About This Chapter
Behavioral Economics & Heuristics - Chapter Summary
How much do you know about behavioral economics and heuristics? This entertaining chapter can help you find out! Short lessons are available to strengthen your understanding of heuristics, behavioral finance, consumer biases and more. Multiple-choice quizzes and a chapter exam can assess your comprehension. After reviewing the lessons, feel free to send any questions you have to our experts. When finished with this chapter, you will be ready to do the following:
- Share the definition of behavioral economics, and explain how it differs from neoclassical economics
- Provide the history of behavioral finance, and discuss how it is applied in marketing
- Define quantitative behavioral finance, and describe the methodology used to understand behavioral biases
- List types of heuristics, and discuss related theories and the impact of heuristics on marketing
- Describe ways to identify and respond to consumer biases
- Discuss the concept of bounded rationality as it relates to decision-making processes
- Explain the basics of cognitive reference points in consumer decision making
- Identify and describe the effects of framing on consumer behavior
- Detail the causes of anchoring and adjustments in consumer behavior
1. Quantitative Behavioral Finance: Definition & Methods
In this lesson, we will introduce the theory of quantitative behavioral finance, discuss the origin of the theory and define the term. Additionally, we will look at the use of statistical methodology to understand behavioral biases in marketing applications.
2. Heuristics: Types, Theories & Impact on Marketing
Heuristics subconsciously help us make decisions about brands and influence our buying behaviors. In this lesson, you'll learn more about types of heuristics and how they impact the way a business markets a product or service.
3. Identifying & Responding to Consumer Biases
In this lesson, several common consumer biases will be introduced and analyzed, along with discussing ways in which marketers can respond to these biases.
4. Bounded Rationality in the Decision Making Processes
In this lesson, you'll learn the definition of bounded rationality and how the theory applies to the consumer decision-making process. You'll also learn how corporations use the theory to adjust their marketing tactics.
5. Cognitive Reference Points in Consumer Decision Making
In this lesson, you'll learn about reference points in marketing and how the reference points are used to impact a consumer's decision-making process for both big and small purchases.
6. The Effects of Framing on Consumer Behavior
In this lesson, we will introduce the concept of framing as it pertains to consumer behavior, as well as discussing its effects on consumer behavior, decision-making, and how it can be analyzed to help determine marketing strategy.
7. Anchoring & Adjustments: Causes & Examples
One of the key fields of study within marketing is why purchases are made. Understanding what is purchased, when, why, and how much is critical to business success. In this lesson, you can learn how this information is used to spur sales.
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