Critique Of The Maximising Behaviour Flashcards
Rational consumer choices states that?
Individuals use logical and sensible reasons to determine the right choice associated with an Individuals best self interest.
State and explain assumptions underlying Rational consumer choice
Consumer rationality- it is assumed that Individuals use Rational calculations.
Utility maximisation- people decide on the option that give them max level of Utility.
Perfect information- people use available information to make their decision.
What is Behavioural economics?
The study of actual economic decision-making, with the emphasis on human behaviour being less Rational.
State and explain the five factors limiting the assumption of Rational consumer choice?
Biases - rule of thumb, anchoring and framing, availability bias.
Bounded rationality
Bounded self control
Bounded selfishness
Imperfect competition
What is Choice architecture?
Refers to the deliberate design of different ways of presenting choices to members of society, and the impact of these methods on decision-making.
Who is a choice architect?
An individual/ organisation responsible for shaping the context in which people make decisions.
State and explain the three categories of choice architecture?
Default choice- occurs when a person is automatically signed up into a system.
Restricted choice- this type of choice architecture limits the choices to people available.
Mandated choice- when people are required to make advanced decision and declare whether they wish to participate in a particular activity.
Define nudge theory?
Nudge theory is the practise of influencing the choices that people make.
State and Define Alternative business objectives
CSR- is about a firm commiting to the values, decisions and actions that impact the society in a positive way.
Market share- refers to a firms portion of of the total revenue in a particular industry. Firms may aim to increase and protect their market shares.
Satisficing- is about aiming for a satisfactory or adequate level of profit, rather than the max profit.
Growth- refers to increasing the size and scale of operations of a firm.
