Analysis of Preference Formation Using Experience Information

Abstract

In this paper, we hypothesize that unconscious biases are formed through life experience, and we formalize the process of preference formation mainly focusing on emotional factors. Based on this underlying model, we implement an empirical model and examine the relation between experience and preference formation using a dataset compiled by the NTTDATA Institute of Management Consulting, Inc. The analysis showed that there are strong relations between experiences and preferences, especially when the emotional impact of the experiences seems to be strong. The results of the empirical analysis are consistent with this intuition and give us various insights into the mechanism of preference formation. It is important to note that around 60% to 80% of experiences are statistically significant in explaining the formation of preference, and the number of significant variables increases when the preference is influenced by intense experiences, as is the case for the preference high quality or ecological options. This supports the intuitive idea that emotionally strong experiences have a strong influence on the formation of unconscious biases. This study gives us various kinds of insights into the marketing strategies. Especially, the analysis on the formation of preference by experiences in life helps to provide advertisement information with strong appeal to each consumer.