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Abstract
This dissertation is comprised of two distinct works of research investigating how consumers apply heuristics when making decisions about products under incomplete information. The first chapter studies a specific heuristic under asymmetric information disclosure, and the second chapter studies a set of heuristics when consumers infer magnitude from prevalence information, which causes opposite inferences and choices, depending on the heuristic used. The two chapters investigate overgeneralized heuristics from different perspectives. The first chapter studies a mere presence effect, an overgeneralized heuristic of merely relying on the presence while ignoring the magnitude of a numeric attribute when it is non-evaluable in the context of product quality judgment. The first chapter also shows that such a heuristic can be eliminated when factual information is provided and emphasized to consumers as a reference point, making the information evaluable. Next, the second chapter shows a pair of different heuristics, with opposite implications for decision-making. Consumers associate prevalence with magnitude in different directions when prevalence is framed generally and by words (Rare = Severe) or specifically and by numbers (Common = Severe). The second chapter also proposes a framework that is effective in influencing consumers to use different heuristics, outward vs. inward thinking, which reverses how prevalence is associated with magnitude. Based on existing findings in chapter one, one criterion that defines an overgeneralized heuristics could be that once factual information is provided to consumers to evaluate the situation, consumers would no longer apply the heuristic, thus making the “correct” decision. Based on chapter two, contextual cues may shift people from one kind of heuristic to another (i.e., from a learned association to a category-based inference).