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PhD, NET(UGC), MBA (Finance), M.com (Finance), B.COM (professional), B.Ed (Commerce + English), DIM, PGDIM, PGDIFM, NIIT Accounting package...

Thursday, August 9, 2012

consumer perception

Selective attention


Being overly impressed by the facts that are salient, spectacular, coincidental, available
or mediated (selective reporting)
As a consequence neglecting to look for contradictory facts, or to get fuller information to
understand more complex / gradual evolutions / situations (see range estimate aversion...).
Selective exposure
(aka event selection).
Looking for and accepting only information sources that confirm and comfort our beliefs.
Selective memory

Focusing (anchoring) on some past events and neglecting others that are too ancient, less
pleasurable, or whatever.
Also, remembering only successes, not failures can lead to repeat risky / irresponsible
behaviors.
Selective perception
Choosing or interpreting information only in a way that comforts our beliefs or justify
our actions.

Affect heuristic
Getting blinded by an emotion (greed, fear, hope, empathy, hate...) that overwhelms a
full and lucid analysis of the situation
Anchoring

Mental focus on a reference point, for example a buying price.
It prevents to see better the situation, for example, in finance, to look for, understand, and
update the factors of value
Belief
See certainty. A belief, right or wrong, might hinder further observation and analysis...
...except when they seem likely to confirm the belief.
Binary logic


Seeing things only in black or white, 100% true or 100% false.
One of the Aristotle's biases / creeds.
This neglects their complexity, gradual aspects (degrees, cursor), dynamic evolution and
not clear-cut situations and prospects (opposites: fuzzy logic, uncertainty).
(pseudo) Certainty


People are afraid of uncertainty, ambiguity and of the unknown.
This allergy might give them an intense painful feeling.
Thus, to feel comfortable, they might adopt a belief they feel as a certainty
even if it is an illusion.
Once a belief is ingrained, people will resist later to adjust to realities and its evolutions.
Cognitive dissonance
Denying mentally the reality of any information / event that goes against one's beliefs,
knowledge, commitments, practices...
Cognitive overload
Too many information (or too many legal rules) can drown the mind and make it unable
to sort what is crucial and what is trite (noise) and also to detect important "weak signals".
Confirmatory /
confirmation bias
A phenomenon linked to cognitive dissonance and selective perception.
It is to accept only information that confirm one's beliefs and/or to interpret whatever
information in a sense that fits those preconceptions.
Denial of realities
Similar to cognitive dissonance.
Focalism
Similar to anchoring
Framing

A language or picture formulation that gives a narrow presentation or definition of a
situation or issue,
* that omits unconsciously or deliberately some aspects
* therefore that limits and deviates its understanding and the related reasoning / decisions.
Generalization
Taking an isolated event or a specific element as a general phenomenon.
Habit
An habit can make inattentive to the evolutions of the situation we have to deal with.
Heuristic


A simplified and quasi automatic mental way to detect and interpret information and
situations and to take decisions. It can be based, to take the most common ones, on:
* previous beliefs and models (representativeness heuristic),
* more or less relevant "rules or thumb",
* immediate perceptions (availability heuristic, primacy bias) or emotions (affect heuristic)...
Mental myopia




This phrase can qualify many bounded cognitive processes, such as seeing and reasoning
* on only the most apparent aspects of things
* or according to one's ingrained beliefs / certainties, using flawed / apparent / binary logic
* or by limiting the conclusions and decision making to the most reductive dichotomies,
skipping other possible solutions
See framing, narrow thinking, tunnel vision, binary logic, availability heuristic, fallacy,
reductionism...
Mimicry
Following the opinion and behavior of other people instead of digging deeper
to understand issues.
Narrow thinking
Using a flawed or binary logic, or taking into account only some elements.
Numeracy bias
Overreliance on numbers (statistics, accounts, probabilities, mathematical models)
without wondering about their assumptions and their realities. Also tendancy to prefer
a precise prevision number instead of a range of scenarios
Optimism / pessimism
Focusing on the favorable / unfavorable interpretations
Primacy bias
Sticking to the first impression or idea. Similar to (availability) heuristic
Range estimate
aversion
Deciding on the basis of only one projected number (seen as the most probable) instead
of a range of scenarios allowing for alternative plans.
Rational ignorance
Avoiding to search search more information than the minimum to save cost and effort.
See also cognitive overload
Reductionism
Mental phenomenon akin to generalization from a single aspect when building a theory
or making a description.
(mis-) Representation
/ representativeness
heuristic
Once we picture, define, categorize, imagine, interpret or express something in a way,
in other words make a mental representation of it, it becomes harder to see things
differently even if that representation is wrong.
Stereotype
Mental phenomenon akin to generalization and reductionism which allot things to arbitrary
clear-cut (often caricatural) categories.
Tunnel vision
Tendency to stick to the first explanation (primacy bias) we think, which makes it difficult
to find other ones. It can be linked to various heuristics

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