Assistant Professor of Marketing
Why do people make bad decisions? And how can we help them make better decisions?
Bill Hedgcock, UI assistant professor of marketing, would like to know, and he’s looking at images of the brain to find the answers.
The phenomenon of interest is called “trade-off aversion,” a subject Hedgcock has studied since 2005. The inspiration for his studies came from his work analyzing loyalty and direct marketing programs for a marketing firm.
Hedgcock noticed that minor changes to a survey question can affect results significantly. It was also clear that people have a harder time choosing between two options than choosing from three options.
“I enjoyed the work and wanted to look deeper into the subject,” said Hedgcock.
He found even more intriguing facets to study.
“It is fascinating to me that people can’t tell you why they make bad decisions," said Hedgcock. "Brain imaging gives us more information about why people make bad decisions.”
So Hedgcock and his research co-author, Akshay Rao, a marketing professor at the University of Minnesota, decided to use functional magnetic resonance imaging (fMRI) technology to view the brain activity and reveal new insights.
In the trade-off aversion study, participants’ brains were imaged while they were asked to choose between two apartment options—a big, expensive apartment, or a small, inexpensive apartment.
Participants then received a third option—a smaller apartment at the same price as the inexpensive apartment. Following this addition, participants were more likely to choose the middle option.
The brain imaging revealed that offering three options resulted in less brain activity dedicated to making calculations and negative emotions.
“What we are realizing is that some decisions generate negative emotions,” said Hedgcock. “In this case, the more you think about making a trade-off between price and space, the worse you feel about it. Now that we know people will pick options that are better than others or stay with the status quo, we need to think about ways to reduce the negative emotion around a decision.”
The results, he says, could be helpful in marketing as well as health care, finance, and policymaking in that organizations could optimize the way they ask questions and offer options.
According to Hedgcock, some of the world’s marketing leaders (e.g. Pepsi, Google, Microsoft) already use brain imaging to explore the consumer mindset when standard techniques like surveys and focus groups fail to provide enough information. But it isn’t exactly mind reading.
“Brain imaging is most useful to a company or organization when it is combined with more traditional methods like surveys or focus groups,” said Hedgcock. “It will reveal whether people processed more emotional or visual information and if they are paying attention.”
In his class, Undergraduate Consumer Behavior, Hedgcock goes beyond the typical textbook and curriculum by introducing them to neuromarketing concepts.
“I talk about the neuroscience phenomena that are relevant to the students and to consumer behavior,” said Hedgcock. “We cover decision biases and how they play into marketing."
He also lectures on brain imaging and physiological measures, such as eye tracking, heart rate monitoring, and skin conductivity. Tippie MBAs receive details about when it is worthwhile for a company to capture physiological data. This fall, he’ll delve deeper into the subject matter with a new First-Year Seminar course for undergraduates, Decision Making and the Brain.