1.2.10- Alternative views of consumer behaviour

Question 1

What is it assumed that consumers aim to maximise?

Answer 1

Utility

Question 2

What are the reasons for irrationality?

Answer 2

-influences of other people
-influences of habitual behaviour
-consumer weakness at computation

Question 3

How does influences of other people cause irrationality?

Answer 3

-buying things to fit in
-creates a bias that consumers are unwilling to change
-herding behaviour

Question 4

What is herding behaviour?

Answer 4

Making decisions based upon what friends and family are doing

Question 5

How does influence of habitual behaviour cause irrationality?

Answer 5

-limits consumers considering an alternative
-includes addictions
-consumers may find it hard to save due to habit of spending

Question 6

How does consumer weakness at computation cause irrationality?

Answer 6

-some aren’t willing or able to make price comparisons
-poor self control
-may not look at long term effects
-may struggle with complex calculations

Question 7

What is the nudge theory?

Answer 7

Small interventions can encourage individuals to make different decisions

Question 8

What are some examples of the nudge theory?

Answer 8

-placing healthy foods at the front of cafe lines
-calorie counts on menus
-charging for plastic bags