Question

In: Operations Management

Case 3 (20 marks) Stacy is planning for her summer holidays to Germany next summer, but...

Case 3

Stacy is planning for her summer holidays to Germany next summer, but she has difficulties to decide the destination because her boyfriend prefers to go to Australia instead of Germany. Some of her friends went to Germany during last Christmas and they had an enjoyable shopping experience there. Stacy went to Australia before for her business trip and unfortunately, she has some rather unhappy experiences there so that she prefers going to German for holidays instead of Australia. They are now collecting additional information for making their decision choices on the final destination.

a) Explain the SEVEN types of consumer biases in Stacy’s judgement process when planning for her summer holidays.

b) Discuss the cognitive decision-making models based on high effort that can be used by Stacy when making decisions for her summer holidays. provide ONE reason.

Solutions

Expert Solution

a)

1. Bias blind spot
This is the tendency to see oneself as less biased than other people and acting less stupid. In the above case her boyfriend is going to Australia and so she is thinking to go there.

2. Choice-supportive bias
This is the tendency to remember one’s choices like in the above case her choice to go to Australia is affected by the shopping experience of friends and the unhappy experience to Australia.
.
3. Confirmation bias
This is the tendency to search for, interpret, focus on, information that confirms one’s preconceptions like Stancy wanted to got to Germany as her friends had a good experience so she relied on that information.

4. Distinction bias
This is the tendency to view two options in comparison to each other i.e. comparing Australia and Germany.

5. Information bias
This is the tendency to seek information to back up their decision so she collects more information to decide the final destination.

6. Negativity bias
The tendency to remember negative incidents and experience like she remembered her unhappy experience at Australia.

7. Status quo bias
This is the tendency to like things to stay relatively the same in the group of people. In her case it was her friends who wen to Germany which is why she wants to go.

(b) Cognitive decision-making models is a process by which consumers make decisions on the basis of thought. They try to combine items of information about attributes to reach to a final decision.
These decisions include
compensatory models-where negative features can be compensated by positive ones
Boyfriend going to Australia has compensated the effect of unhappy experience at Australia.
vs
non compensatory models- where negative attributes lead to rejection of decision. Like unhappy experience to Australia leads to rejection of the destination.


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