Neuromarketing and Consumer Decisions

Decision Making

The act of decision making is defined as , the action or process of making important decisions.

“Decision-making involves the selection of a course of action from among two or more possible alternatives in order to arrive at a solution for a given problem”.

Decision making is the process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.

Using a step-by-step decision-making process can help you make more deliberate, thoughtful decisions by organizing relevant information and defining alternatives. This approach increases the chances that you will choose the most satisfying alternative possible

Step 1: Identify the decision

You realize that you need to make a decision. Try to clearly define the nature of the decision you must make. This first step is very important.

Step 2: Gather relevant information

Collect some pertinent information before you make your decision: what information is needed, the best sources of information, and how to get it. This step involves both internal and external “work.” Some information is internal: you’ll seek it through a process of self-assessment. Other information is external: you’ll find it online, in books, from other people, and from other sources.

Step 3: Identify the alternatives

As you collect information, you will probably identify several possible paths of action, or alternatives. You can also use your imagination and additional information to construct new alternatives. In this step, you will list all possible and desirable alternatives.

Step 4: Weigh the evidence

Draw on your information and emotions to imagine what it would be like if you carried out each of the alternatives to the end. Evaluate whether the need identified in Step 1 would be met or resolved through the use of each alternative. As you go through this difficult internal process, you’ll begin to favor certain alternatives: those that seem to have a higher potential for reaching your goal. Finally, place the alternatives in a priority order, based upon your own value system.

Step 5: Choose among alternatives

Once you have weighed all the evidence, you are ready to select the alternative that seems to be best one for you. You may even choose a combination of alternatives. Your choice in Step 5 may very likely be the same or similar to the alternative you placed at the top of your list at the end of Step 4.

Step 6: Take action

You’re now ready to take some positive action by beginning to implement the alternative you chose in Step 5.

Step 7: Review your decision & its consequences

In this final step, consider the results of your decision and evaluate whether or not it has resolved the need you identified in Step 1. If the decision has not met the identified need, you may want to repeat certain steps of the process to make a new decision. For example, you might want to gather more detailed or somewhat different information or explore additional alternatives.

Neuroscience behind Decision Making

Neuroscientists have shown how decision-making processes are influenced by neurons. Whether in society or nature, decisions are often the result of complex interactions between many factors.

Neurons much like people are constantly communicating with each other. A neuron which itself is not involved in the decision may simply have received this information from a neighboring neuron and "joined in" the conversation. Actually, the neighboring cell sends out the crucial signal transmitted to the higher decision areas in the brain.

The brain makes simple choices by assigning values to the stimuli under consideration and then comparing these values to make a decision. Activity in the orbitofrontal cortex (OFC) is consistent with the encoding of stimulus value at the time of choice

Which part of the brain controls decision making?

The largest lobe of the brain, located in the front of the head, the frontal lobe is involved in personality characteristics, decision-making and movement.

• How does the limbic system affect decision making?

The limbic system is a collective term for brain structures that are involved in processing emotions. It is also responsible for all human behavior, all decision-making, and has no capacity for language. On top of that the limbic system processes information 200 times faster than the cognitive brain!

• What happens in the brain during decision making?

The frontal lobe, which is located at the frontal part of our brains right inside our forehead, appears to be responsible for planning, thinking and making choices. Conversely, damage to the brain's frontal lobe is known to impair one's ability to plan, think and make choices or decisions

• What percentage of decision making is emotional?

90 percent

We now know that up to 90 percent of the decisions we make are based on emotion. Take a minute and read that again; almost every decision we make is based on emotion, not rational thought and measured consideration

• How do emotions influence decision making?

Emotions can affect not just the nature of the decision, but the speed at which you make it. Anger can lead to impatience and rash decision-making. If you're excited, you might make quick decisions without considering the implications, as you surf the wave of confidence and optimism about the future.

• What part of the brain controls decision making and rational thought?

Prefrontal cortex

Adults think with the prefrontal cortex, the brain's rational part. This is the part of the brain that responds to situations with good judgment and an awareness of long-term consequences. Teens process information with the amygdala.

• What is the main function of the amygdala?

The amygdala may be best known as the part of the brain that drives the so-called “fight or flight” response. While it is often associated with the body's fear and stress responses, it also plays a pivotal role in memory.

• What emotions does the amygdala control?

Amygdala. The amygdala helps coordinate responses to things in your environment, especially those that trigger an emotional response. This structure plays an important role in fear and anger.

Dopamine neurons represent in decision-making process

?The "reward network." Two important parts of this network are dopamine neurons deep in the midbrain and a region called the orbito-frontal cortex in the front of the brain. "We know that dopamine neurons encode reward prediction error,"?

"They become very active after an animal receives an unexpected reward and become less active as expectations are learned."?

When making economic choices, typically, items are first evaluated, then compared, a decision is made, and action is taken. This process was replicated in a game for monkeys. The monkeys learned to associate six pictures with different amounts of reward. They were shown one of the images and could choose it and get the reward, or they could pass and get the reward associated with a second image. With this setup, when the first image gave a mid-level reward, the monkeys sometimes chose to take the reward and sometimes risked passing to get a bigger reward. This allowed the researchers to separate the evaluation and decision processes.

The team found that dopamine neurons represented both parts of the decision-making process. Some indicated the amount of reward represented by the picture, and others indicated the final yes/no choice. Many neurons displayed both types of information, transitioning from value to choice over time.

?"Dopamine neurons especially reflect the entire integrated decision-making process"?

Stress and Decisions

Stress has not typically been seen as relevant to consumer decision making. However, it is an important factor in some decisions such as food choice under time or budget constraints, which may be associated with stress (e.g., grocery shopping after a stressful day at work when cortisol levels may be high). Furthermore, the cortisol variable can also act as a “manipulation check” on the experimental stressor, and could provide additional information about other processes such as habituation to the stressor. Biological data could provide evidence that the participant is habituating to the stressor, and thus provide one way to interpret an observed change in the choices the participant makes in the face of a repeated stressor

2015, Graybiel, Friedman, and their colleagues first identified the brain circuit involved in decision making that involves cost-benefit conflict. The circuit begins in the medial prefrontal cortex, which is responsible for mood control, and extends into clusters of neurons called striosomes, which are located in the striatum, a region associated with habit formation, motivation, and reward reinforcement.

In that study, the researchers trained rodents to run a maze in which they had to choose between one option that included highly concentrated chocolate milk, which they like, along with bright light, which they don't, and an option with dimmer light but weaker chocolate milk. By inhibiting the connection between cortical neurons and striosomes, using a technique known as optogenetics, they found that they could transform the rodents' preference for lower-risk, lower-payoff choices to a preference for bigger payoffs despite their bigger costs.

In the new study, the researchers performed a similar experiment without optogenetic manipulations. Instead, they exposed the rodents to a short period of stress every day for two weeks.

Before experiencing stress, normal rats and mice would choose to run toward the maze arm with dimmer light and weaker chocolate milk about half the time. The researchers gradually increased the concentration of chocolate milk found in the dimmer side, and as they did so, the animals began choosing that side more frequently.

However, when chronically stressed rats and mice were put in the same situation, they continued to choose the bright light/better chocolate milk side even as the chocolate milk concentration greatly increased on the dimmer side. This was the same behavior the researchers saw in rodents that had the prefrontal cortex-striosome circuit disrupted optogenetically.

"The result is that the animal ignores the high cost and chooses the high reward."

Neuromarketing and consumer decision making

Decision-making is a fundamental part of human behavior. We all make decisions every day that influence our health, well-being, finances, and future prospects among other ?things, especially when in many cases these decisions do not appear rational or to benefit us in the long run and have tried to answer the question of why people act the way they do.

Decision theory integrates mathematics, statistics, economics, philosophy, management, and psychology to better understand how decisions such as choices between incommensurable commodities, choice under uncertainty, intertemporal choice, and social choice are made. It has been assumed in decision theory that agents respond rationally in forming their choices and preferences. Essentially, consumers should follow a utility maximization function:

v p,( m) = max u x)( (p1,p2, …, pn) * (x1, x2,…, xn) = m such that px = m.

The function gives the maximum utility achievable at a given level of prices (p) and income (m), and a utility maximizing bundle x* meets the budget constraint of the consumer with equality.

Neuroscience adds value to decision-making research by enhancing the ability to make inferences beyond our usual variables and paradigms.

Although the brain is biologically based, it is also shaped by environmental, cultural, and contextual factors.

Armed with knowledge of how these variables interact, decision research scholars and practitioners may be in a better position to develop more effective, more personalized and more tailored interventions and decision aids that can improve decision making.

Neuroscience provides a framework in which to study and ultimately account for individual differences. Specifically, individual differences in choice need not be arbitrary or idiosyncratic. Instead, they could reflect predictable interactions between genetic markers that code for brain function (e.g., genes that shape our dopamine system), hormone and neurotransmitter levels that fluctuate with disease and state variation (e.g., sleep deprivation), and environmental. Many of these variables are simply outside the scope of standard models but may be highly relevant for consumer behavior.

REFERENCES

1.??????Decision-making process | UMass Dartmouth

2.??????Ralf M Haefner, Sebastian Gerwinn, Jakob H Macke, Matthias Bethge. Inferring decoding strategies from choice probabilities in the presence of correlated variability. Nature Neuroscience, 2013

3.??????Mengxi Yun, Takashi Kawai, Masafumi Nejime, Hiroshi Yamada, Masayuki Matsumoto. Signal dynamics of midbrain dopamine neurons during economic decision-making in monkeys. Science Advances, 2020; 6 (27): eaba4962 DOI: 10.1126/sciadv.aba4962

4.??????Alexander Friedman et al. Chronic Stress Alters Striosome-Circuit Dynamics, Leading to Aberrant Decision-Making. Cell, November 2017 DOI: 10.1016/j.cell.2017.10.017

5.??????Montague and Berns, 2002; Rangel et al., 2008; Kable and Glimcher, 2009; Rush[1]worth et al., 2009; Rangel and Hare,2010

6.??????Mark Lett (2012) 23:473–485 DOI 10.1007/s11002-012-9188-z

7.??????The Neuroscience of Consumer Decision-Making, Pirouz, Dante

8.??????The Journal of Neuroscience, January 5, 2011 ? 31(1):331–338 ?