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Neuroeconomics: Your brain on Black Friday

By Marla Vacek Broadfoot
Correspondent
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Dr. Scott Huettel, director of the Center for Interdisciplinary Decision Sciences at Duke University, explains why people react differently to the biggest shopping day of the year. Questions and answers have been edited.

Q. Do we have any idea, scientifically speaking, what is going through the minds of shoppers on Black Friday?

A. Decision scientists and neuroscientists now understand some of the key processes of decision making, and how those processes are engaged for consumer decisions. For example, we know that our brains represent value not in absolute terms but in relative terms, specifically whether something is better or worse than a reference point. The sales on “Black Friday” shopping are often presented as extreme discounts from a reference point – which makes the deals seem much better than if consumers only saw the final price.

Q. Are some people wired to be shoppers while others are attuned to stay home?

A. Probably not. But people do differ dramatically in how they approach decisions, and that could influence whether they are overwhelmed or energized by Black Friday shopping. Some people adopt an analytic approach to decision making in which they try to gain as much information as possible and then weigh costs and benefits. That approach doesn’t work very well when decisions become complex and not all the information is available – such as in the time- and product-limited sales on Black Friday. Other people adopt what we call a “heuristic” approach, in which they simplify a complex decision to a few features and then search for an option that’s good enough. That approach works better when we face complex consumer choices.

Q. How do marketers use neuroeconomics research, or the study of how the brain makes decisions, to their advantage?

A. They often have good intuitions about what motivates consumers. They know that people want to avoid regret in their decisions. A common practice is to provide consumers with options that that they won’t buy, but will reduce their regret about buying something else. Adding a very expensive piece of jewelry to a display case may not generate any sales of that piece, but it could make the pieces around it seem more affordable.

Q. Does the first thing a person purchases have an effect on what they end up buying later in their shopping spree?

A. Our brains use the same processes for both large and small purchases. When we make a small purchase like a cup of coffee, we deal with monetary amounts over a small range; that is, an extra dollar seems to matter a lot. But, when we make a large purchase like a new car, we have to deal with a much larger range of money, and we no longer worry about small differences in price. If we make a big decision at the outset of a shopping trip, we run the risk of losing the ability to accurately evaluate smaller purchases – and those small purchases can add up!

marla.broadfoot@gmail.com

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