Consumer
Behaviour
Klelia Prodromou
Msc Digital Marketing | Semester 2
Only important!
, KEY REMARKS
WEEK 1: CONSUMER RATIONALITY
Consumers often make decisions that seem irrational — their preferences are
influenced by how things are presented, compared, or emotionally experienced, rather
than by pure logic.
Prospect Theory Framing Effect
(Levin & Gaeth (1988)) (Levin & Gaeth (1988))
People hate losing more than they like People react differently to the same
winning — this is called loss aversion. information depending on whether it’s
It explains why negative framing (25% fat) presented as a gain or a loss.
makes the beef seem worse than positive Example: A label saying "75% lean" makes
framing (75% lean), even though the ground beef seem healthier than "25% fat",
numbers are identical. even though they mean the same thing.
Emotionally, losses feel bigger than This affects people’s taste ratings, purchase
equivalent gains. That’s why people decisions, and even their memory of how
respond so strongly to negative words or good something was.
frames. The framing has an impact even after the
person has tasted the product, meaning
experience doesn’t always override initial
Preference Reversal & Evaluability
(Hsee et al. (1999)) impressions.
What people prefer changes depending on
how options are shown — separately or
Zero Pricing Effect
side by side. (Shampanier et al. (2007))
Example: A small but clear TV might be When something becomes free, people
preferred alone, but when compared to a overvalue it — way more than they should.
larger one with lower clarity, the Example: Reducing a price from 1¢ to 0¢
preference can flip. causes a bigger jump in demand than
This is because some features (like size) reducing from 2¢ to 1¢ — even though the
are easy to evaluate, while others (like price difference is the same.
screen resolution) are hard to judge unless This happens because “free” feels
compared. emotionally rewarding — people think
Evaluability Hypothesis: if something is they’re getting something with no
hard to evaluate on its own, we rely more downside, and that makes it feel more
on it in joint evaluations (when we can valuable.
compare options). This shows that pricing isn’t just rational —
it’s emotional.
Hedonic vs. Utilitarian Products & Guilt
Justification In Summary
(Khan & Dhar (2010)) Framing Effect: How positive vs. negative wording
In a bundle (e.g., perfume + soap), framing influences perception.
the discount as being on the hedonic item Prospect Theory: People are more affected by losses
increases the chance of purchase. than gains.
Preference Reversal: Preferences flip depending on
Why? Because people think, “Well, it’s
whether you compare things or not.
okay — it’s on sale.” This reduces the guilt
Zero-Price Effect: People love “free” — irrationally so.
of buying something fun or unnecessary. Guilt Justification: Discounts on fun items make
people feel less bad about indulging.
Real World Examples
Marketers use framing to make products seem more appealing (e.g., “90% fat-free”).
Retailers use zero pricing (e.g., “Buy one, get one free”) to drive demand.
Discounting hedonic items is a smart tactic to increase conversion — it makes indulgence feel rational.
, KEY BIASES
WEEK 1: CONSUMER RATIONALITY
Framing Effect Attribute Framing Bias
(Levin & Gaeth (1988)) (Levin & Gaeth (1988))
People’s decisions are influenced by how Evaluations change depending on whether
information is presented — as a gain or a a product attribute is presented positively
loss — even if the outcomes are identical. or negatively.
Example: “75% lean” sounds better than A type of framing effect specific to
“25% fat” descriptive features.
Loss Aversions Preference Reversal
(Levin & Gaeth (1988)) (Hsee et al. (1999))
Losses feel more painful than gains feel People choose one option in joint
good. evaluation but a different one in separate
A core concept in prospect theory. evaluation — even when the options are
the same.
Evaluability Bias Our preferences change depending on
(Hsee et al. (1999)) how options are presented.
People rely more on attributes that are
easier to evaluate, even if they’re less Zero Pricing Effect
important. (Shampanier et al. (2007))
Hard-to-evaluate attributes get ignored in People overvalue a product when its price
separate evaluation but dominate in is zero — “free” adds psychological value.
comparisons. We react irrationally when something
costs nothing.
Justification Effect (in Hedonic
Consumption) Mental Accounting
(Khan & Dhar (2010)) (Khan & Dhar (2010))
People are more likely to buy hedonic People treat money differently depending
items when they can justify the purchase on how it is framed or labeled (e.g.,
(e.g., through a discount). “savings on X”).
Discounts reduce guilt for indulgent • Framing a discount on a specific item
purchases. changes how it's mentally processed.
LEVIN & GAETH (1988)
How Consumers Are Affected by the Framing of Attribute Information Before and After Consuming the Product
Main Experiment
(Levin & Gaeth (1988))
Participants: A group of people asked to rate ground beef.
Imagine you’re at the grocery
store looking at ground beef. One
The Beef: All participants tasted the same beef, but the labels
package says “75% lean”, and were different:
another says “25% fat.” Which Group A: Told the beef was “75% lean”
one sounds better to you? Most Group B: Told it was “25% fat”
people say “75% lean” — even What they did:
though it’s exactly the same Participants rated the beef on several things — like taste,
thing as “25% fat.” That’s the quality, and greasiness.
magic of attribute framing — the
Some tasted the beef before seeing the label.
way info is presented changes
Others saw the label before tasting the beef.
how we feel about it.
, LEVIN & GAETH
WEEK 1: CONSUMER RATIONALITY (1988)
How Consumers Are Affected by the Framing of Attribute Information Before and After Consuming the Product
Main Findings Control: Same beef,
(Levin & Gaeth (1988)) fixed descriptions
Framing worked!
People who saw “75% lean” gave better ratings than
D.V.: Taste and
those who saw “25% fat.” I.V.: Framing beef
quality rating of
Tasting didn’t erase the bias (75% lean vs 25% fat)
beef
Even after eating the beef, those who saw the “lean”
label still liked it more.
BUT, tasting did weaken the effect a bit — like reality Moderator: Order of label
kicking in. exposure (before vs. after tasting)
Order mattered
If people tasted before seeing the label, the framing
Key Concept: Attribute Framing – Presenting the
had less power.
same information in a positive (vs. negative) light
If they saw the label first, it shaped their can nudge perception and decision-making.
expectations more strongly.
Experience Moderates Framing: When people
R O
O S
S P
PEECCTT (Kahneman & Tversky, 1979)
actually experience the product, the framing effect
PPR ORRYY weakens, but doesn't disappear. Labels first =
TTHHEEO
Losses hurt more than gains feel good → stronger bias. vs. Experience first = more balanced
loss aversion. evaluation.
People judge outcomes relative to a reference point, not total value.
Gains feel less exciting over time; losses feel consistently painful.
HSEE, LOEWENSTEIN, BLOUNT & BAZERMAN (1999)
Preference Reversals Between Joint and Separate Evaluations of Options: A Review and Theoretical Analysis
Ever buy something that looked amazing when compared to others, but later felt “meh” when you
used it alone? That’s evaluation mode in action. This paper explains why we often choose
differently depending on how options are presented:
And guess what? Our preferences often flip depending on the mode. That’s the preference reversal!
Joint Evaluation (JE) = Seeing options side by side Separate Evaluation (SE) = Seeing only one option at a time
Experiment 1
Some attributes are hard to
Participants evaluated dictionaries:
judge alone (evaluability-
Dict A: 10,000 words, perfect condition
limited), like processor
Dict B: 20,000 words, torn cover
speed.
In separate evaluation: People preferred Dict A (nice and clean).
Others are easy to judge
In joint evaluation: People preferred Dict B (more words! more
alone (evaluability-easy),
value!).
like color or damage.
The tangible attribute (word count) dominated in joint evaluation,
In J.E. comparisons help
even though people say they care about condition.
clarify hard-to-judge traits.
Experiment 2
In S.E., people rely on gut
People were paid to do tasks:
feelings or obvious features.
Task A: $2 for 5 minutes
We don’t know how to value
Task B: $3 for 10 minutes
something unless we can
In separate evaluation: People liked Task A (less time, fast money).
compare it — context shapes
In joint evaluation: Task B felt more “worth it” — more money for
judgment.
just 5 extra minutes.
Behaviour
Klelia Prodromou
Msc Digital Marketing | Semester 2
Only important!
, KEY REMARKS
WEEK 1: CONSUMER RATIONALITY
Consumers often make decisions that seem irrational — their preferences are
influenced by how things are presented, compared, or emotionally experienced, rather
than by pure logic.
Prospect Theory Framing Effect
(Levin & Gaeth (1988)) (Levin & Gaeth (1988))
People hate losing more than they like People react differently to the same
winning — this is called loss aversion. information depending on whether it’s
It explains why negative framing (25% fat) presented as a gain or a loss.
makes the beef seem worse than positive Example: A label saying "75% lean" makes
framing (75% lean), even though the ground beef seem healthier than "25% fat",
numbers are identical. even though they mean the same thing.
Emotionally, losses feel bigger than This affects people’s taste ratings, purchase
equivalent gains. That’s why people decisions, and even their memory of how
respond so strongly to negative words or good something was.
frames. The framing has an impact even after the
person has tasted the product, meaning
experience doesn’t always override initial
Preference Reversal & Evaluability
(Hsee et al. (1999)) impressions.
What people prefer changes depending on
how options are shown — separately or
Zero Pricing Effect
side by side. (Shampanier et al. (2007))
Example: A small but clear TV might be When something becomes free, people
preferred alone, but when compared to a overvalue it — way more than they should.
larger one with lower clarity, the Example: Reducing a price from 1¢ to 0¢
preference can flip. causes a bigger jump in demand than
This is because some features (like size) reducing from 2¢ to 1¢ — even though the
are easy to evaluate, while others (like price difference is the same.
screen resolution) are hard to judge unless This happens because “free” feels
compared. emotionally rewarding — people think
Evaluability Hypothesis: if something is they’re getting something with no
hard to evaluate on its own, we rely more downside, and that makes it feel more
on it in joint evaluations (when we can valuable.
compare options). This shows that pricing isn’t just rational —
it’s emotional.
Hedonic vs. Utilitarian Products & Guilt
Justification In Summary
(Khan & Dhar (2010)) Framing Effect: How positive vs. negative wording
In a bundle (e.g., perfume + soap), framing influences perception.
the discount as being on the hedonic item Prospect Theory: People are more affected by losses
increases the chance of purchase. than gains.
Preference Reversal: Preferences flip depending on
Why? Because people think, “Well, it’s
whether you compare things or not.
okay — it’s on sale.” This reduces the guilt
Zero-Price Effect: People love “free” — irrationally so.
of buying something fun or unnecessary. Guilt Justification: Discounts on fun items make
people feel less bad about indulging.
Real World Examples
Marketers use framing to make products seem more appealing (e.g., “90% fat-free”).
Retailers use zero pricing (e.g., “Buy one, get one free”) to drive demand.
Discounting hedonic items is a smart tactic to increase conversion — it makes indulgence feel rational.
, KEY BIASES
WEEK 1: CONSUMER RATIONALITY
Framing Effect Attribute Framing Bias
(Levin & Gaeth (1988)) (Levin & Gaeth (1988))
People’s decisions are influenced by how Evaluations change depending on whether
information is presented — as a gain or a a product attribute is presented positively
loss — even if the outcomes are identical. or negatively.
Example: “75% lean” sounds better than A type of framing effect specific to
“25% fat” descriptive features.
Loss Aversions Preference Reversal
(Levin & Gaeth (1988)) (Hsee et al. (1999))
Losses feel more painful than gains feel People choose one option in joint
good. evaluation but a different one in separate
A core concept in prospect theory. evaluation — even when the options are
the same.
Evaluability Bias Our preferences change depending on
(Hsee et al. (1999)) how options are presented.
People rely more on attributes that are
easier to evaluate, even if they’re less Zero Pricing Effect
important. (Shampanier et al. (2007))
Hard-to-evaluate attributes get ignored in People overvalue a product when its price
separate evaluation but dominate in is zero — “free” adds psychological value.
comparisons. We react irrationally when something
costs nothing.
Justification Effect (in Hedonic
Consumption) Mental Accounting
(Khan & Dhar (2010)) (Khan & Dhar (2010))
People are more likely to buy hedonic People treat money differently depending
items when they can justify the purchase on how it is framed or labeled (e.g.,
(e.g., through a discount). “savings on X”).
Discounts reduce guilt for indulgent • Framing a discount on a specific item
purchases. changes how it's mentally processed.
LEVIN & GAETH (1988)
How Consumers Are Affected by the Framing of Attribute Information Before and After Consuming the Product
Main Experiment
(Levin & Gaeth (1988))
Participants: A group of people asked to rate ground beef.
Imagine you’re at the grocery
store looking at ground beef. One
The Beef: All participants tasted the same beef, but the labels
package says “75% lean”, and were different:
another says “25% fat.” Which Group A: Told the beef was “75% lean”
one sounds better to you? Most Group B: Told it was “25% fat”
people say “75% lean” — even What they did:
though it’s exactly the same Participants rated the beef on several things — like taste,
thing as “25% fat.” That’s the quality, and greasiness.
magic of attribute framing — the
Some tasted the beef before seeing the label.
way info is presented changes
Others saw the label before tasting the beef.
how we feel about it.
, LEVIN & GAETH
WEEK 1: CONSUMER RATIONALITY (1988)
How Consumers Are Affected by the Framing of Attribute Information Before and After Consuming the Product
Main Findings Control: Same beef,
(Levin & Gaeth (1988)) fixed descriptions
Framing worked!
People who saw “75% lean” gave better ratings than
D.V.: Taste and
those who saw “25% fat.” I.V.: Framing beef
quality rating of
Tasting didn’t erase the bias (75% lean vs 25% fat)
beef
Even after eating the beef, those who saw the “lean”
label still liked it more.
BUT, tasting did weaken the effect a bit — like reality Moderator: Order of label
kicking in. exposure (before vs. after tasting)
Order mattered
If people tasted before seeing the label, the framing
Key Concept: Attribute Framing – Presenting the
had less power.
same information in a positive (vs. negative) light
If they saw the label first, it shaped their can nudge perception and decision-making.
expectations more strongly.
Experience Moderates Framing: When people
R O
O S
S P
PEECCTT (Kahneman & Tversky, 1979)
actually experience the product, the framing effect
PPR ORRYY weakens, but doesn't disappear. Labels first =
TTHHEEO
Losses hurt more than gains feel good → stronger bias. vs. Experience first = more balanced
loss aversion. evaluation.
People judge outcomes relative to a reference point, not total value.
Gains feel less exciting over time; losses feel consistently painful.
HSEE, LOEWENSTEIN, BLOUNT & BAZERMAN (1999)
Preference Reversals Between Joint and Separate Evaluations of Options: A Review and Theoretical Analysis
Ever buy something that looked amazing when compared to others, but later felt “meh” when you
used it alone? That’s evaluation mode in action. This paper explains why we often choose
differently depending on how options are presented:
And guess what? Our preferences often flip depending on the mode. That’s the preference reversal!
Joint Evaluation (JE) = Seeing options side by side Separate Evaluation (SE) = Seeing only one option at a time
Experiment 1
Some attributes are hard to
Participants evaluated dictionaries:
judge alone (evaluability-
Dict A: 10,000 words, perfect condition
limited), like processor
Dict B: 20,000 words, torn cover
speed.
In separate evaluation: People preferred Dict A (nice and clean).
Others are easy to judge
In joint evaluation: People preferred Dict B (more words! more
alone (evaluability-easy),
value!).
like color or damage.
The tangible attribute (word count) dominated in joint evaluation,
In J.E. comparisons help
even though people say they care about condition.
clarify hard-to-judge traits.
Experiment 2
In S.E., people rely on gut
People were paid to do tasks:
feelings or obvious features.
Task A: $2 for 5 minutes
We don’t know how to value
Task B: $3 for 10 minutes
something unless we can
In separate evaluation: People liked Task A (less time, fast money).
compare it — context shapes
In joint evaluation: Task B felt more “worth it” — more money for
judgment.
just 5 extra minutes.
