Question 1

There is a snowstorm tonight,and the Toronto Maple Leafs game is going ahead as scheduled. Your roommate,Alexi,obtained a free ticket from a work associate and is staying home. You,however,paid $75 (non-refundable)and feel like you have to go. This is an example of:

Accepted Answer

This is an example of the sunk-cost fallacy because you are going to the game despite the unfavorable weather conditions because you have already paid for the ticket and feel like you have to attend. However, the money you spent on the ticket is a sunk cost, meaning it has already been spent and cannot be recovered. It would be more rational to consider the current costs (such as the inconvenience and potential danger of traveling in the snowstorm) and benefits (such as the enjoyment of the game) and make a decision based on those factors alone, rather than being influenced by the sunk cost.

Question 2

Alison has been given a free ticket to a dance performance. On the night of the performance,there is the threat of a transportation strike. Would Alison be likely to attempt to go or not,and would her decision be different if she had paid a high price for her ticket? Explain.

Accepted Answer

The answer of Alison has been given a free ticket...

Question 3

Louisa has wanted a Louis Vuitton handbag ever since she saw one on the television show Sex and the City. She could never imagine adjusting her household budget in order to save up the money to buy such an item as it was an outrageous amount to spend on a purse. This year she received a large bonus at work and went directly to the Louis Vuitton website and ordered the handbag. What bias does this behaviour reflect?

Accepted Answer

This behavior reflects the house money effect, as Louisa's bonus at work gave her a feeling of "extra" money that she could spend on a luxury item without feeling guilty about sacrificing her regular budget.

Question 4

Allison is in the market to purchase a new computer. She uses a decision strategy whereby she evaluates all of the available options to come up with the best possible decision. This is an example of:

Accepted Answer

Allison is using a maximizing decision strategy, which means she is evaluating all options and trying to find the best possible choice. The other options (heuristic, prepurchase solution, satisficing) all involve making a decision that may not necessarily be the best one, based on different criteria or limitations.

Question 5

Kent is a loyal Coca-Cola drinker. As a college student,he averages about four Cokes a day. He even prefers Coke to water. However,today when he passes a vending machine in his dorm,he buys a new drink called Big Red. Which of the following most appropriately explains his behaviour,given the facts about Kent's previous behaviour?

Accepted Answer

Kent's choice to buy a new drink despite his loyalty and preference for Coca-Cola can be best explained by sensory-specific satiety. This concept suggests that repetitive consumption of the same food or drink leads to a temporary decline in its appeal, prompting individuals to seek variety for a different sensory experience.

Question 6

Dave enjoys Carlsberg lager and would say it is his favourite brand. However,sometimes he will buy another brand of beer even when his favourite is there. Why?

Accepted Answer

The answer of Dave enjoys Carlsberg lager and would say...

Question 7

Casinos make their interiors very plush and expensive looking,knowing that gamblers who would be reluctant to make a $10 bet in average surroundings would gladly make $100 wagers in luxurious surroundings. Which of the following best explains the gambler's behaviour?

Accepted Answer

The gamblers' behavior is best explained by mental accounting, which suggests that people's decision-making can be influenced by the context or environment, even if it leads to irrational choices. Luxurious surroundings can make larger bets seem more reasonable or appealing, even though the actual odds and risks haven't changed.

Question 8

Define problem recognition. Show how problems can arise. Give a brief example to illustrate the problem recognition process.

Accepted Answer

The answer of Define problem recognition. Show how problems can...

Question 9

Which of the following is a key part to the elements of prospect theory?

Accepted Answer

The answer of Which of the following is a key...

Question 10

Explain prospect theory.

Accepted Answer

The answer of Explain prospect theory....

Question 11

Since consumers rarely have the resources,especially time,to weigh every possible factor into a decision,they often happily settle for a solution that is just good enough. This is known as:

Accepted Answer

Bounded rationality refers to the limited ability of consumers to make completely rational decisions due to constraints such as time, information, and cognitive ability. The concept of settling for a solution that is just good enough is a manifestation of bounded rationality.

Question 12

Explain Herbert Simon's view of the decision making process.

Accepted Answer

The answer of Explain Herbert Simon's view of the decision...

Question 13

When a consumer becomes satiated with a favourite product,he or she may trade enjoyment just to try a different product. This is termed variety seeking.

Accepted Answer

This statement is true. Variety seeking is the tendency of consumers to switch to different products to break the monotony of consuming the same product repeatedly. This is a common behavior observed in many consumers.

Question 14

Hirosi ordered the expensive "heart attack special" at his local pub. It came with a full pound of hamburger and a full bucket of fries. Halfway through the meal,Hirosi was not feeling well. Yet according to the sunk-cost fallacy,Hirosi will continue until he has finished the "special."

Accepted Answer

The sunk-cost fallacy states that people are more likely to continue investing in a situation or decision because of the resources already invested, even if it no longer makes logical sense. In the case of Hirosi, he may feel inclined to finish the meal because he has already paid for it and wants to get his money's worth, despite feeling ill.

Question 15

Ella's absolute favourite cereal is Love Crunch by Nature's Path. However,one day she decides to switch to a less-liked cereal,just to "mix things up." What concept does this behaviour demonstrate and why did she likely do this?

Accepted Answer

The answer of Ella's absolute favourite cereal is Love Crunch...

Question 16

Rachael would like to shop around comprehensively for her car insurance this year. However she is overwhelmed at work,so instead of searching more extensively she simply does a quick check on three well-known options and chooses one. According to Herbert Simon,this is known as a ________ solution.

Accepted Answer

The concept of satisficing refers to making a decision that is satisfactory or "good enough" rather than investing the time and effort to find the optimal solution. In this scenario, Rachael did not search extensively but instead quickly checked three well-known options and chose one that met her needs, which is an example of satisficing. Therefore, the best choice is C, satisficing.

Question 17

One form of framing called ________ describes people who are so obsessed with preparing for the future that they can't enjoy the present.

Accepted Answer

Hyperopia, also known as "future framing," is the tendency to focus excessively on the future at the expense of the present. This can lead people to constantly worry about what might happen in the future and fail to fully enjoy their current experiences. Mental accounting refers to the tendency to categorize and treat money differently based on arbitrary mental accounts. Myopia, or "present framing," refers to the opposite problem of hyperopia, where people are so focused on the present that they ignore important long-term consequences. Loss aversion refers to the tendency to value losses more than gains of equal magnitude.

Question 18

________ shoppers,who have more to lose when they make a bad purchase,actually search less before they buy than do ________ shoppers.

Accepted Answer

Lower-income shoppers often have more constraints on their resources, making each purchase more significant. Affluent shoppers might search less because they can more easily absorb the cost of a bad purchase.

Question 19

Explain how personalized product recommendations can provide customer assistance. What are the negatives for the consumer?

Accepted Answer

The answer of Explain how personalized product recommendations can provide...

Question 20

How are online search engines and social media informing both consumers and marketers,as searches are made for product information?

Accepted Answer

The answer of How are online search engines and social...

Quiz 9: Individual Decision Making

There is a snowstorm tonight,and the Toronto Maple Leafs game is going ahead as scheduled. Your roommate,Alexi,obtained a free ticket from a work associate and is staying home. You,however,paid $75 (non-refundable) and feel like you have to go. This is an example of: