This weeks readings are more challenging because they involve probabilities and gambles. This is the world of behavioral economics, and it can be difficult to follow. However, the basic theories are not all that complicated. In these four chapters, Kahneman talks about Prospect Theory and our tendency to be risk seeking when facing a possible loss and risk averse when facing a possible gain. He also talks about our Loss Aversion and the ways Framing Effects can initiate our loss aversion when making decisions. Finally, he describes the ways in which describing outcomes in vivid ways can cause us to ignore the probabilities of those outcomes and consequently overweight the probability of rare events.
These ideas have been very influential in several disciplines, but probably most especially in Marketing, specifically in Digital Marketing. Think about Marketing in the broadest sense and find a marketing example that makes use of any of these cognitive biases (or any of the other biases we have read about) to influence consumers buying choices. The example can be an ad, or a particular use of social media, social influencers, or retail positioning or promotions or any number of things. Describe how Prospect Theory, Framing effects, loss aversion, the overweight of rare events or other heuristics are being invoked. How might you use these biases to influence public policy makers or business decision makers or buyers? For the adventurous among you, the inquiry might be expanded to consider AI and ChatGPT and the way use of these psychological tools might be baked into the technology we may come to rely on.
Because this can be challenging, I have provided something to help. I have posted a link to an article that discusses the above issues very directly. The link is called “”
You may use Kahneman or the above article as your source. A complete post includes responses to the questions of two colleagues
(MAKE SURE TO HAVE A TITLE/QUESTION AND WORK CITED!!!!)
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