The 4 Minds of the Customer: A Framework for Understanding and Applying the Science of Decision Making

Ryan  Hamilton; Uma R. Karmarkar

Working Paper | 2017

The 4 Minds of the Customer: A Framework for Understanding and Applying the Science of Decision Making

by Ryan Hamilton and Uma R. Karmarkar

Abstract

Scientists have spent decades creating powerful and detailed descriptions of how people make decisions. Unfortunately, many of these theories make contradictory predictions and are difficult to understand and implement. We introduce the 4 Minds framework as a practical tool for understanding and applying the science of decision-making in the marketplace. We synthesize previous research on decision-making into four broad approaches customers can take to making choices. These four decision-making “Minds”—Ideal Point Mind, Market Comparison Mind, Local Comparison Mind, and Image Mind—lead to very different outcomes and behaviors. We have developed the 4 Minds framework to serve as a diagnostic tool to help identify which clusters of decision-making research are most likely to apply in any given situation. By learning how these decision-making Minds differ, and the factors and environments that precipitate each one, marketers can better anticipate and serve their intended customers.

Keywords: consumer behavior; consumer choice; Market research; segmentation; Decision Choices and Conditions; decision making process; decision; marketing; marketing research; Consumer Behavior; Decision Choices and Conditions; Marketing; Decision Making; Segmentation; Research;

Language: English

Format: Print

Citation:

Hamilton, Ryan, and Uma R. Karmarkar. "The 4 Minds of the Customer: A Framework for Understanding and Applying the Science of Decision Making." Marketing Science Institute Report, No. 17-109, May 2017.

The way a choice set is constructed can have a significant influence on how individuals perceive and evaluate their options and make decisions between them. Here, I examine whether a “display set” of visible but unavailable options can exert these same types of influences on whether or not to choose a single (target) item. Across a series of experiments, purchase intent is increased when the display set and target are drawn from the same category but decreased when the display and target items are mismatched. This effect is shown to depend on perceived similarity, such that increasing display-target similarity increases purchase intent towards the target. Furthermore, contrary to the predictions made by previous neural and behavioral research on choice sets, the relative value and/or number of display-only items have no significant impact on these decisions. These findings reveal a novel choice behavior in commonly encountered settings such as online marketplaces.

Antisocial behavior is often assumed to reflect aberrant risk processing. However, many of the most significant forms of antisocial behavior, including crime, reflect the outcomes of decisions made under conditions of ambiguity rather than risk. While risk and ambiguity are formally distinct and experimentally dissociable, little is known about ambiguity sensitivity in individuals who engage in chronic antisocial behavior. We used a financial decision-making task in a high-risk community-based sample to test for associations between sensitivity to ambiguity, antisocial behavior, and arrest history. Sensitivity to ambiguity was lower in individuals who met diagnostic criteria for Antisocial Personality Disorder. Lower ambiguity sensitivity was also associated with higher externalizing (but not psychopathy) scores and with higher levels of aggression (but not rule breaking). Finally, blunted sensitivity to ambiguity also predicted a greater frequency of arrests. Together, these data suggest that alterations in cost-benefit decision-making under conditions of ambiguity may promote antisocial behavior.

Article | Journal of Behavioral Decision Making | January 2017

Should You Sleep on It? The Effects of Overnight Sleep on Subjective Preference-based Choice

Uma R. Karmarkar, Baba Shiv and Rebecca M.C. Spencer

Conventional wisdom and studies of unconscious processing suggest that sleeping on a choice may improve decision-making. Though sleep has been shown to benefit several cognitive tasks, including problem solving, its impact on everyday choices remains unclear. Here we explore the effects of "sleeping on it" on preference-based decisions among multiple options. In two studies, individuals viewed several attributes describing a set of items and were asked to select their preferred item after a 12-hour interval that either contained sleep or was spent fully awake. After an overnight period including sleep, individuals showed increases in positive perceptions of the choice set. This finding contrasts with previous research showing that sleep selectively enhances recall for negative information. In addition, this increase in positive recall did not translate into a greater desire to purchase their preferred item or into an overall benefit for choice satisfaction. Time-of-day controls were used to confirm that the observed effects could not be explained by circadian influences. Thus we show that people may feel more positive about the choice options, but not more confident about the choice after "sleeping on" a subjective decision. We discuss how the valence of recalled choice set information may be important in understanding the effects of sleep on multi-attribute decision making, and suggest several avenues for future research.

Keywords: decision making; choice; sleep; choice sets; confidence; consumer behavior; consumer psychology; consumer preferences; Decision Choices and Conditions; Consumer Behavior;

Citation:

Karmarkar, Uma R., Baba Shiv, and Rebecca M.C. Spencer. "Should You Sleep on It? The Effects of Overnight Sleep on Subjective Preference-based Choice." Journal of Behavioral Decision Making 30, no. 1 (January 2017): 70–79. View Details

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The 4 Minds of the Customer: A Framework for Understanding and Applying the Science of Decision Making

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