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.

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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

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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.

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