Critique of Maximizing Behavior Flashcards
Rational Consumer Choice
The assumption that all consumers make the most rational decisions
Perfect Information
A situation where an economic agent has complete information about everything related to the product they’re buying/selling
Imperfect Information
A situation where an economic agent has incomplete information on the product they’re buying/selling
Bounded Rationality
The idea that consumers do not always have the capability to make perfectly rational decisions
Bounded Selfishness
The idea that consumers are not always completely selfish, in contrast to traditional economic theory
Bounded Self-Control
The idea that consumers may give in to their temptations and consume products they know are not maximizing their utility
Rule-of-Thumb
General rules consumers stick to when faced with a lack of information regarding a product
Anchoring Bias
A cognitive bias where consumers over-rely on information they’ve received in the past, rather than current information
Framing Bias
A cognitive bias where consumers decide on products based on how positively (or negatively) they are portrayed
Availability Bias
A cognitive bias where consumers decide on products based on what information they can first remember is associated with the product
Choice Architecture
The study of how choices can be presented in a way that influences which choice is taken
Nudge Theory
Ways to influence consumers into choosing something, without actively restricting their choices; They are simply “nudged” into the “right” direction
Corporate Social Responsibility
The consideration firms make on how they impact society and the environment
