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8 - How Do We Choose?

Published online by Cambridge University Press:  18 October 2022

Peter E. Earl
Affiliation:
University of Queensland
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Summary

This chapter examines alternative view of how people choose once they have construed what their options offer. It includes critical assessments of one-size-fits-all models from psychology (the Fishbein-Ajzen model of behavioral intentions, which takes account of social pressure, and Prospect Theory, which Thaler popularized in economics) that entail weighing up strong and weak points to arrive at an overall value for each option (“compensatory” choices). However, it suggests these are better seen within a pluralistic, context-based view of choice in which, in some situations, choices are made in intolerant ways based on a checklist or list hierarchically ranked requirements (“non-compensatory” choice) or are made via much simpler decision rules. These different ways of choosing are considered in relation to Chapter 7’s analysis of value systems and that framework is used to analyze how dilemmas are resolved. Differences between choice methods in the role they assign to prices are considered, along with the psychology of pricing and how the use of decision rules reduces challenge of predicting buyer behavior. Case studies are used to show how contexts affect how choices are made.

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Chapter
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Principles of Behavioral Economics
Bringing Together Old, New and Evolutionary Approaches
, pp. 220 - 263
Publisher: Cambridge University Press
Print publication year: 2022

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  • How Do We Choose?
  • Peter E. Earl, University of Queensland
  • Book: Principles of Behavioral Economics
  • Online publication: 18 October 2022
  • Chapter DOI: https://doi.org/10.1017/9781009091053.009
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  • How Do We Choose?
  • Peter E. Earl, University of Queensland
  • Book: Principles of Behavioral Economics
  • Online publication: 18 October 2022
  • Chapter DOI: https://doi.org/10.1017/9781009091053.009
Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • How Do We Choose?
  • Peter E. Earl, University of Queensland
  • Book: Principles of Behavioral Economics
  • Online publication: 18 October 2022
  • Chapter DOI: https://doi.org/10.1017/9781009091053.009
Available formats
×