Things That Go Bump in the Mind: How Behavioral Economics Could Invigorate Marketing
Published 8/1/2006
Author: Eric J. Johnson
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Executive Summary
In this comment, the author addresses several challenges that must be overcome for a behavioral economics approach to prosper in marketing. First, parameters, such as those for loss aversion, impatience, and related constructs, are useful summaries of more complex processes. Because marketers must understand, explain, and change behavior, a deeper level of understanding of the relationship among these parameters and processes is useful. The second challenge is individual differences. Marketing depends on how people differ. This is the basis of market segmentation, product positioning, and other activities, yet economics often minimizes these differences, which makes it less useful even as a behavioral perspective. The third challenge is that academic marketing is divided into at least two fields that do not communicate with each other, at least as measured by citations in the major journals.
Nonetheless, the direction taken by Ho, Lim, and Camerer is applauded, and the author argues that both behavioral and quantitative marketers should share the common ground represented by behavioral economics.
Biography
Eric Johnson is Norman Eig Professor of Business in the School of Business at Columbia University. His research interests are in consumer and managerial decision making. Before moving to Columbia, he was David Hauck Professor of Marketing and Professor of Psychology and Operations and Information Management in the Wharton School at the University of Pennsylvania. He is the current president of the Society for Judgment and Decision-Making. As part of his work in behavioral decision research, Professor Johnson has been involved in understanding the nature and origin of preferences. This work includes research on preference reversals, the effect of anchoring on preferences, and work that characterizes preferences as constructive. A major stream has examined the role of default options in choice.
J Marketing Research, Volume 43, Number 3, August 2006
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