HUMAN DECISION MAKING PROCESS

Describe and evaluate contrastinf models on the processes involved in human decision making.

Describe and evaluate contrast in models on the processes involved in human decision making.

Conceptually, decision making models can be distinguished into compensatory and non-compensatory approaches. In the first case, a low utility (evaluation, satisfaction, etc., depending on the concept being used) derived from a particular attribute of a choice alternative can at least partially be compensated by high utilities derived from one or more of the remaining attributes.

In the case of a non-compensatory decision-making process, it is assumed that such trade-offs are not made. Instead, attributes are typically assumed to be evaluated on an attribute-by-attribute basis. If a choice alternative is not acceptable on that basis, the alternative will not be chosen regardless of the utility derived from the other attributes. The most commonly used model that represents a compensa- tory decision-making process is the multinomial logit model. It typically assumes that the part-worth utilities defined at the attribute level can be combined according to a linear function. Differences in overall utilities then determine the choice prob- abilities. Nonlinear utility specifications are relatively rare, but are expected to be a good alternative in the case of duration decisions as one would expect that the marginal utility of time decreases with increasing time. The conjunctive model as an example of a non-compensatory decision-making process assumes that indivi- duals define thresholds for each attribute and once these have been met, a positive decision (in this context: go home) is made. Theoretically, one would assume that the choice of a compensatory or a non-compensatory decision process depends on the nature of the choice problem, an individual's pre- involvement and experience with similar problems, the state of arousal of the individual, and situational factors such as time budget and time pressure. Ceteris paribus, one would hypothesize that decisions become non-compensatory in nature with lower Recent developments in the literature of decision making have expanded the notion of how consumers make decisions beyond the rational choice framework used by economists or the cognitive information integration framework used by psychologists (Bell et al., 1988).

With the expansion of traditional cost-benefit analysis of decision making, researchers find decision-making heuristics insightful to explain consumer decision making (Lee and Geistfeld, 1998; Mantel and Kardes, 1999; Payne et al., 1988). A number of decision heuristics have been identified, including linear compensatory, additive difference, simple additive, conjunctive, disjunctive, elimination by aspects, lexicographic, and phased rules (see Lee and Geistfeld (1998) for a review of decision-making heuristics). These decision-making heuristics are grouped into two distinctive types of strategies: attribute-by-attribute versus alternative-by-alternative comparisons (Lee, 1994; Mantel and Kardes, 1999). Consumers using attribute-based strategies make attribute-by-attribute comparisons across alternatives, whereas those using alternative-by-alternative comparisons examine one alternative at a time. Another important characteristic of decision-making heuristics involves the compensatory nature of decision making, whether or not a consumer is willing to make a trade-off (Lee and Geistfeld, 1998).

Individual consumers' choice of decision heuristics has been found to ...