Forecasting consumer choice with psychophysiological data: neuromarketing studies on consumer behavior

Abstract

Many economists and econometricians assumed that peoples are rational. Based on this assumption, choice theory was developed. But sometimes choices are made by subconsciousness or by emotion. All the choices were not be able to be explained by rationality. However, techonological advances in neuroscience have deepened our understanding of nervous system. The scope of neuroscience has broadened to cognitive and behavioral science. In recent days, marketing scientists have employed various methods of neuroscience to understand the underlying dynamics of consumer choice.In this study, I address practical implication for delivering effective messages. And after that, discuss about endeavor to improve forecasting accuracy. Experiments in the following studies are separately designed and conducted. Yet the two studies follow the same ends to understand consumer choice by using psychophysiological responses. In study one, I measured and analyzed psychophysiological responses and self-reported emotional responses to risky pictures (tobacco and alcohol). Measurements are used to determine what kinds of messages are effective to which group of subjects. Based on the Limited Capacity Model of Motivated Mediated Message Processing (LC4MP), I elicited four hypotheses. A mixed ANOVA and Repeated Measures ANOVA were employed to test these hypotheses. As a result, I found that risk-takers in Korea are less positive and more negative to risky pictures. This is the opposite of results in the U.S.In study two, I analyzed the decision-making process of movie-goer through an experiment that also measures physiological responses. During the experiment, subject disclosed his or her choice set. I fitted and forecasted the final choice by employing two-stage model using physiological responses. And I compared the result of two-stage model to that of an ordinary multinomial logit model. By explicitly taking into account the consideration stage and the selection stage of choice respecti...