Alternative views of consumer behaviour Flashcards
1
Q
What is behavioural economics?
A
It is a method of economic analysis that applies psychological insights into human behaviour to explain economic decision making.
2
Q
What are reasons why consumers may not behave rationally?
A
Influence of other peoples behaviour
Habitual behaviour
Inertia (people will put more effort into preventing a loss than winning a gain)
Information overload
Complexity of information
Too many choices available
Consumer weakness at computation
3
Q
What is the key implication of behavioural economics?
A
That policy makers need to place greater emphasis on the psychology of behaviour when devising policy.
