Heuristic Thinking and Limited Attention in the Car Market

Sydnor, Justin R.; Pope, Devin G.; Lacetera, Nicola

doi:10.1257/aer.102.5.2206

Cited by 275 publications

(83 citation statements)

References 27 publications

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“…A variety of studies have shown that people use heuristics when making decisions under risk (Clotfelter and Cook, ; Kahneman, Slovic, and Tversky, ; [Lacetera, Pope, and Sydnor], ). However, while many studies have been conducted in order to identify heuristic patterns, up until now, researchers have mostly refrained from trying to determine the cause for the utilization of heuristics (for a notable exception see, e.g., Payne, Bettman, and Johnson, ()).…”

Section: Introductionmentioning

confidence: 99%

The Influence of Affect on Heuristic Thinking in Insurance Demand

Jaspersen¹,

Aseervatham²

2015

J of Risk & Insurance

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Heuristic thinking can influence human behavior in decisions under risk and uncertainty. In an experimental setting, we study whether emotional activation primes individuals to use the representativeness heuristic and the affect heuristic. We observe the decision behavior of 272 subjects in a computerbased experiment that differentiates between incidental affect and integral affect. Positive incidental affect and integral affect increase the use of the representativeness heuristic, while negative incidental affect has no effect. Our findings have statistical and economic significance and carry implications for insurance companies and regulators.

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Section: Introductionmentioning

confidence: 99%

The Influence of Affect on Heuristic Thinking in Insurance Demand

Jaspersen¹,

Aseervatham²

2015

J of Risk & Insurance

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“…Such illusionary processing of a just-below number is also evident beyond the domain of price cognition. Lacetera, Pope, and Sydnor (2012) found that cars with odometer values just below round numbers (e.g., 79,900-79,999) were sold at higher prices than cars with odometer values just above round numbers (e.g., 80,001-80.100).…”

Section: Just-below Pricingmentioning

confidence: 96%

Outwitting the rational mind: How effortful thinking influences price cognition

Hossain

Yang

2018

Behavioral Decision Making

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Prior research presents mixed findings on how people's degrees of effortful thinking influence their reliance on heuristics and biases. Although the tenets of dual process theory would argue that effortful thinking should attenuate people's reliance on heuristics, a number of contemporary findings suggest otherwise: Effortful thinking may, in fact, enhance biased processing of information in certain instances. This research shows how, in the context of pricing, people's degrees of effortful thinking can amplify their inclination towards biased processing of price information. In five studies (n = 1,339), we find that effortful thinking induces a greater preference for nine‐ending (vs. zero‐ending) prices, and the effect is mainly driven by people's greater propensity for argument‐based decision making. Such predilection to nine‐endings attenuates with lower cognitive effort in processing price information. Moreover, when locus of deliberation shifts from price to quality, consumers' preference for nine‐ending priced options is subdued.

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“…By using BONDS, Lacetera and colleagues (2012) were able to demonstrate the power of decision-making heuristics even within very real and high-stakes contexts: Left-digit biases cost buyers hundreds of dollars on a long-term purchase. The study shows the impact of cognitive biases at a scope that would be functionally impossible in laboratory research.…”

Section: The Data Revolution: Big Data and Naturally Occurring Datasetsmentioning

confidence: 99%

Finding the traces of behavioral and cognitive processes in big data and naturally occurring datasets

Paxton

Griffiths

2017

Behav Res

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Today, people generate and store more data than ever before as they interact with both real and virtual environments. These digital traces of behavior and cognition offer cognitive scientists and psychologists an unprecedented opportunity to test theories outside the laboratory. Despite general excitement about big data and naturally occurring datasets among researchers, three “gaps” stand in the way of their wider adoption in theory-driven research: the imagination gap, the skills gap, and the culture gap. We outline an approach to bridging these three gaps while respecting our responsibilities to the public as participants in and consumers of the resulting research. To that end, we introduce Data on the Mind (http://www.dataonthemind.org), a community-focused initiative aimed at meeting the unprecedented challenges and opportunities of theory-driven research with big data and naturally occurring datasets. We argue that big data and naturally occurring datasets are most powerfully used to supplement—not supplant—traditional experimental paradigms in order to understand human behavior and cognition, and we highlight emerging ethical issues related to the collection, sharing, and use of these powerful datasets.

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Heuristic Thinking and Limited Attention in the Car Market

Cited by 275 publications

References 27 publications

The Influence of Affect on Heuristic Thinking in Insurance Demand

The Influence of Affect on Heuristic Thinking in Insurance Demand

Outwitting the rational mind: How effortful thinking influences price cognition

Finding the traces of behavioral and cognitive processes in big data and naturally occurring datasets

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