density: Revisiting the role of perceived control

Purpose – The purpose of this research is to add to our understanding of the antecedents of customer satisfaction by examining the effects of service reliability (Is the service “correctly” produced?) and service validity (Is the “correct” service produced?) of search, experience and credence services.Design/methodology/approach – Service validity and service reliability were manipulated in scenarios describing service encounters with different types of services. Customer satisfaction was measured using questionnaires.Findings – Service validity and service reliability independently affect customer satisfaction with search services. For experience services, service validity and service reliability are necessary conditions for customer satisfaction. For credence services, no effects of service validity were found but the effects of service reliability on customers' satisfaction were profound.Research limitations/implications – Scenarios provided a useful method to investigate customer evaluation of differe...

Mirjam Galetzka

Papers

Tough package, strong taste: The influence of packaging design on taste impressions and product evaluations

Lighting affects students’ concentration positively: findings from three Dutch studies

Human and spatial dimensions of retail density: Revisiting the role of perceived control

Service validity and service reliability of search, experience and credence services: A scenario study

What’s in a name? The effects of sound symbolism and package shape on consumer responses to food products