2. Consumers

2014 ◽  
pp. 5-27
Author(s):  
Avinash Dixit
Keyword(s):  
Decision Making ◽  
Loss Aversion ◽  
Consumer Choice ◽  
Opportunity Cost ◽  
Thought Processes ◽  
Cost Of Living ◽  
Decisions Under Risk ◽  
Demand Curves ◽  
The Brain ◽  
Effect Time

‘Consumers’ considers several concepts involved with, or influenced by, consumer activity and consumer choice — substitution, complements, demand curves, income effect, statistical estimation, cost-of-living indexes, the babysitter effect, time, budgets, opportunity cost, and risk and loss aversion. What thought processes are involved in budgeting decisions? Are consumers rational? The new view of ‘behavioural economics’ suggests not and is supported by Daniel Kahneman's work that proposes two different systems of decision-making in the brain — fast and slow. The effects of consumer behaviour can be significant; for example, loss-aversion and other features of decisions under risk can seriously affect the properties of financial markets.

scholarly journals Dopamine modulates dynamic decision-making during foraging

2019 ◽  
Author(s):  
Campbell Le Heron ◽  
Nils Kolling ◽  
Olivia Plant ◽  
Annika Kienast ◽  
Rebecca Janska ◽  
...  
Keyword(s):  
Decision Making ◽  
Opportunity Cost ◽  
Dopamine D2 Receptor ◽  
D2 Receptor ◽  
Receptor Activity ◽  
Dynamic Decision Making ◽  
Healthy Human ◽  
Pharmacological Manipulation ◽  
Human Participants ◽  
The Brain

ABSTRACTThe mesolimbic dopaminergic system exerts a crucial influence on incentive processing. However, the contribution of dopamine in dynamic, ecological situations where reward rates vary, and decisions evolve over time, remains unclear. In such circumstances, current (foreground) reward accrual needs to be compared continuously with potential rewards that could be obtained by travelling elsewhere (background reward rate), in order to determine the opportunity cost of staying versus leaving. We hypothesised that dopamine specifically modulates the influence of background – but not foreground – reward information when making a dynamic comparison of these variables for optimal behaviour. On a novel foraging task based on an ecological account of animal behaviour (marginal value theorem), human participants were required to decide when to leave locations in situations where foreground rewards depleted at different rates, either in rich or poor environments with high or low background rates. In line with theoretical accounts, people’s decisions to move from current locations were independently modulated by both foreground and background reward rates. Pharmacological manipulation of dopamine D2 receptor activity using the agonist cabergoline significantly affected decisions to move on, specifically modulating the effect of background but not foreground rewards rates. In particular, when on cabergoline, people left patches in poor environments much earlier. These results demonstrate a role of dopamine in signalling the opportunity cost of rewards, not value per se. Using this ecologically derived framework we uncover a specific mechanism by which D2 dopamine receptor activity modulates decision-making when foreground and background reward rates are dynamically compared.Significance statementMany decisions, across economic, political and social spheres, involve choices to “leave”. Such decisions depend on a continuous comparison of a current location’s value, with that of other locations you could move on to. However, how the brain makes such decisions is poorly understood. Here, we developed a computerized task, based around theories of how animals make decisions to move on when foraging for food. Healthy human participants had to decide when to leave collecting financial rewards in a location, and travel to collect rewards elsewhere. Using a pharmacological manipulation, we show that the activity of dopamine in the brain modulates decisions to move on, with people valuing other locations differently depending on their dopaminergic state.

Decision Making Styles and Consumer Choice

2008 ◽  
Author(s):  
Thomas Nygren ◽  
Rebecca White ◽  
Kristi Snuttjer
Keyword(s):  
Decision Making ◽  
Consumer Choice ◽  
Decision Making Styles

The transformation of the decision-making process on the part of economic agents influenced by social constraints

2020 ◽  
Vol 16 (7) ◽  
pp. 1202-1222
Author(s):  
M.V. Grechko ◽  
L.A. Kobina ◽  
S.A. Goncharenko
Keyword(s):  
Decision Making ◽  
Consumer Choice ◽  
Social Constraints ◽  
Decision Making Process ◽  
Economic Knowledge ◽  
Economic Agents ◽  
The Individual ◽  
Contextual Environment ◽  
Economic Constraints ◽  
External Signals

Subject. The article focuses on the decision-making mechanism used by economic agents given the existing social constraints. Objectives. We devise applied toolkit to study how socio-economic constraints transform the decision-making mechanism used by economic agents. Methods. The study involves means of the expert survey, the method that streamlines economic knowledge. Results. Social constraints are illustrated to influence the decision-making mechanism used by economic agents, assuming that the individual mind relies on specific mechanisms to make judgments and decisions. Generally, the mechanisms are very useful, however they may generate serious errors during the decision-making process. Given the social constraints, economic agents were found to follow four mental models to make their decisions in case of the full or partial uncertainty, i.e. the representative relevance, accessibility, relations, heuristics (modeling). Conclusions and Relevance. The scientific ideas herein show that the inner architecture of a choice an individual makes determines his or her decisions. The decisions often depend on the contextual environment that gives external signals perceived by the individual while evaluating alternative ways. The findings can possibly be used as a mechanism to manage the consumer choice.

Emotional stress & decision-making: an emotional stressor significantly reduces loss aversion

Stress ◽  
2021 ◽  
pp. 1-7
Author(s):  
Francisco Molins ◽  
Carla Ayuso ◽  
Miguel Ángel Serrano
Keyword(s):  
Decision Making ◽  
Emotional Stress ◽  
Loss Aversion

Neuroscience: The New English Major?

2021 ◽  
pp. 107385842110039
Author(s):  
Kristin F. Phillips ◽  
Harald Sontheimer
Keyword(s):  
Decision Making ◽  
Graduate Education ◽  
Human Behavior ◽  
Undergraduate Curriculum ◽  
Virginia Tech ◽  
Bachelor's Degree ◽  
State University ◽  
Human Interactions ◽  
English Major ◽  
The Brain

Once strictly the domain of medical and graduate education, neuroscience has made its way into the undergraduate curriculum with over 230 colleges and universities now offering a bachelor’s degree in neuroscience. The disciplinary focus on the brain teaches students to apply science to the understanding of human behavior, human interactions, sensation, emotions, and decision making. In this article, we encourage new and existing undergraduate neuroscience programs to envision neuroscience as a broad discipline with the potential to develop competencies suitable for a variety of careers that reach well beyond research and medicine. This article describes our philosophy and illustrates a broad-based undergraduate degree in neuroscience implemented at a major state university, Virginia Tech. We highlight the fact that the research-centered Experimental Neuroscience major is least popular of our four distinct majors, which underscores our philosophy that undergraduate neuroscience can cater to a different audience than traditionally thought.

scholarly journals Consciousness, decision making, and volition: freedom beyond chance and necessity

2021 ◽  
Author(s):  
Hans Liljenström
Keyword(s):  
Decision Making ◽  
Free Will ◽  
Brain Activity ◽  
Brain Structures ◽  
Complex Process ◽  
Neural Information ◽  
Neural Information Processing ◽  
Stochastic Population Model ◽  
The Brain

AbstractWhat is the role of consciousness in volition and decision-making? Are our actions fully determined by brain activity preceding our decisions to act, or can consciousness instead affect the brain activity leading to action? This has been much debated in philosophy, but also in science since the famous experiments by Libet in the 1980s, where the current most common interpretation is that conscious free will is an illusion. It seems that the brain knows, up to several seconds in advance what “you” decide to do. These studies have, however, been criticized, and alternative interpretations of the experiments can be given, some of which are discussed in this paper. In an attempt to elucidate the processes involved in decision-making (DM), as an essential part of volition, we have developed a computational model of relevant brain structures and their neurodynamics. While DM is a complex process, we have particularly focused on the amygdala and orbitofrontal cortex (OFC) for its emotional, and the lateral prefrontal cortex (LPFC) for its cognitive aspects. In this paper, we present a stochastic population model representing the neural information processing of DM. Simulation results seem to confirm the notion that if decisions have to be made fast, emotional processes and aspects dominate, while rational processes are more time consuming and may result in a delayed decision. Finally, some limitations of current science and computational modeling will be discussed, hinting at a future development of science, where consciousness and free will may add to chance and necessity as explanation for what happens in the world.

scholarly journals Motivational system modulates brain responses during exploratory decision-making

2021 ◽  
Vol 11 (1) ◽  
Author(s):  
Chia-Wei Li ◽  
Carol Yeh-Yun Lin ◽  
Ting-Ting Chang ◽  
Nai-Shing Yen ◽  
Danchi Tan
Keyword(s):  
Decision Making ◽  
High Performance ◽  
Behavioral Activation ◽  
Motivational Orientation ◽  
Performance Group ◽  
Reward Seeking ◽  
Brain Responses ◽  
Low Performance ◽  
Risk Choice ◽  
The Brain

AbstractManagers face risk in explorative decision-making and those who are better at such decisions can achieve future viability. To understand what makes a manager effective at explorative decision-making requires an analysis of the manager’s motivational characteristics. The behavioral activation/inhibition system (BAS/BIS), fitting the motivational orientation of “approach” or “avoidance,” can affect individual decision-making. However, very little is known about the neural correlates of BAS/BIS orientation and their interrelationship with the mental activity during explorative decision-making. We conducted an fMRI study on 111 potential managers to investigate how the brain responses of explorative decision-making interact with BAS/BIS. Participants were separated into high- and low-performance groups based on the median exploration-score. The low-performance group showed significantly higher BAS than that of the high-performance group, and its BAS had significant negative association with neural networks related to reward-seeking during explorative decision-making. Moreover, the BIS of the low-performance group was negatively correlated with the activation of cerebral regions responding to risk-choice during explorative decision-making. Our finding showed that BAS/BIS was associated with the brain activation during explorative decision-making only in the low-performance group. This study contributed to the understanding of the micro-foundations of strategically relevant decision-making and has an implication for management development.

Are the saving decision patterns of bank customers also clouded by psychological biases? Evidence from Ghana

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Joseph Emmanuel Tetteh ◽  
Christopher Boachie
Keyword(s):  
Decision Making ◽  
Loss Aversion ◽  
Design Methodology ◽  
Weighted Least Squares ◽  
Least Squares Regression ◽  
Individual Decision ◽  
Content Type ◽  
Saving Decisions ◽  
The Individual ◽  
Practical Implications

PurposeThis paper attempts to investigate the influence of psychological biases on saving decision-making of bank customers in Ghana.Design/methodology/approachIt employs weighted least squares regression to test the effect of psychological biases on savings decisions of bank customers.FindingsThe findings show that all the nine psychological biases, namely mental accounting, availability, loss aversion, representativeness, anchoring, overconfidence, status quo, framing effect and disposition effect employed for the study have a significant influence on saving decision of bank customers. The results depict that psychological biases are entrenched in the saving pattern of bank customers in Ghana.Practical implicationsFor policy purposes, the study recommends that bank customers need to enhance their knowledge of psychological biases in order to improve their gains from savings, and not to fall prey to these prejudices. The satisfied customer is a dependable source of bank viability and survival.Originality/valueTo the best of the knowledge of the author, this study provides the first empirical evidence of the influence of psychological biases on saving decisions of bank customers in Ghana. The findings of this study will enhance knowledge on the influence of psychological biases on individual decision-making and will accentuate the fact that the individual is not an entirely rational being.

GIFFEN EFFECT MODEL

2020 ◽  
Vol 10 (7) ◽  
pp. 1228-1245
Author(s):  
V.I. Tsurikov ◽  
Keyword(s):  
Consumer Choice ◽  
Demand Curve ◽  
Aggregate Demand ◽  
Negative Slope ◽  
Individual Values ◽  
Effect Model ◽  
Demand Curves ◽  
Income Individual ◽  
The Mathematical Model

The mathematical model of the Giffen effect proposed in the article clearly demonstrates both the effect itself and the reasons for its manifestation. The main advantages of the model include its extreme simplicity, which opens up access to the widest circle of readers, the use of standard methods for solving the consumer choice problem, and the most important fundamental agreement with the results of the field experiment of Jensen and Miller. The model shows that any good for which there is a more expensive substitute can be of little value. This or that good is endowed with the appropriate property by a particular consumer due to his or her own preferences, income level and prevailing prices. Any good of little value, including those that can only be consumed by a high-income individual, may turn out to be Giffen’s goods. Therefore, the consumption of Giffen’s product cannot be considered as evidence of the low standard of living of the consumer. According to the model, an increase in demand for an increasingly expensive low-value good, which is the essence of the Giffen paradox, is the result of optimizing a set of goods, i.e. the result of rational consumer behavior. It is shown that for the manifestation of the Giffen effect, it is necessary that the amount of funds allocated by the consumer for the purchase of a low-value good and its more expensive substitute falls into a certain rather narrow range of values. The failures of numerous and long-term studies aimed at detecting empirical manifestations of Giffen behavior in various historical events are explained by the fact that the corresponding analysis was carried out on the basis of averaged rather than individual values of demand for all categories of consumers. As a result, the negative slope of the aggregate demand curve turned out to be dominant over the positive sections of certain individual demand curves.

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