Micro - Alternative views on consumer behaviour Flashcards
The reasons why consumers may not behave rationally
It is taught in economics that rational consumers always maximise their utility when making decisions. For example, a rational consumer is likely to gather all the information they can, analyse this information and then come up with a decision that is most likely to maximise their utility. However, behavioural economics suggests that consumers may not always make their decisions based on which option will maximise their utility. Instead, emotional, social and psychological factors can result in consumers making a choice that seems at odds with what a rational consumer would choose. There are three main theories that Edexcel students need to understand in the decision making process of consumers.
