• Korean Management Science Review
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• v.16 no.1
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• pp.101-113
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• 1999

The individual behavior on considering prior information when one assesses the probability of uncertain event by representativeness heuristic has been investigated. While prior researches proposed two contrasting behaviors on the employment, we tested the mixed hypothesis that individual ignores the prior information to some extents and begins to consider it above certain threshold when the evidence of representativeness is not salient. The threshold effect of prior probability is positively experimented and the results strongly support the discontinuity hypothesis of representativeness heuristic.

• Asia-Pacific Journal of Business
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• v.15 no.3
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• pp.431-448
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• 2024

Purpose - This study aims to explore the return characteristics of asset growth factors in the Korean stock marekt by employing the representativeness heuristic-a behavioral bias originally identified by Kahneman and Tversky(1972). Design/methodology/approach - Our empirical analysis, based on Korean stock market data from 2004 to 2023, compared the conditional probability of high asset growth companies achieving elevated returns to the overall probability. This assessment helps gauge the representativeness of potential 'future Google' companies. Additionally, we use regression models to explore investor behavior and market anomalies in the stock returns. Findings - The findings suggest that when dividing the sample period into phases with high and low representativeness measures, biases significantly impact asset growth factors. Specifically, during high representativeness preiods, stock price reversals were absent among high asset growth companies. Conversely, during low representativeness periods, stock price drifts become evident. Research implications or Originality - This research contributes to the field of behavioral finance by providing empirical evidence of the impact of cognitive biases on asset growth and stock returns in an emerging market like Korea. It highlights the need for investors and policymakers to consider psychological factors when analyzing market behaviors, potentially leading to more informed investment strategies and regulatory frameworks.

• Journal of Global Scholars of Marketing Science
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• v.18 no.2
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• pp.47-64
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• 2008

It is well known that consumer's quality perception is strongly affected by price. Higher priced products tend to be perceived to have better quality than lower priced products although the objective product quality is the same. However, it is less known the process through which quality perception is affected by price cues. The existing literature suggests three potential hypotheses (i.e., the selectiveprocessing hypothesis, the selective interpretation hypothesis, and the representativeness heuristic hypothesis) that explain the underlying processes of the price-induced quality perception. The current research tests among the three competing hypotheses and also examines the role of consumer knowledge as a moderating factor. An experiment was conducted to test the moderating role of the knowledge in the price-quality relationship and to investigate the underlying process. The results indicate that theinfluence of price on perceived quality differs between novices and experts. Expert consumers' quality perception is not significantly influenced by price and this finding is consistent with the extant literature. On the other hand, novice consumers' quality perception is affected by price and the tests on the underlying process support for the representativeness heuristic hypothesis. Novice consumers assess that a high-priced brand should have good product quality due to the belief that high (low) price brands represent better (worse) brand quality and such a representativeness heuristic occurs without involving selective attention or selective interpretation price-consistent information.

• Korean Journal of Organic Agriculture
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• v.32 no.1
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• pp.25-37
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• 2024

This study is to apply behavioral economics-an economics that studies actual human behavior based on cognitive psychology-to the farming decision-making process of onion and garlic farmers. Of behavioral economic theories, dual system theory and prospect theory (value function), heuristic and bias were surveyed and examined in the field. The reference point of farmers was farming experience of the previous year, and so they showed reference dependence and anchoring heuristic, not rational thinking on production cost plan. And they showed status quo bias that cultivated continuously the previous year or the present crop. This status quo bias is related to loss aversion propensity. Farmers did not usually change cultivating crops, in other words, they showed diminishing sensitivity-insensitive to those that the more revenue or loss was increased. This diminishing sensitivity is related to loss aversion propensity and status quo bias. Also, farmers had representativeness heuristic because they regarded auction price of Garakdong wholesale market as the standard price level despite various prices by production region. And farmers had the affect heuristic that they depended on producers' organization data more than the state-run research institute ones about cultivation intentions and actual situations.

• Journal of Distribution Science
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• v.17 no.10
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• pp.73-81
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• 2019

Purpose - The purpose of this study was to examine the effect of the heuristic type of consumers affecting purchase decision making and the intention of shopping value in their relationship to derive mobile social commerce purchase promotion plans. Research design, data, and methodology - A research model was constructed to relate the mediating effect of shopping value between heuristic types and purchase intentions. A total of 233 valid questionnaires were used for analysis for users using mobile social commerce. The statistical program used SPSS 24.0 and AMOS 24.0, and correlation analysis, regression analysis, and 3-step parametric regression analysis were used for the analysis. Results - The results of the analysis showed that representativeness heuristics, availability heuristics, adjustment heuristics, and affect heuristics had a statistically significant effect on the utilitarian value and the hedonic value. On the other hand, affect heuristics among the heuristic types were found to have the greatest influence not only on the utilitarian value but also on the hedonic value. The two types of shopping value were found to be partially mediated between representativeness heuristics and purchase intentions, between adjustment heuristics and purchase intentions, and fully mediated between availability heuristics and purchase intentions, affect heuristics and purchase intentions. Conclusions - These findings suggest that mobile social commerce companies should check in advance how consumer heuristic types affect purchase intentions. In particular, affect heuristics are caused by consumers' emotional mood such as mood or external stimulus being more important to decision making than rational decision making. Therefore, the result of this study suggests that it can be an important factor to secure the competitiveness that the potential customers who access to use mobile social commerce can feel enough fun and enjoyment in the platform provided by the company. It is also worth paying attention to the utilitarian and hedonic values perceived by consumers. This is because the judgment regarding the economic, convenience and important information provided by the mobile social commerce users affects the purchase intention through the trust of the information, past use, and shopping experience displayed on the mobile social commerce platform.

• Korean Journal of Culture and Social Issue
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• v.11 no.1
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• pp.59-84
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• 2005

Three studies were conducted to examine the degree to which three common heuristics, anchoring heuristic, framing effect and representative-ness heuristic, influence the decision-making precesses of actual judges and 5-persons mock juries. With scenarios regarding various issues that are commonly raised in actual criminal and civil trials, study 1 examined the 158 actual judges' decisions. In study 2, the decisions of 80 mock jury groups that consisted of college students were examined with similar scenarios. And individual decisions were examined in study 3 to compare with the group decisions in study 2. The decision processes of the actual judges and the mock jury groups alike were found to be influenced by "anchors". But the biases by the anchoring heuristic were more pronounced in the group decisions than in the decisions of the actual judges. With respect to framing effect, the actual judges were found to be resistant, while a small effect was found in the decisions of mock jury groups. Representative-ness biases weren't found in the decisions of both the actual judges and mock juries. The implications of the results for judicial systems were discussed.