How We Make Consumer Choices

You're walking down a high street, looking for a new pair of shoes, and you're torn between three models displayed in the shop window. How will you choose? What factors will shape your preference? When we talk about a purchase experience, we often say we chose based on value for money or expected utility - that is, the satisfaction or benefit we anticipate, considering costs and risks. In reality, many factors come into play when making a consumer choice, and we're often unaware of them.

The factors that influence our choices

Recognising a need - such as wanting a new pair of shoes - is considered a crucial moment in the decision-making process, although it's not necessarily the first step in chronological order.

The factors that influence our consumption choices can be internal or external. We can group the internal, subjective factors into three categories, and the external ones into a fourth.

• Cognitive factors relate to how we perceive things - our ideas, beliefs, personality traits and ways of being. For instance, someone who feels insecure in social relationships might develop an excessive attachment to money, using it as a source of safety and protection.
• Behavioural factors include how we act and navigate different situations, our lifestyle, and the financial means available to support it.
• Emotional factors refer both to the emotions triggered by a purchase (which might delight or disappoint us) and the moods that precede it and may influence it. For example, we might treat ourselves to an ice cream when feeling down, or make a major purchase in a moment of euphoria.
• Environmental factors encompass everything around us that can affect a consumption decision. These range from the quality and quantity of information available, to how it's presented (which can lead to framing effects), to the opportunities we encounter (a street full of shops offers different stimuli than one without), and the pressures exerted by the social and cultural environment we belong to (think of trends, or the importance of labels like "organic" or "eco-friendly" in certain contexts).

When we make a purchase, we're subject to a variety of influences - both internal and external - that complicate the act of deciding. Several experiments have shown that even when people believe they are choosing freely to maximise expected utility, they may actually be driven by an unconscious desire to avoid the pain of future regret.

The mental shortcuts we use when making a purchase

When we buy something, we don't always think in a fully rational or thorough way - a concept known as bounded rationality. This is partly due to the limits of our own minds, and partly because the external context doesn't always provide all the elements we'd need to make a truly rational choice. But there's more. In making decisions, our brain often relies on mental shortcuts - known as heuristics - shaped by our evolutionary and adaptive journey. This might happen, for example, when we don't have enough time to carefully assess all the available information.

Heuristics were first studied in depth by Daniel Kahneman and Amos Tversky, pioneers in the field of decision-making and cognitive biases. Here are a few examples:

• Satisficing: we select the first option that meets a certain threshold of acceptability based on a pre-set criterion (such as colour), excluding all other available alternatives from consideration.
• Elimination by aspects: we set a minimum level for the feature we consider most important (e.g. memory capacity for a computer) and discard all options below that level, overlooking alternatives that might offer other desirable features (such as price or screen resolution) that could compensate for the "deficiency".
• Lexicographic method: a simplified strategy where we compare options using a primary criterion (e.g. price), and only move to a secondary one (e.g. aesthetics) if the first doesn't help us choose.
• Pro-con list: we mentally count the number of positive and negative aspects of each option and choose the one with the greatest difference between pros and cons. However, giving equal weight to all factors isn't perfectly rational - some features, like quality, may be objectively more important, while others, like aesthetics, may be subjectively more appealing.

External manipulations

Marketing experts were among the first to study how decision-making works, driven by the desire to influence our choices and boost sales. There are countless marketing strategies designed to nudge us towards a purchase - one of the most well-known is the decoy effect.

How does it work? Imagine you walk into a cinema and fancy some liquorice. At the snack bar, you're offered two options: a "small" pack for €3 and a "large" pack for €9. Faced with such a price gap, most people would choose the small pack. Now imagine returning to the same cinema the following week, still craving liquorice. This time, there's a third option: a "medium" pack for €8. What will you choose now?

Research shows that many people would now opt for the "large" pack at €9. What's changed? The new "medium" option, which is relatively poor value, acts as a decoy. It doesn't attract preferences itself - nor is it meant to - but it makes the "large" pack seem more attractive and reasonably priced by comparison. This marketing technique subtly influences us to spend €9 - a price we previously considered too high when the only alternative was the €3 small pack.

First theorised by Joel Huber in 1982, the decoy effect teaches us that even the most resolute among us can be subject to external manipulation without realising it. It also shows that choosing between alternatives is never entirely independent of how those alternatives are presented.

At the end of this journey, let's return to the original scene: standing in front of a shop window, trying to choose a pair of shoes. Now we know that, as we decide, a lively dance is taking place in our minds, involving many unseen players. Getting to know some of them can help us make better consumer choices.

So, which pair will you choose? Probably the only one left in your size - but that's another story...