Process of making decisions on loan currency: Influence of representativeness on information processing and coherence with consumption motives

Rationality of decision maker is often reduced by heuristics and biases, and also by different types of external stimuli. In decision-making process individuals simplify phases of information selection and information processing by using heuristics, simple rules which are focused on one aspect of complex problem and ignore other aspects, and in that way 'speed up' decision-making process. This method of making decisions, although efficient in making simple decisions, can lead to mistakes in probability assessment and diminish rationality of decision maker. In that way it can influence drastically on transaction outcome for which decision is being made. The subject of this study is influence of representativeness heuristic on making financial decisions by individuals, and influence of consumption motives on stereotypical elements in information processing phase. Study was conducted by determining attitudes of respondents toward currencies, and then by conducting experiments with aim of analyzing method of making decisions on loan currency. Aim of study was determining whether and to what extent representativeness influence choice of currency in process of making loan decisions. Results of conducted behavioral experiments show that respondents, opposite to rational model, do not asses probability by processing available information and in accordance with their preferences, but by comparing decision objects with other objects which have same attributes, showing in that way moderate positive correlation between stereotypical attitudes and choice of loan currency. Experiments have shown that instrumental motive significantly influence representativeness heuristics, that is, individuals are prone to process information with diminished influence of stereotypical attitudes caused by external stimuli, in situations where there is no so called 'hedonistic decision-making'. Respondents have been making more efficient decisions if they had motive which does not lead to hedonistic consumption. Experiments did not show connections between consummatory motives and representativeness.