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We tend to buy branded products that we are familiar with. For instance, if it's cornflakes we want, then we'd buy a pack of Kellogg's. Likewise, people buy shares of their employer-companies and shares of companies in the sector they are employed. What drives such behaviour?
Research has shown that familiarity breeds contentment, not contempt. This means the more you are exposed to a particular product, the more you will like it, explaining our association with certain brands. You may, for instance, prefer Coke over Pepsi. But it is possible that you might be unable to differentiate between the two if you're asked to taste them blindfolded.
Mere-exposure effect
Experiments in neuroscience have shown that your memory activates automatically when it sees objects that you may be even unaware of, but have been exposed to earlier. It is, hence, possible that you like Coke because you are exposed to it often, not necessarily because you think it tastes better than Pepsi. Behavioural psychologists call this the Mere-exposure Effect.
This psychological bias is one reason why people tend to invest in their employer-stock. You are continually exposed to your company's logos and products every day. This mere exposure saturates your brain with familiarity. And that gives you the mental comfort to own your employer-stock. Likewise, it is the familiarity that prompts you to buy shares of other companies in the sector you work in.
There is another argument. Neuroscience has also shown that we react adversely to the unfamiliar. A person working in the technology industry may not know much about the oil and gas sector. Venturing into the unknown may cause fear and that, in turn, triggers the amygdala- your brain's fear centre. So, Mere-exposure Effect is driven by the familiarity with the known, while the fear of the unknown reinforces this effect. This could mean that our preferences, especially for food, could be driven not necessarily by tastes but by our continual exposure to certain brands.
(The author is the founder of Navera Consulting. He can be reached at >enhancek@gmail.com )
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