A review is presented of the book “Heuristics and Biases: The Psychology of Intuitive Judgment,” edited by Thomas Gilovich, Dale Griffin, and Daniel Kahneman.

Heuristics and Biases: The Psychology of Intuitive Judgment

Much research in the last two decades has demon- strated that human responses deviate from the performance deemed normative according to various models of decision mak- ing and rational judgment (e.g., the basic axioms of utility theory). This gap between the normative and the descriptive can be inter- preted as indicating systematic irrationalities in human cognition. However, four alternative interpretations preserve the assumption that human behavior and cognition is largely rational. These posit that the gap is due to (1) performance errors, (2) computational limitations, (3) the wrong norm being applied by the experi- menter, and (4) a different construal of the task by the subject. In the debates about the viability of these alternative explanations, attention has been focused too narrowly on the modal response. In a series of experiments involving most of the classic tasks in the heuristics and biases literature, we have examined the implica- tions of individual differences in performance for each of the four explanations of the normative/descriptive gap. Performance er- rors are a minor factor in the gap; computational limitations un- derlie non-normative responding on several tasks, particularly those that involve some type of cognitive decontextualization. Un- expected patterns of covariance can suggest when the wrong norm is being applied to a task or when an alternative construal of the task should be considered appropriate.

https://www.cambridge.org/core/services/aop-cambridge-core/content/view/S0140525X00003435

Individual differences in reasoning: Implications for the rationality debate?

The program of research now known as the heuristics and biases approach began with a survey of 84 participants at the 1969 meetings of the Mathematical Psychology Society and the American Psychological Association (Tversky & Kahneman, 1971). The respondents, including several authors of statistics texts, were asked realistic questions about the robustness of statistical estimates and the replicability of research results. The article commented tongue-in-heek on the prevalence of a belief that the law of large numbers applies to small numbers as well: Respondents placed too much confidence in the results of small samples, and their statistical judgments showed little sensitivity to sample size. The mathematical psychologists who participated in the survey not only should have known better – they did know better. Although their intuitive guesses were off the mark, most of them could have computed the correct answers on the back of an envelope. These sophisticated individuals apparently had access to two distinct approaches for answering statistical questions: one that is spontaneous, intuitive, effortless, and fast; and another that is deliberate, rule-governed, effortful, and slow. The persistence of large biases in the guesses of experts raised doubts about the educability of statistical intuitions. Moreover, it was known that the same biases affect choices in the real world, where researchers commonly select sample sizes that are too small to provide a fair test of their hypotheses (Cohen, 1969, 1992).

Representativeness revisited: Attribute substitution in intuitive judgment.

The affect heuristic

Branding has emerged as a top management priority in the last decade due to the growing realization that brands are one of the most valuable intangible assets that firms have. Driven in part by this intense industry interest, academic researchers have explored a number of different brand-related topics in recent years, generating scores of papers, articles, research reports, and books. This paper identifies some of the influential work in the branding area, highlighting what has been learned from an academic perspective on important topics such as brand positioning, brand integration, brand-equity measurement, brand growth, and brand management. The paper also outlines some gaps that exist in the research of branding and brand equity and formulates a series of related research questions. Choice modeling implications of the branding concept and the challenges of incorporating main and interaction effects of branding as well as the impact of competition are discussed.

/pdf/brands-and-branding-research-findings-and-future-priorities-2n1yuyrxc1.pdf

Brands and Branding: Research Findings and Future Priorities

In this article, the authors examine how ownership status moderates the effects of stretch direction (up or down), brand image (prestige or nonprestige), and branding strategy (subbrand name or dir...

The Ownership Effect in Consumer Responses to Brand Line Stretches

This research examines the proposition that high perceived fit of a brand extension results when consumers can establish explanatory links that connect the parent brand and the extension. Explanatory links are created when salient parent brand associations are seen as relevant in the extension context. The salience and relevance of associations depends, in part, upon the dominant parent brand associations, the brand-to-extension relationship, and the communication strategy used to introduce the extension. Results indicated that extensions were poorly rated when the parent brand's dominant association was inconsistent with the extension's dominant association. Specifically, brands with dominant attribute-based associations (e.g., physical features) received lower evaluations than brands with dominant non-attribute-based associations (e.g., brand users) when extended to a category with no physical attributes in common. In this case, evaluations were improved with an elaborational communication stra...

Communication Strategies for Brand Extensions: Enhancing Perceived Fit by Establishing Explanatory Links

The authors propose that attempts to increase consumers' objective knowledge (OK) regarding financial instruments can deter willingness to invest when such attempts diminish consumers' subjective knowledge (SK). In four studies, the authors use different SK manipulations and investment products to show that investment decisions are influenced by SK, independent of OK. Specifically, they find that (1) willingness to pursue a risky investment increases when SK is high (vs. low) relative to a prior investment choice (Study 1); (2) willingness to enroll in a retirement saving program is enhanced by asking consumers an easy (vs. difficult) question about finance, thereby increasing SK (Study 2); (3) technically elaborating information about a mutual fund diminishes SK regarding that investment and decreases choice of that fund (Study 3); and (4) consumers invest less money in funds when missing information is made salient, holding the objective investment information constant (Study 4). Furthermore, t...

Subjective Knowledge in Consumer Financial Decisions

Just as good looks bestow an unconscious “beauty premium” on people, high aesthetics bestows an unrecognized benefit on consumer goods. Specifically, choosing a product with good design affirms the consumer’s sense of self. Choice of a highly aesthetic product was compared with choice of products superior on other attributes including function, brand, and hedonics to show that only aesthetics influences a consumer’s personal values. In study 1 a prior self-affirming task leads to a decrease in choice share of a highly aesthetic option. Studies 2 and 3 mimic prior research on self-affirmation with, however, choice of a highly aesthetic product replacing a traditional self-affirmation manipulation. Choosing a product with good design resulted in increased openness to counter-attitudinal arguments and reduced propensity to escalate commitment toward a failing course of action. There are numerous implications of this form of self-affirmation, from public policy to retail therapy.

https://www.jstor.org/stable/10.1086/663775

Self-Affirmation through the Choice of Highly Aesthetic Products

We examine movie sequels as brand extensions of experiential goods. Study 1 reveals a reversal of the traditional categorization model such that dissimilar extensions are rated higher than similar extensions. This reversal is moderated by the name of the sequel; numbered sequels (Daredevil 2) are influenced by similarity more than named sequels (Daredevil: Taking It to the Streets). Study 2 reveals that the reversal arises because numbered sequels invoke a greater degree of assimilation with the parent movie, thereby increasing consumers’ level of satiation of experiential attributes. The Internet Movie Database (IMDb) provides external validity for our results (study 3).

https://www.jstor.org/stable/10.1086/508520

Sanjay Sood

Papers

The Ownership Effect in Consumer Responses to Brand Line Stretches

Communication Strategies for Brand Extensions: Enhancing Perceived Fit by Establishing Explanatory Links

Subjective Knowledge in Consumer Financial Decisions

Self-Affirmation through the Choice of Highly Aesthetic Products

Brand Extensions of Experiential Goods: Movie Sequel Evaluations