consumer behaviour

Question 1

who is a irrational and rational consumer?

Answer 1

rational consumers ALWAYS make decisions to maximize utility/satisfaction. irrational consumers tend to make decisions that do not maximize utility

Question 2

give 6 reasons why a consumer would make an irrational decision

Answer 2

1. herding= because the people the consumer associates with are still at bank x although bank y has lower interest rates, the person stays at bank x. 2. because of gaps in the info/asymetric info= producer may not give full detail/consumer may have doubts. 3. brand loyalty= consumers may only want to purchase only products from brand x cuz of a personal bias. 4. habitual behavior= breaking habits cause withdrawal symptoms that may make the consumer uncomfortable so they may be reluctant to switch- consumer inertia. 5. framing= economic statements that influence people in a way that changes an outcome