Keywords
uncertainty
decision making
prospect theory
aging
How to Cite
Abstract
Consumers' decision-making power is irrational in everyday life due to risk uncertainty, limited information, perceived cost, and other variables; hence, it is critical to research consumers' decision-making to select the best out of numerous alternatives. This entails selecting a course of action to address a specific problem from among two or more possible alternatives- decision-making processes incorporate elements of uncertainty and risk. Therefore, this article aims to explore the principles, values, and approaches to decision-making risk and uncertainties by analysing recent literature. Decision-making analyses are conducted from a variety of analytical viewpoints. However, Tversky and Kahneman's prospect theory, published in 1979, remains one of the most widely utilised approaches for analysing decision-making under suspicion and ambiguity. Also, personal choices are
a problem-solving approach with an emphasis on alternative selection. Ultimately, working on consumer decision-making and aging is critical for a complete knowledge of how customer loyalty and high-quality decision-making may be retained over a person's life.
References
Alexander, A. (2020). Decision making in uncertain times (A. Smet, L. Weiss, Eds.). Mckinsey. Access on the internet: https://www.mckinsey.com/business-functions/people-and-organizational-performance/our-insights/decision-making-in-uncertain-times.
Anam, R. K., Munir, M., Hadi, P. H. (2021). Online shopping behavior in the perspective of martin heidegger’s technological philosophy. “Modern Management Review”, 26(3). DOI: 10.7862/rz.2021.mmr.14.
Barberis, N. (2012). Thirty years of prospect theory in economics: A Review and Assessment. “SSRN Electronic Journal”, 4(2). DOI: 10.2139/ssrn.2177288.
Bullock, J. B., Logan, S. (1969). A Model for Decision Making Under Uncertainty. “Agricultural Economics Research”, 21(4).
Carpenter, S. M., Yoon, C. (2011). Aging and consumer decision making. “Annals of the New York Academy of Sciences”, 1235(1). DOI: 10.1111/j.1749-6632.2011.06390.x.
Castel, A. D. (2005). Memory for grocery prices in younger and older adults: The role of schematic support. “Psychology and Aging”, 20(4). DOI: 10.1037/0882-7974.20.4.718.
Dougherty, M. R. P., Gettys, C. F., Ogden, E. E. (1999). MINERVA-DM: A memory processes model for judgments of likelihood. “Psychological Review”, 106(1). DOI: 10.1037/0033-295x.106.1.180.
Elliott, S. R. (1998). Experiments in decision-making under risk and uncertainty: thinking outside the box. “Managerial and Decision Economics”, 19(4–5). DOI: 10.1002/(sici)1099-1468(199806/08)19:4.
Frazier, I., Lighthall, N. R., Horta, M., Perez, E., Ebner, N. C. (2019). CISDA: Changes in Integration for Social Decisions in Aging. “WIREs Cognitive Science”, 10(3). DOI: 10.1002/wcs.1490.
Gavrilov, L. A., Gavrilova, N. S. (2012). Biodemography of Exceptional Longevity: Early-Life and Mid-Life Predictors of Human Longevity. “Biodemography and Social Biology”, 58(1). DOI: 10.1080/19485565.2012.666121.
Gottlieb, D. (2012). Prospect theory, life insurance, and annuities. “The Wharton School Research”, 44.
Gottlieb, D., Azevedo, E. M. (2012). Risk-neutral firms can extract unbounded profits from consumers with prospect theory preferences. “Journal of Economic Theory”, 147(3). DOI: 10.1016/j.jet.2012.01.002.
Hanoch, Y., Rolison, J. J., Freund, A. M. (2016). Does Medical Risk Perception and Risk-Taking Change with Age? “Risk Analysis”, 38(5). DOI:10.1111/risa.12692.
Henninger, D. E., Madden, D. J., Huettel, S. A. (2010). Processing speed and memory mediate age-related differences in decision making. “Psychology and Aging”, 25(2). DOI:10.1037/a0019096.
Herrmann, J. W. (2017). Rational Decision Making. “Wiley StatsRef: Statistics Reference Online”. DOI: 10.1002/9781118445112.stat07928.
Hertwig, R., & Erev, I. (2009). The description – experience gap in risky choice. “Trends in Cognitive Sciences, 13(12). DOI: 10.1016/j.tics.2009.09.004.
Jedrusik, A. (2021). Project risk management based on a set of best practices. “Modern Management Review”, 26(3). DOI: 10.7862/rz.2021.mmr.19.
Johnson, J. G., Busemeyer, J. R. (2010). Decision making under risk and uncertainty. “Wiley Interdisciplinary Reviews: Cognitive Science”, 1(5). DOI: 10.1002/wcs.76.
Kahneman, D., Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. “Econometrica”, 47(2). DOI: 10.2307/1914185.
Karl, M. (2016). Risk and Uncertainty in Travel Decision-Making: Tourist and Destination Perspective. “Journal of Travel Research”, 57(1). DOI: 10.1177/0047287516678337.
Kazuhisa, T. (2021). Escaping from bad decisions: a behavioral decision-theoretic perspective. Academic Press.
Kirmani, A., Campbell, Margaret C. (2004). Goal Seeker and Persuasion Sentry: How Consumer Targets Respond to Interpersonal Marketing Persuasion. “Journal of Consumer Research”, 31(3). DOI: 10.1086/425092.
Korniotis, G. M., Kumar, A. (2011). Do Older Investors Make Better Investment Decisions? “Review of Economics and Statistics”, 93(1). DOI: 10.1162/rest_a_00053.
Korobkin, R. B., Ulen, T. S. (2000). Law and Behavioral Science: Removing the Rationality Assumption from Law and Economics. “SSRN Electronic Journal”, 88(4). DOI: 10.2139/ssrn.229937.
Kurhade, M., Wankhade, R. (2016). An Overview on Decision Making Under Risk and Uncertainty. “International Journal of Science and Research (IJSR)”, 5(4). DOI: 10.21275/v5i4.nov162585.
Kusev, P., Purser, H., Heilman, R., Cooke, A. J., Schaik, V., Baranova, V., Martin, R., Ayton, P. (2017). Understanding risky behavior: The influence of cognitive, emotional and hormonal factors on decision-making under risk. “Frontiers in Psychology”, 8(2). DOI: 10.3389/fpsyg.2017.00102.
Leder, J., Lauer, T., Schütz, A., Gürerk, Ö. (2021). Background Uncertainty Can Increase Risk Aversion in Decision Making. “PsyArXiv”, 2. DOI: 10.31234/osf.io/6s4vf.
Leuker, C., Pachur, T., Hertwig, R., Pleskac, T. J. (2018). Exploiting risk – reward structures in decision making under uncertainty. “Cognition”, 175(2). DOI: 10.1016/j.cognition.2018.02.019.
Lighthall, N. R. (2019). Neural mechanisms of decision‐making in aging. “WIREs Cognitive Science”, 11(1). DOI: 10.1002/wcs.1519.
Łodziński, A. (2020). Support of decision-making under risk by a risk-averse decision-maker. “Decision Making in Manufacturing and Services”, 13(1). DOI: 10.7494/dmms.2019.13.1-2.3473.
Long, X., Nasiry, J. (2015). Prospect Theory Explains Newsvendor Behavior: The Role of Reference Points. “Management Science”, 61(12). DOI: 10.1287/mnsc.2014.2050.
Luce, R. D., Raiffa, H. (1957). Games and decision. New York: John Wiley & Sons, Inc.
Mathis, K. (2015) ‘European perspectives on behavioural law and economics’ [In:] European Perspectives on Behavioural Law and Economics. Switzerland: Springer International Publishing. DOI: 10.1007/978-3-319-11635-8.
Polman, E., Wu, K. (2019). Decision making for others involving risk: A review and meta-analysis. “Journal of Economic Psychology”. DOI: 10.1016/j.joep.2019.06.007.
Quinn, P., Cockburn, A. (2018). Loss Aversion and Preferences in Interaction. “Human-Computer Interaction, Taylor & Francis”, 35(2). DOI: 10.1080/07370024.2018.1433040.
Ranyard, R. (2014). Decision Making Strategies. “Wiley StatsRef: Statistics Reference Online”. DOI: 10.1002/9781118445112.stat06715.
Rolison, J. J., Hanoch, Y., Wood, S. (2012). Risky decision making in younger and older adults: The role of learning. “Psychology and Aging”, 27(1). DOI: 10.1037/a0024689.
Salthouse, T. A. (1996). The processing-speed theory of adult age differences in cognition. Psychological Review, 103(3). DOI: 10.1037/0033-295x.103.3.403.
Sproten, A. N., Diener, C., Fiebach, C. J., Schwieren, C. (2018). Decision making and age: Factors influencing decision making under uncertainty. “Journal of Behavioral and Experimental Economics”, 76. DOI: 10.1016/j.socec.2018.07.002.
Tversky, A., Kahneman, D. (1979). Prospect Theory: An Analysis of Decision under Risk. “Econometrica”, 47(2). DOI: 10.2307/1914185.
Tversky, A., Kahneman, D. (1992). Advances in prospect theory: Cumulative representation of uncertainty. “Journal of Risk and Uncertainty”, 5(4). DOI: 10.1007/bf00122574.
Ulen, T.S., Korobkin, R.B. (2000). Law and Behavioral Science: Removing the Rationality Assumption from Law and Economics. “SSRN Electronic Journal”, 88(4). DOI: 10.2139/ssrn.229937.
Vaupel, J. W. (2010). Biodemography of human ageing. “Nature”, 464(7288). DOI: 10.1038/nature08984.
Xia, Y., Xiong, Z., Dong, X., Lu, H. (2017). Risk Assessment and Decision-Making under Uncertainty in Tunnel and Underground Engineering. “Entropy”, 19(10). DOI: 10.3390/e19100549.
Yoe, C. E. (2019). Principles of risk analysis: decision making under uncertainty. Crc Press, Taylor and Francis.
Zaleskiewicz, T., Traczyk, J. (2020). Emotions and Financial Decision Making. “Psychological Perspectives on Financial Decision Making”. New York: Springer. DOI: 10.1007/978-3-030-45500-2_6.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Copyright (c) 2022 Modern Management Review