Are we really rational?

As consumers most of us are under the impression that we can make rational decisions as we wish. This may look plausible. However, findings indicate that this is not often the case. Consumers may not process multiple decision criteria at once, and oftentimes rely on one or two only.

Well, this may not look that bad. What if one does a good job making choices based on just a single criterion? Theoretically, that is conceivable, but empirical findings suggest consumers may also have difficulty with assessing one criterion. Hence, they could make irrational judgments without knowing that they have done so.

The impact of the number of settings

Some consumers may know that and look for clues that are ostensibly clear, straightforward, and relatively diagnostic. One such clue is the role of the number of adjustable processing settings that products come with.

Imagine there are two range-hoods: one with three speed settings and the other with six. In a rational setting and among truly rational people, one could say that above and beyond this difference in terms of the number of speed settings, it must be the airflow or even the wattage of hoods that makes a difference.

One could think that the hypothetical range of settings is continuous, then broken down into specified levels for reasons other than the output performance of the products.

In that sense, the maximum output performance of the rangehoods should be finite and fixed (e.g., 3000 m³/h) and independent of the number of speed settings: a heater with three speed settings, one with six, and another that comes with a slider and, in a sense an unlimited number of speed settings, should all have the same maximum output performance when their airflow is the same.

Findings from our studies across multiple products reveal that consumers mistakenly consider the number of adjustable heat/speed settings a clue to maximum output performance.

This may signal that the number of settings could function as a diagnostic clue.

Realistically speaking, the actual output performance metric of certain products is clear: watts for a heater, dpi for a printer, airflow for a range hood, just to name some. That said, we found that even in the presence of the latter, consumers relied on the former to infer the maximum output performance of products.

Even worse, when the number of settings and actual diagnostic information were reversed (i.e., a less powerful product came with a greater number of settings), a significant proportion of consumers relied on the number of settings to infer maximum output performance instead of the actual diagnostic clue.

Where does this flawed intuition stop?

We concluded in the research that only when levels and certain diagnostic values (e.g., watts) are mapped and the products are juxtaposed, would consumers come to the realisation that the number of settings has nothing to do with output performance.

This signals that consumers may rely on relatively broad worldviews that impact the conclusions they draw and thereby decisions they make.

The role of lay theories

The research suggests that humans have long tried to come up with explanations for the phenomena in the world around. Some of these lay explanations could be sensible.

For example, many believe that doing extreme physical activities right after having a meal is not a good idea. However, many of these lay explanations are flawed and could lead to poor choices/decisions.

For instance, doctors say that taking antibiotics has nothing to do with the treatment of the common cold or flu. However, some people still think they should take the medication.

Similarly, the impact of the number of speed/heat settings is one such flawed lay belief. Consumers seem to have the intuition that more is always better, even if the actual performance or diagnostic clue suggests otherwise.

The latter is as we proposed and observed in our research. Similarly, research has concluded that a printer whose model number is even slightly greater than another one (X110 vs. X100) is considered superior even if the actual printout of the latter is superior.

Where to go from here?

Empirical evidence indicates that consumers have difficulty with understanding the role and weight of numbers. Are there any remedies for this?

First, consumers could be educated through communication efforts by firms.

However, this may not happen in reality.

Right or wrong, companies may be more concerned with the sales efforts and hence like this flawed intuition to be at work on consumers’ side. Second, and as a corollary to the first point, policymakers could devise some rules, thereby forcing manufacturers to communicate the fact that the number of levels could have something to do with variety of outputs but nothing with the maximum output of products.

We should also note that this is key, as this is concerned with the impact of one factor only. Couple this with other intuitions such as those about product dimensions, price etc., and wait for the disaster to come.

Dr Shahin Sharifi is a lecturer in the Department of Marketing at Macquarie Business School.