Browsing by Subject "Choice"

Now showing 1 - 3 of 3
  • Thumbnail Image
    Item
    Accessibility and the choice of network investments in the London underground
    (2014-08) Giacomin, David J.
    In 1863, the Metropolitan Railway of what came to be known as the London Underground successfully opened as the world's first subway. Its high ridership spawned interest in additional links. Entrepreneurs secured funding and then proposed new lines to Parliament for approval, though only a portion were actually approved. While putative rail barons may have conducted some economic analysis, the final decision lay with Parliament, which did not have available modern transportation economic or geographic analysis tools. How good were the decisions that Parliament made in approving Underground Lines? This paper explores the role accessibility played on the decision to approve or reject proposed early London Tube Schemes.
  • Thumbnail Image
    Item
    Essays on the Neural basis of consumer choice.
    (2008-06) Hedgcock, William
    Economists often assume decision makers are hyper-rational agents with few limits to their cognitive capabilities. Sometimes labeled "Homo Economicus", these decision makers learn quickly, perform complex math, have endless information processing capacity, and are exceptionally rational (Thaler 2000). While these assumptions make it easier to model decision making behavior, they are demonstrably false. Decision makers calculate probabilities inaccurately (Allais 1953), dislike ambiguity (Ellsberg 1961), change behavior to avoid negative emotion (Luce, Bettman and Payne 2001), and are affected by the mere presence of alternatives that should be irrelevant to their decision (Huber, Payne and Puto 1982). These violations have led to the development of other models that are better at predicting what consumers actually do. Rank dependent utility theory (Quiggin 1981) took into account imperfect probabilistic calculations. A more recent version of this theory (Schmeidler 1989) extended the model to ambiguous decisions. Prospect theory's weighting function (Kahneman and Tversky 1979) also addressed people's imperfect probabilistic calculations while the theory's editing function accounted for some of the simplification strategies that decision makers use to overcome their cognitive limitations. Still, while better at describing certain behaviors, all of these theories share a common limitation. Like the model of Homo Economicus, these theories model behavior "as-if" humans were performing the functions prescribed by the theory. Rank dependent utility theory predicts probabilistic behavior "as-if" people rank ordered probabilities. Prospect theory's weighting function predicts probabilistic behavior "as-if" people overestimate small probabilities and underestimate large probabilities. Prospect theory's editing function describes some editing processes "as-if" people perform them to simplify decisions, but it does not describe how they actually come to choose a specific editing function (Thaler 2000). Ultimately, all of these theories generate a single equation that predicts consumer choice "as-if" consumers calculated these values and chose the option with maximal value. These models so far have either focused on what consumers should do or have focused on predicting what consumers actually do. Decision making models frequently do not attempt to describe the cognitive processes that are actually used to make a decision. The research described in this dissertation investigates this rarely studied area in human decision making. The research does not focus on what people do. Instead, it focuses on the decision making process itself. Recent advancements in brain imaging techniques such as electroencephalography (EEG), magnetoencephalography (MEG), functional magnetic resonance imaging (fMRI), and positron emission tomography (PET) have allowed decision making researchers to examine cognitive processes that were previously thought impossible to observe. This research uses behavior and fMRI to study the decision making process as it actually occurs in human decision makers. The dissertation adopts a theoretical framework developed in economics (Camerer et al. 2005) and psychology (Liberman 2007) to understand neuroscientific studies of behavior. The framework is a 2x2 combination of dual process theories that draws a distinction between cognitive processes that are either automatic or controlled and that are either internally (related to internal body states) or externally (related to sensory states) focused. Research hypotheses are developed and tested based on this framework. This dissertation contributes to the study of decision making in three ways. Theoretically, it tests an alternative model of decision making that emphasizes the cognitive process underlying decision making. Methodologically, the research demonstrates the usefulness of neuroscientific techniques as a complement to more traditional methods used in marketing research. Practically, the research contributes to a better understanding of decision making processes which could ultimately benefit society by helping consumers overcome decision biases that lead to societal problems such as drug use, obesity, and race bias.
  • Thumbnail Image
    Item
    The influence of previous decision on subsequent decision
    (2008-12) Kim, Jungkeun
    We often make decisions repeatedly. In these repeated-decision situations, consumers' prior knowledge and experiences based on consumption have been assumed to influence their current choice processes and outcomes. However, the research literature is currently silent as to how the influence of prior decision processes or outcomes operates in making subsequent decisions. To fill this gap, this dissertation investigates the impact of previous decisions on subsequent ones. We propose that the decision structure of an initial decision can differentially affect a subsequent one. Specifically, we compare the impact of trade-off- (i.e., the decision when no option is superior to the other option among all attributes) versus dominance-related initial decisions (i.e., the decision when one option is superior to and at least not inferior to the other option among all attributes). Based on the different research streams, we suggest competing predictions regarding the role of previous decision structure on subsequent choices. One stream of research from resource- or effort-based explanations (e.g., effort-as-information and resource availability) suggests that the tendency to keep a previous choice will be stronger in the trade-off versus the dominance condition. On the other hand, the other research stream from non-resource- or non-effort-based explanations (e.g., justification and regret/negative emotional research) suggests the opposite prediction (i.e., the tendency to keep a previous choice will be stronger in the dominance versus the trade-off condition). In six studies, we found empirical evidence for the impact of previous decisions on subsequent ones. We mainly found that people who made an initial trade-off decision (vs. those who made a dominance decision) were more likely to stick to their previously chosen alternative. In addition, the empirical studies supported the notion that the underlying mechanism of this pattern was due to the "resource availability" mechanism rather than the "effort-as-information: previous effort spending as a source of information for judgment" mechanism.