1 - Consumer Behaviour Flashcards
(8 cards)
1
Q
What are economic agents assumed to be?
A
Rational
2
Q
What is rational consumer behaviour?
A
Decision-making process that’s based on making choices that maximise utility
3
Q
What 4 things about consumers does rational consumer behaviour assume?
A
- consumers make all choices independently
- consumers have fixed and consistent preferences
- consumers have full info
- consumers always make optimal choice
4
Q
What’s irrational consumer behaviour?
A
When people make systematic and persistent deviations from rational choice
5
Q
Why does irrational consumer behaviour happen?
A
- humans are emotional, impulsive and lack self-control
- humans are social and belong to many networks
- humans have limited time, energy and brain power
- humans have regrets and a strong sense of loss aversion
6
Q
Examples of habitual behaviour that causes irrational behaviour
A
- choosing same dish of restaurant menu
- addictions/routines
- renewal on car insurance
7
Q
Examples of irrational behaviour being influenced by others
A
- peer pressure
- fashion/trends
- social networks
- social norms and herd behaviour
8
Q
Examples of consumers being irrational due to weakness at computation
A
- limited brainpower and time, fast decisions-rule of thumb
- limited ability to calculate/absorb complex info
- emotional responses
- can be misled
