1.2.10 Alternative Views of Consumer Behaviour

Question 1

What are the reasons for people not behaving rationally?

Answer 1

• Influences of other people
• Influence of habitual behavior
• Consumer weakness at computation

Question 2

Give an example of behaving non-rationally due to influence of other people

Answer 2

• Someone may buy something to “fit in” or because everyone else has it, and so they are expected to too

Question 3

What is ‘Herding Behaviour’?

Answer 3

When an individual copies the actions pf a large group.

• For example the stock market, causes huge market bubbles

Question 4

Give 2 examples of behaving non-rationally due to influence of habitual behaviour.

Answer 4

• Consumers will buy more more drugs/alcohol even they know they should give up
• Consumers buying their products at eye level so supermarkets tend to keep higher priced products near the top and lower priced products lower

Question 5

Give 2 examples of behaving non-rationally due to consumer weakness at computation

Answer 5

• Many customers buy multipack goods because they assume they are cheaper which isn’t always the case
• Consumers are sometimes poor at self control and so do things they know they shouldn’t
• Consumers will make decisions without looking at the long term effects