title: Emotional balances in experimental consumer choices.
abstract: This paper presents an experiment, which builds a bridge over the gap between neuroscience and the analysis of economic behaviour. We apply the mathematical theory of Pavlovian conditioning, known as Recurrent Associative Gated Dipole (READ), to analyse consumer choices in a computer-based experiment. Supplier reputations, consumer satisfaction, and customer reactions are operationally defined and, together with prices, related to READ's neural dynamics. We recorded our participants' decisions with their timing, and then mapped those decisions on a sequence of events generated by the READ model. To achieve this, all constants in the differential equations were determined using simulated annealing with data from 129 people. READ predicted correctly 96% of all consumer choices in a calibration sample (n=1290), and 87% in a test sample (n=903), thus outperforming logit models. The rank correlations between self-assessed and dipole-generated consumer satisfactions were 89% in the calibration sample and 78% in the test sample, surpassing by a wide margin the best linear regression model.
authors.affiliation: Department of Statistics and Econometrics, Faculty of Economics and Business Administration, Sofia University, 125 Tzarigradsko Chaussee Blvd., Bl. 3, 1113 Sofia, Bulgaria. g.mengov@feb.uni-sofia.bg
authors.forename: George
authors.initials: G
authors.lastname: Mengov
authors.forename: Henrik
authors.initials: H
authors.lastname: Egbert
authors.forename: Stefan
authors.initials: S
authors.lastname: Pulov
authors.forename: Kalin
authors.initials: K
authors.lastname: Georgiev
mesh_terms: D000465:Algorithms; D002138:Calibration; D002755:Choice Behavior / Q000502:physiology*; D003214:Conditioning, Classical; D003258:Consumer Behavior; D004644:Emotions / Q000502:physiology*; D015233:Models, Statistical; D009042:Motivation; D012044:Regression Analysis; D013269:Stochastic Processes