1.2.10 Alternative Views Of Consumer Behaviour

Question 1

What are the 3 main reasons of irrational behaviour?

Answer 1

• Influences of other people
• Influence of Habitual Behaviour
• Consumer weakness computationally

Question 2

Explain how Influences of other people cause irrational behaviour?

Answer 2

Herd behaviour - people want to fit in or copy the actions of large groups.

One example is the stock market where huge market bubbles can form.

Question 3

Explain how Influence of Habitual Behaviour causes irrational behaviour?

Answer 3

Habits create a barrier to rationality, for instance, consumers tend to buy things at eye level, supermarkets exploit this by placing cheaper products at the bottom of shelves.

Addiction also counts, consumers know they should give smoking up but often do not due to habitual behaviour.

Question 4

Explain how Consumer weakness at computation causes irrational behaviour?

Answer 4

Many consumers aren’t willing or able to make comparisons between prices and so they will buy more expensive goods than needed.

One example is consumers saving up for thier pensions - many overlook the long term and fail to do this.