The heuristics affecting consumer buying decision processes: The role of cognitive biases on brand loyalty proneness

Behavioral decision research which has become increasingly important in the past few decades, come to the fore in many disciplines with the discovery of the dynamics behind people's decision-making processes. Consumer behavior and how the consumer makes the purchase decision are one of the most important issues for marketers. Each brand wants the consumers to choose their own brand among the other alternatives. Therefore, the brands want to anticipate how the consumer goes through cognitive processes and they make their strategies according to them. The aim of this thesis is to investigate the possible effects of the cognitive biases, which are the essentials of behavioral decision theory, on the brand loyalty proneness. Accordingly, four cognitive biases (loss aversion, status quo bias, sunk cost fallacy and social proof) that are considered to play a role on the brand loyalty proneness are identified and their effects on each other and on the brand loyalty proneness are investigated. Structural Equation Modeling (SEM) was applied to answer the basic question of the thesis. The results of SEM analysis show that the status quo bias and social proof has direct effects on the brand loyalty proneness, and the loss aversion and sunk cost fallacy has indirect effects on the brand loyalty proneness, through status quo bias and social proof. In addition, the direct effects of loss aversion on the status quo bias, sunk cost fallacy and social proof; and the direct effects of sunk cost fallacy on the status quo bias are determined.