Journal articles: 'Consumer rationality'

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Redmond, William H. "Consumer Rationality and Consumer Sovereignty." Review of Social Economy 58, no. 2 (June 2000): 177–96. http://dx.doi.org/10.1080/003467600402530.

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Brito, Dagobert L., and Peter R. Hartley. "Consumer Rationality and Credit Cards." Journal of Political Economy 103, no. 2 (April 1995): 400–433. http://dx.doi.org/10.1086/261988.

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Biza-Khupe, Simangaliso. "An Alternative Theoretical Perspective to the Analysis of Global Trends on Consumer Debt." Perspectives on Global Development and Technology 7, no. 3-4 (2008): 281–303. http://dx.doi.org/10.1163/156914908x370692.

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AbstractAlarming global trends in consumer debt have remained a subject of interest for many decades. Despite literature being replete with studies on the subject, the role that information intermediaries play in influencing financial rationality of consumer credit decisions has remained unexplored. This article presents a perspective that is being proposed for the first time. It is proposed that the rationality of consumer credit decision in an economy is determined by the combined effect of a most commonly used primary financial information intermediary and the propensity for consumers to rely on the advice of a primary financial information intermediary. This perspective of analyzing consumer debt acquisition is instrumental to policymakers, consumer lobbyists, and marketers.

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Ene, Corina. "Post-Consumer Waste." International Journal of Sustainable Economies Management 2, no. 3 (July 2013): 19–31. http://dx.doi.org/10.4018/ijsem.2013070102.

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The complexity of purchase decision process goes beyond economic and human rationality boundaries, leading to increased amounts spent inappropriately, including, implicitly, significant quantities of post-consumer waste. Excessive waste of resources, reflected in massive quantities of abandoned goods on the one hand, and on the other - insufficient access to resources for a significant part of the world population - are topical issues that are based on overall irrational behavior of consumers and society, requiring global and local optimization by strategies involving all interested parties. The paper aims to formulate and emphasize actual problems and prospects regarding the rationality of consumer behavior towards waste creating and disposal, trying to answer the following question: given that the actual society is facing a series of irreversible ecological problems, what needs to be done in order to reduce post consumer-waste and to promote environmentally and resources friendly behaviors?

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Arcidiacono, Davide. "Consumer rationality in a multidisciplinary perspective." Journal of Socio-Economics 40, no. 5 (October 2011): 516–22. http://dx.doi.org/10.1016/j.socec.2011.01.003.

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Deng, Isaiah. "Cognitive Framing Illusions and Consumer Rationality." Open Management Journal 4, no. 1 (June 3, 2011): 1–8. http://dx.doi.org/10.2174/1874948801104010001.

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Hartman, R. S., M. J. Doane, and C. K. Woo. "Consumer Rationality and the Status Quo." Quarterly Journal of Economics 106, no. 1 (February 1, 1991): 141–62. http://dx.doi.org/10.2307/2937910.

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Manzini, Paola, and Marco Mariotti. "Consumer choice and revealed bounded rationality." Economic Theory 41, no. 3 (June 17, 2008): 379–92. http://dx.doi.org/10.1007/s00199-008-0389-x.

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Gamble, James L. "Validity, rationality definitions, and consumer sovereignty." Atlantic Economic Journal 25, no. 3 (September 1997): 323. http://dx.doi.org/10.1007/bf02298415.

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Zalega, Tomasz. "Rational And Methods Of Research Into Consumer Market Behaviour." Equilibrium 7, no. 4 (December 31, 2012): 77–99. http://dx.doi.org/10.12775/equil.2012.028.

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The issue of rationality of consumption and consumer behavior becomes more and more relevant in today’s economy. The objective of this article is to analyze the rationality of consumer behaviors in the market from the point of view of various economic schools, using classical methods as well as the concept of ecological rationality which is more akin to an institutional approach. The article also addresses important, selected aspects concerning certain approaches and methods used in research on rationality of consumer behaviors in the market. Particular attention is paid to the problem of rationality in methodology of empirical studies. The analysis of selected research approaches (i.e. predictive and postdictive approach) to the problem of rational choice and consumer behavior, considered from the point of view of both those approaches, makes for a summing-up of the article.

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Wangsa, Ignasius Heri Satrya. "Nilai konsumen dalam "Aku tahu apa yang aku beli"." Journal of Business and Information Systems (e-ISSN: 2685-2543) 3, no. 1 (January 12, 2021): 34–48. http://dx.doi.org/10.36067/jbis.v3i1.93.

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The consumer can make the best decision based on his natural capacity as a rational and economic man. Practically, this rationality is determined by new values accumulated from previous consumption experience. This research aims at studying consumers' values through rationalization of relevant variables in consumers values mix. Context of consumer confidence "I know what to buy" represents his independence as a consumer who treasures assurance and certainty reflected upon specific values. Consumers subscribe to these values as the primary reference in consumer buying behavior. Additionally, this context facilitates the study on consumer value resistance about the internal and external environment pressure. This research contributes to consumer's values theory through a mixed-method.

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Huang, Tingliang, Zhe Yin, and Ying-Ju Chen. "Managing Posterior Price Matching: The Role of Customer Boundedly Rational Expectations." Manufacturing & Service Operations Management 19, no. 3 (July 2017): 385–402. http://dx.doi.org/10.1287/msom.2016.0612.

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The posterior price-matching policy, whereby a firm promises to reimburse the price difference to a customer who purchases a product before the firm marks it down, has been used in practice. The extensive literature has offered the following explanations for why posterior price matching is adopted: to reduce inventory, to soften competition, to price discriminate consumers, and to eliminate consumer strategic waiting incentives. In this paper, we provide a novel explanation and investigate the role of consumer bounded rationality in the sense of anecdotal reasoning. We adopt a simple model that allows us to isolate the role of customer bounded rationality on using posterior price matching. We demonstrate that while it is never optimal to adopt posterior price matching when consumers have rational expectations, it can be optimal when they have boundedly rational expectations. We show when and how a seller can intentionally mark down with some probability and adopt price matching to make a profit. Ignoring customer bounded rationality can result in a significant profit loss. Then, we build a dynamic programming model to investigate how the firm should dynamically manage its markdowns over the long run. We show that a cyclic policy switching between a high and low markdown probability is typically optimal for exploiting customer bounded rationality. We characterize the nature of the cyclic policy and the range in which it is optimal. Our findings underscore the importance of consumer bounded rationality and provide managerial and practical guidelines on how to manage price matching when customers are boundedly rational. The online supplement is available at https://doi.org/10.1287/msom.2016.0612 .

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Vinayak, Saumya. "Consumer Choice on Savings Accounts: Bounded rationality." Deakin Papers on International Business Economics 2, no. 1 (July 1, 2009): 23–29. http://dx.doi.org/10.21153/dpibe2009vol2no1art200.

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Given the falling returns in share markets and the comparative safety of savings accounts protected by the deposit insurance provided by the Australian Government, there was a significant surge in deposits made in savings ac counts. According to an article published in The Australian , Australian households deposited an estimated $38 billion into savings accounts over a period of six months ending on the 31 st of March, 2009. Among the various deposit-taking institutions, Westpac received the largest part of this growth. (Jimenez, 2009). Interestingly, there have been no major changes in the interest rates offered on savings accounts by the major banks recently. If the savings account market is examined , the first thing that one notices is the large number of options available to a prospective customer. There are more than fifty savings accounts on offer by various banks, building societies and credit unions. These include regular savings accounts, high interest savings accounts with more stringent conditions on deposits, withdrawals and usage and exclusively online savings accounts. Any given savings account product can have different combinations of attributes apart from the interest rate offered such as the minimum balance requirements, the minimum lock-in period, etc. For an average consumer who wants to open a savings account, there is a plethora of choices available. This paper considers how a typical consumer might make a choice among so many options and whether this choice is “right”.

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MAYER, PETER C. "ELECTRICITY CONSERVATION: CONSUMER RATIONALITY VERSUS PROSPECT THEORY." Contemporary Economic Policy 13, no. 2 (April 1995): 109–18. http://dx.doi.org/10.1111/j.1465-7287.1995.tb00747.x.

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Wei, Ying, and Feng Li. "Impact of Heterogeneous Consumers on Pricing Decisions under Dual-Channel Competition." Mathematical Problems in Engineering 2015 (2015): 1–9. http://dx.doi.org/10.1155/2015/584084.

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This paper studies impact of heterogeneous consumer behavior on optimal pricing decisions under dual channel supply chain competition, which consists of one manufacturer and one retailer. The manufacturer is market leader with two sales channels: one is direct channel facing consumers directly and the other is indirect channel facing the retailer. Consumers decide whether to buy and from which channel to buy products. Purchasing decisions are based on considerations of prices posted on different channels, preference or loyalty to specific channels, and degree of rationality in decision-making process. Due to the complexity of heterogeneous consumer decision behavior, traditional mathematical analysis to the pricing problem becomes quite challenging. An agent-based modeling and simulation approach is then proposed and implemented. Simulation results reveal that consumer behavior influences both prices and profits. When consumers are increasingly loyal to the retailing channel, the retailer can make a higher selling price and more benefits. On the other hand, when consumers are increasingly loyal to the direct channel, the number of purchases from the direct channel increases and the manufacturer is better off. It is also interesting to note that as rationality level increases, selling prices for both channels slightly decrease.

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Nakayama, Makoto. "Exploratory Study on the Stability of Consumer Rationality in Judging Online Reviews." Journal of Electronic Commerce in Organizations 15, no. 1 (January 2017): 1–22. http://dx.doi.org/10.4018/jeco.2017010101.

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Consumers are often asked valuate the quality of online reviews. However, they often misjudge the true value of reviews because their thoughts on reviews are not well formed with criteria. This exploratory study conducted stylized survey-based experiments using 217 consumers. Consumers typically underestimate the value of reviews because they do not always use valuation criteria when reading reviews. The extent of such underestimations ranges from 12% to 15% for goods with objective attributes like electronic products. In addition, nearly half of the consumers revised their review valuations upon taking a second look at the same review for these goods. Close to one-third of the consumers changed their review valuations for subjective goods like music albums. Such valuation changes are specific to consumer profiles. Their predominant emotional sentiment also has a varying effect on subjective and non-subjective goods.

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Zhang, YuHang, and Ying Wang. "The Impact of Boundedly Rational Consumers on the Strategic Decision of Two Competing Firms." International Journal of Information Systems and Supply Chain Management 10, no. 4 (October 2017): 61–79. http://dx.doi.org/10.4018/ijisscm.2017100104.

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Consider two production competing firms offering vertically differentiated products to strategic consumers who are the boundedly rational consumer surplus maximizers. Distinguishing three settings of production capacity commitment, pricing optimization and dynamic production capacity management, we show how consumer behavior resulting from bounded rationality impact pricing and production capacity decisions of firm. In this study, we follow the and model to analyze that consumers strategize over which product to purchase under two scenarios where two firms enter the same market simultaneously or successively. In either model, consumers have to rely on anecdote reasoning or word-of-mouth to infer the product information of both firms. Due to this bounded rationality, firms dynamically adjust their strategic decisions to maximize profits. In this study, we prove that it is not always optimal to the production capacity decisions no matter under one anecdote or multiple anecdotes in either scenario, and the fill rate of regular product increases as the level of product environmental protection increases, then the profit of corresponding firm might increase. We show that the result of production capacity decisions of both firms being not always optimal is robust to the heterogeneous sample size, price optimization and discounted valuation.

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Kwasnicki, Witold. "Legacy of Ludwig von Mises: Rationalism." Studies in Logic, Grammar and Rhetoric 57, no. 1 (March 1, 2019): 41–64. http://dx.doi.org/10.2478/slgr-2019-0003.

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Abstract There are three intentions (aims) of this paper. First, to focus the attention of readers to three not so well known and least frequently quoted by economists of Mises’s books, namely his 1957 Theory and History: An Interpretation of Social and Economic Evolution, and two closely related The Ultimate Foundation of Economic Science: An Essay on Method (1962), and Epistemological Problems of Economics (1933/1960). The second aim is to outline Mises’s legacy, presented in the form of eleven dimensions of Mises’s Intellectual Universe. The eleven dimensions of Mises’s system are: Economics as science, praxeology, and human action; Methodological dualism; Judgments of value and subjectivism; Individualism; Rationalism and human action; Consumer; Cooperation and competition; Thymology; Mathematics in economics; Predictions; and Historical analysis. Third, to present the main issues related to Mises’s concept of rationalism. There is no mention of Ludwig von Mises’s concept of rationality in a great number of books and papers dealing with the understanding of the rationality of human beings. The concept of rationality proposed by Ludwig von Mises is neglected by modern researchers and economists of different schools, but especially by mainstream economists. A good example of neglecting Mises’s ideas on rationality is the latest book by Nassim Taleb, Skin in the Game: Hidden Asymmetries in Daily Life. Although Taleb’s proposition of understanding rationality and irrationality is very close to the concept of Mises, he does not refer to Mises’s work at all. No single word on Mises in that book!

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Miao, Miao, and Krishna Jayakar. "Bounded rationality and consumer choice: an evaluation of consumer choice of mobile bundles." Chinese Journal of Communication 7, no. 2 (April 3, 2014): 191–211. http://dx.doi.org/10.1080/17544750.2014.905869.

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Campbell, John Y., Howell E. Jackson, Brigitte C. Madrian, and Peter Tufano. "Consumer Financial Protection." Journal of Economic Perspectives 25, no. 1 (February 1, 2011): 91–114. http://dx.doi.org/10.1257/jep.25.1.91.

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The recent financial crisis has led many to question how well businesses deliver services and how well regulatory institutions address problems in consumer financial markets. This paper discusses consumer financial regulation, emphasizing the full range of arguments for regulation that derive from market failure and from limited consumer rationality in financial decision making. We present three case studies—of mortgage markets, payday lending, and financing retirement consumption—to illustrate the need for, and limits of, regulation. We argue that if regulation is to be beneficial, it must be tailored to specific problems and must be accompanied by research to measure the effectiveness of regulatory interventions.

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Spiegler, Ran. "Consumer bounded rationality and rigidity/flexibility retail price patterns." Economics Letters 116, no. 3 (September 2012): 335–38. http://dx.doi.org/10.1016/j.econlet.2012.04.003.

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Muhamad, Rusnah, and Sharifah Alwi. "Explicating consumer segmentation and brand positioning in the Islamic financial services industry." Asia-Pacific Journal of Business Administration 7, no. 3 (September 7, 2015): 253–74. http://dx.doi.org/10.1108/apjba-12-2014-0136.

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Purpose – The purpose of this paper is to discuss how the current research on the Islamic financial services industry attempts to classify its consumers and provide a fresh and critical insight into the retail Islamic banking market segmentation to harness and enhance understanding, as well as provide a guideline for a better segmentation to bank marketers. Design/methodology/approach – This study is conceptual in nature. Based on Qur’anic verses and previous literature, the authors aim to propose an applicable model of market segmentation for the retail Islamic banking market in Malaysia. Consumer segmentation in the conventional financial service industry is analysed, and prior studies on the selection criteria of Islamic banks are evaluated. Findings – In moving forward, taking cue from the classification of people in classical doctrinal and historical literature and the initial exploratory study conducted from the managerial perspective, the authors propose five cluster groups of consumers for the retail Islamic banking market in Malaysia, namely, religious conviction, religious and economic rationality, economic rationality, ethical observant and economic rationality and ethical observant. A discussion linking consumer segmentation to the branding in the retail Islamic banking market is discussed. Research limitations/implications – The five cluster groups of consumers for the retail Islamic banking market in Malaysia proposed in this study pave the way for embarking on promising and relevant future research, which is needed to substantiate and enrich the academic understanding and managerial practice of linking market segmentation and brand positioning for Islamic banking market in Malaysia. Future research should focus on verifying the five proposed segments by conducting empirical studies on a larger scale among the retail banking consumers in Malaysia and globally. Practical implications – The study provides an initial bases or dimensions of consumers of the retail Islamic banking market in Malaysia. The proposed consumers segments are useful in guiding the management of Islamic bank in Malaysia in making decisions relating to the promotion strategy as well as product and brand positioning strategy. Originality/value – For both academia and the Islamic banking industry, this study provides useful knowledge in strategically using market segmentation to position Islamic banking products and services in Malaysia and the global market.

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Lewbel, Arthur. "Demand Systems With and Without Errors." American Economic Review 91, no. 3 (June 1, 2001): 611–18. http://dx.doi.org/10.1257/aer.91.3.611.

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Revealed preference theory assumes that each consumer has demands that are rational, meaning that they arise from the maximization of his or her own utility function. In contrast, econometric or statistical demand models assume that each consumer's demands equal a rational systematic component derived from a common utility function, plus an individual-specific, additive error term. This paper reconciles these differences, by providing necessary and sufficient conditions for rationality of statistical demand models given individual consumer rationality. (JEL D11, D12, C30, C43)

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Liu, Cheng, Chin-Shyang Shyu, Tsung-Yu Chou, Chao-Chien Chen, and Chien-Hung Wu. "What Is the Current Development Status of Wearable Device in Industrial 4.0? Using Technology Acceptance Model to Explore the Willingness and Pattern of Usage of the Consumers." Mathematical Problems in Engineering 2020 (December 16, 2020): 1–12. http://dx.doi.org/10.1155/2020/9762015.

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The object of the study is to use the technology acceptance model to explore the willingness and pattern of usage of the consumers. 205 valid questionnaires were collected by using the Google online survey platform. Using IBM SPSS and AMOS Statistics 20.0 software, first background information was analyzed, then CFA was used to analyze the relationship between variables, and SEM was used to verify the rationality of the measurement model. The result discovered that there is a positive effect on perceived usefulness by perceived utility of usage by the users. There is a positive effect on usage intention by perceived utility. There is a positive effect on perceived curiosity by perceived utility. There is a positive effect on usage intention by perceived usefulness, and there is a positive effect on usage willingness by social support for the wearable device users. However, there is no positive effect on usage willingness by perceived curiosity. Conclusion. If the industry can provide consumers with a good experience, it will help enhance consumer attitudes, increase consumer willingness, and continue to enhance consumer curiosity. Simply satisfying consumers' curiosity cannot increase consumer willingness, but social support will affect consumers' willingness to use.

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Lippai, L. "Rationality requires self-control." Acta Oeconomica 60, no. 3 (September 1, 2010): 255–73. http://dx.doi.org/10.1556/aoecon.60.2010.3.2.

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The observation on the phenomenon of consumer self-control is a frontier of economics and psychology which is gaining more and more significance. The objective of the study is to empirically observe the phenomenon above.In this study self-control is defined as the resultant of the intra-psychic and situational variables that influence the power necessary to rationally implement inter-temporal decisions. Based on this concept the present empirical study is to map the respondents’ preference order related to their everyday activities, then examine what happens if the participants are confronted with a decision situation in which following such a preference order is not unconditionally rational from an economic point of view.The results show that only 31.6 percent of the 279 respondents giving estimable answers decided in harmony with the preference order expressed at an earlier phase of the study when they faced the tempting decision situation mentioned above.

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Bulut, Zeki Atıl, Ali Naci Karabulut, Tuğba Uçma Uysal, and Ali Çağlar Uzun. "Explaining Young Consumers' Online Purchase Behavior under Risky Conditions." International Journal of Online Marketing 5, no. 3 (July 2015): 65–80. http://dx.doi.org/10.4018/ijom.2015070105.

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As the internet becomes a new shopping channel, which threats traditional shopping, it also causes dramatic changes in consumer market. In the light of theories claiming that consumers act with limited rationality and make their preferences with the motive of avoiding loss, the main aim of this study is to measure the impact of loss variables on the consumers' decisions about online shopping in Turkey. The originality of this study is to categorise and analyse loss variables as ‘the ones that happen in the process of shopping' and ‘the ones that happen out of the process of shopping'. Following the literature stating that consumers tend to act irrationally, the study also concludes that consumers tend to be away from the economical rationality at a great extent under the loss conditions. The findings show that any type of loss either physically or mentally related to consumers' shopping has an effect on consumers' irrational behaviors. This study indicates that this effect is higher in the conditions of loss in the process of shopping than out of the process of shopping.

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Kiełczewski, Dariusz, Felicjan Bylok, Anna Dąbrowska, Mirosława Janoś-Kresło, and Irena Ozimek. "Consumers’ Competences as a Stimulant of Sustainable Consumption." Folia Oeconomica Stetinensia 17, no. 2 (December 1, 2017): 97–114. http://dx.doi.org/10.1515/foli-2017-0021.

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AbstractThe paper contains considerations on the issue of sustainable consumption whose stimulator may be consumer competences. The problem can be examined in the cognitive, emotional and behavioural dimensions. Besides the theoretical approach, the authors have presented findings of the research carried out for the purposes of the project “Consumer Competences as a Stimulant of Innovative Behaviours and Sustainable Consumption” (2011/03/B/HS4/04417) financed from resources provided by the National Science Centre. The research involved a research sample of 1,000 Poles meeting specific criteria established by the authors. The obtained empirical material allowed for the construction of the consumer competence index which took into account the following variables: Knowledge of the consumer’s rights and ways of use thereof (Knowledge), Planning measured with the following variables (Planning), Making rational consumption choices measured with the following variables (Rationality), Autonomy of choices measured with the following variables (Sovereignty). Three groups of consumers were singled out and characterised in the study, namely: highly competent consumers, consumers with a medium level of competences, and consumers with low competences.

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David, A. K., and Y. Z. Li. "Consumer rationality assumptions in the real-time pricing of electricity." IEE Proceedings C Generation, Transmission and Distribution 139, no. 4 (1992): 315. http://dx.doi.org/10.1049/ip-c.1992.0047.

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Matysik-Pejas, Renata, and Monika Szafranska. "The Rationality of Consumer behaviour on the Food Products Market." Delhi Business Review 12, no. 2 (December 23, 2011): 11–19. http://dx.doi.org/10.51768/dbr.v12i2.122201115.

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Afrina, Dita. "RASIONALITAS MUSLIM TERHADAP PERILAKU ISRAF DALAM KONSUMSI PERSPEKTIF EKONOMI ISLAM." EkBis: Jurnal Ekonomi dan Bisnis 2, no. 1 (April 4, 2019): 23. http://dx.doi.org/10.14421/ekbis.2018.2.1.1088.

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AbstractIn an economic activity, it is prohibited to mix between halal and haram, because this is part of consumption behavior. Seeing how Islamic consumer behavior in consumption is what makes the writer want to analyze the rationality of Israf in consumption by linking the value of values contained in Islamic economics. By using qualitative research methods with literature research, namely by explaining the rationality of Muslims towards israf behavior which will then be explained in the literature on the consumption of Islamic economic perspectives. Where the results of the study show that Muslim rationality is in line with Islamic behavior, by having to consider Israf's actions.Keywords: Rationality, Israf, consumption

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Weiner, Kate. "The Subject of Functional Foods: Accounts of Using Foods Containing Phytosterols." Sociological Research Online 16, no. 2 (June 2011): 133–42. http://dx.doi.org/10.5153/sro.2343.

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This paper explores the notion of the late modern or reflexive subject, for whom consumption, rationality, autonomy and a reflexive attitude to risk are said to be constitutive. Drawing on an example of ‘ordinary’ health consumption ( GRONOW and WARDE, 2001 ), the paper addresses what kinds of consumer identities emerge in people's talk about buying or eating foods containing phytosterols. These are ‘functional foods’ which are marketed on the basis that they actively lower cholesterol. Based on interviews with people who say that they buy or eat these foods, the analysis focuses on participants’ reported trajectories relating to how this came about. Participants’ accounts contain a number of explicit and implicit reasons for buying or eating the foods, which I characterise as agential, contextual, or non-agential, depending on the degree to which they draw on the agency of the actual purchaser or eater. These different types of explanations can be ordered in terms of their appeals to rationality, risk consciousness and autonomy. In agential explanations, people talk, for example, of doing something good for themselves, or experimenting with the foods. These explanations explicitly position consumers as health conscious, autonomous and rational to varying degrees. Contextual explanations drew on, for example, the role of doctors or family history in alerting people to a potential problem. These suggest both a different sense of risk consciousness, which may be prompted or contextual, and a less autonomous kind of consumer who is connected to others through a set of family and other relationships. Non-agential explanations, for example, where people attributed their consumption to others or to habit, appeal neither to the rationality, the health consciousness nor the autonomy of the actual consumer. The analysis helps to reinforce the potentially contextual or fluctuating nature of risk consciousness, and the relational and non-instrumental aspects of daily practices.

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Chong, Zhang, Haoping Liu, Hyoung Jun Kim, Qian Wu, and Samuel Xie. "The Rationality of Addiction." Deakin Papers on International Business Economics 2, no. 2 (December 1, 2009): 1–8. http://dx.doi.org/10.21153/dpibe2009vol2no2art192.

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This paper presents a discussion on the rationality of addiction using economic theories. Drug abuse is the dominant context for addict ion in this paper. However, it does not preclude a broader definition, encapsulating dependence on substances other than pharmacological agents; let it be nicotine , alcohol, coffee, chocolates or sex. The argument follows the progression in rationale from consumption to addiction to eventual remission. The economics of any behaviour, addiction-motivated or otherwise, distils down to the scarcity of means and our intuitions of opportunity costs involved in making a choice. The two concepts are interrelated. The process of decision-making weighs the benefit of each choice (its marginal utility) against its opportunity cost. In utility maximization theory, money is a scarce resource assumed important for maximizing utility. Therefore, choice on consumption is decided by the relative price between two goods. Overall utility is maximized when the ratio of the prices of two desired goods is equal to their marginal rate of substitution – the ratio of their marginal utilities. That is, the objective or source of utility for a consumer is to maximi ze the total value of their available money.

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Gabaix, Xavier. "A Sparsity-Based Model of Bounded Rationality *." Quarterly Journal of Economics 129, no. 4 (September 17, 2014): 1661–710. http://dx.doi.org/10.1093/qje/qju024.

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AbstractThis article defines and analyzes a “sparse max” operator, which is a less than fully attentive and rational version of the traditional max operator. The agent builds (as economists do) a simplified model of the world which is sparse, considering only the variables of first-order importance. His stylized model and his resulting choices both derive from constrained optimization. Still, the sparse max remains tractable to compute. Moreover, the induced outcomes reflect basic psychological forces governing limited attention. The sparse max yields a behavioral version of basic chapters of the microeconomics textbook: consumer demand and competitive equilibrium. I obtain a behavioral version of Marshallian and Hicksian demand, Arrow-Debreu competitive equilibrium, the Slutsky matrix, the Edgeworth box, Roy’s identity, and so on. The Slutsky matrix is no longer symmetric: nonsalient prices are associated with anomalously small demand elasticities. Because the consumer exhibits nominal illusion, in the Edgeworth box, the offer curve is a two-dimensional surface rather than a one-dimensional curve. As a result, different aggregate price levels correspond to materially distinct competitive equilibria, in a similar spirit to a Phillips curve. The Arrow-Debreu welfare theorems typically do not hold. This framework provides a way to assess which parts of basic microeconomics are robust, and which are not, to the assumption of perfect maximization.

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Li, Hao, Xi Yang, Yu Tu, and Ting Peng. "Two-Period Dynamic versus Fixed-Ratio Pricing Policies under Duopoly Competition." Mathematical Problems in Engineering 2019 (March 28, 2019): 1–11. http://dx.doi.org/10.1155/2019/6567952.

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This paper introduces a two-period, pricing policy under duopoly competition between two firms offering an identical product to consumers who are intertemporal utility maximization. Firms have equal inventories of faultlessly replaceable and perishable products. The firms adjust prices to maximize profits and determine optimal pricing policies, choosing from dynamic pricing, fixed-ratio pricing, and elastic pricing policies. According to a duopoly competition model, the consumer is limited to a single firm visit per period. The consumer decides to purchase the product at current price from a firm and remain in the market to purchase product from the other firm in the next period or exit the market. The results offer three main conclusions. First, elastic pricing is consistent with dynamic pricing. Second, the more consumers visit the firm in the first period, the more profits the firm will make. Third, we explore the effectiveness of different pricing policies. The results show that although dynamic pricing is a more complex policy than fixed-ratio pricing, it may lead to decreased equilibrium profits when the firms sharply discounts prices and consumer rationality is unlimited.

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Volfova, Hana, Jan Salamoun, and Roberto Bergami. "Rationality of University Students: A Behavioral Economics and Consumer Behavior Perspective." International Journal of Interdisciplinary Studies in Communication 10, no. 3 (2015): 1–15. http://dx.doi.org/10.18848/2324-7320/cgp/v10i03/53615.

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Burgess, J. A., and A. J. Walsh. "Consumer Sovereignty, Rationality and the Mandatory Labelling of Genetically Modified Food." Business and Professional Ethics Journal 18, no. 3 (1999): 7–26. http://dx.doi.org/10.5840/bpej1999183/415.

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Drichoutis, Andreas C., and Rodolfo M. Nayga. "Economic Rationality under Cognitive Load." Economic Journal 130, no. 632 (May 8, 2020): 2382–409. http://dx.doi.org/10.1093/ej/ueaa052.

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Abstract Economic analysis assumes that consumer behaviour can be rationalised by a utility function. Previous research has shown that some consistency of choices with economic rationality can be captured by permanent cognitive ability. No other known study however has examined how a temporary load in subjects’ working memory can affect economic rationality. Using two controlled laboratory experiments, we exogenously vary cognitive load by asking subjects to memorise a number while they undertake an induced budget allocation task (Choi et al., 2007a, b). Using a number of manipulation checks, we verify that cognitive load has adverse effects on subjects’ performance in reasoning tasks. However, we find no effect in any of the goodness-of-fit measures that measure consistency of subjects’ choices with the Generalized Axiom of Revealed Preference (GARP), despite having a sample size large enough to detect even small differences between treatments with 80% power. We also find no effect on first-order stochastic dominance and risk preferences. Our finding suggests that economic rationality can be attained even when subjects are placed under temporary working memory load, despite the fact that the load has adverse effects in reasoning tasks.

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O’Sullivan, Stephen R., and Avi Shankar. "Rethinking marketplace culture: Play and the context of context." Marketing Theory 19, no. 4 (April 10, 2019): 509–31. http://dx.doi.org/10.1177/1470593119839171.

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Play theory has been underutilized to understand consumer behaviour. In this article, we adopt a play theory perspective to understand how consumers respond to and navigate macrostructural influences. The marketplace culture stream of consumer culture theory (CCT) research is particularly well suited to macrostructural analysis from a play theory perspective. We develop an analytical framework derived from play theory to interpret the context of marketplace culture. We show how the types of play foundational to marketplace culture experiences act as expressions of order or disorder to wider macrostructural influences. In contrast to agentic perspectives, we show how marketplace culture experiences, despite their fun appearance, embody the underlying tensions of the intensifying rationality, regulation and competition structuring neoliberal society. Finally, we express concern over the marketer’s control of playground expression and suggest CCT adopt a more critical stance to the commercialization of play.

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Panda, Santosh C. "Rational Choice with Intransitive Preferences." Studies in Microeconomics 6, no. 1-2 (June 2018): 66–83. http://dx.doi.org/10.1177/2321022218799001.

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Traditional rational choice theory assumes that the weak preference relation of an agent is an ordering that is it satisfies reflexivity, completeness and transitivity. It is also well known that the ordering property is essential to build the traditional ordinal utility analysis of consumer behaviour. However, there can be many situations when the weak preference relation of an agent may violate transitivity property, and hence, is not an ordering. In such situations traditional ordinal utility analysis breaks down. This paper develops a framework and discusses all the important results of rational choice theory when preferences are intransitive. It looks at weaker rationality properties such as quasi-transitivity and acyclicity and based on that it introduces weaker concepts of rationality such as quasi-transitive rationality and acyclic rationality and characterizes them. It also brings in the congruence axioms and property of path independence, and establishes the link with rationality. Finally, it analyzes how the results will change if we bring in restricted domain assumption of the choice function. JEL Classification: D01, D10, D11

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Viscusi, W. Kip, Wesley A. Magat, and Joel Huber. "An Investigation of the Rationality of Consumer Valuations of Multiple Health Risks." RAND Journal of Economics 18, no. 4 (1987): 465. http://dx.doi.org/10.2307/2555636.

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Choudhury, Nanda, Srabanti Mukherjee, and Biplab Datta. "Consumer Decision-making at the Base of the Pyramid: Synthesis of Literature and an Integrative Framework." Marketing Review 18, no. 3 (December 31, 2018): 270–306. http://dx.doi.org/10.1362/146934718x15434305916853.

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As a pioneering effort, this study analyses the consumer decision-making process at the Base of the Pyramid (BoP). This study proposes consumer vulnerability, bounded rationality, locking-in effect and opportunism as major constructs influencing the consumer decision-making process at the BoP. Using a Systematic Literature Review (SLR), this study has integrated the transaction cost perspective into the consumer decision-making process at the BoP, which is a novel contribution to the literature of consumer behaviour. This work has recognised the importance of the retailer and its role in the decision-making process, and adds a new perspective to the study of BoP as well as to consumer behaviour theories. This study will be helpful to businesses while serving the BoP segment by crafting appropriate marketing strategies for this segment.

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Vásquez Duque, Omar. "No Alarms and Many Surprises: Salience as a Basis For Excessive Pricing Intervention in an Antitrust Context." Journal of Competition Law & Economics 16, no. 4 (June 25, 2020): 552–71. http://dx.doi.org/10.1093/joclec/nhaa017.

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Abstract This article explores how consumers’ bounded rationality can justify antitrust intervention when a firm becomes a monopoly and exploits a product attribute that was not policed by market forces when there was competition for the market. Behavioral economics predicts product complexity leads consumer demand to be a function of salient costs and benefits rather than of actual costs and benefits of products. The divergence between the former and the latter hinders and distorts competition. In fact, comparison shopping is costlier, and sellers can backload part of their prices to nonsalient product attributes. Consumers perceive only a distorted lower price by focusing on salient product features, which leaves room for inefficient matching and opportunistic behavior given the risk of ex post exploitation. These are behavioral limits of competition. In this work, I argue that when (i) there is a lock-in problem, (ii) consumers do not control the probability of triggering a hidden price, and (iii) a typical consumer could not have reasonably expected to find such a hidden price, antitrust intervention would not only deter ex post exploitation but would also enhance competition on the real price of goods. Antitrust would correct a behavioral market failure.

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Omar, Driss Ait, Hamid Garmani, Mohamed El Amrani, Mohamed Baslam, and Mohamed Fakir. "Analyzing the Customers' Dynamic Confusion in Telecommunication Networks Share Game." International Journal of Business Data Communications and Networking 15, no. 2 (July 2019): 15–34. http://dx.doi.org/10.4018/ijbdcn.2019070102.

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In this article, the authors have developed a simple oligopolistic model to formalize the interactions between service providers and end-users by considering that the rationality of customers varies over time. This article assessed the impact of the dynamics of consumer confusion on the competition and profitability of service providers who are considered rational and competitive with one another to maximize their respective gains in the face of a confused fraction of consumers while others are not confused. This article shows the existence and uniqueness of the Nash equilibrium. The authors used the best response dynamic algorithm for learning Nash equilibrium. We have shown that when the number of confused customers is large, the ISP interest this and they offer moderately high prices with low quality of service. On the other hand, over time, rationality increases, forcing the ISPs to change their strategies by offering better services so that their demand increases. We also add that when customer behavior changes quickly, the ISPs follow clearer strategies with customer satisfactory services.

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Swait, Joffre, Monica Popa, and Luming Wang. "Capturing Context-Sensitive Information Usage in Choice Models via Mixtures of Information Archetypes." Journal of Marketing Research 53, no. 5 (October 2016): 646–64. http://dx.doi.org/10.1509/jmr.12.0518.

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The authors offer a new conceptualization and operational model of consumer choice that allows context-sensitive information usage and preference heterogeneity to be separately and simultaneously captured, thus transforming the axiom of full information use into a testable hypothesis. A key contribution of the proposed framework is the integration of two previously disjointed and often antagonistic research paradigms: (1) the economic rationality perspective, which assumes stable preferences and full information usage, and (2) the psychological bounded-rationality perspective, which allows context-sensitive preferences and information selectivity. The authors demonstrate that the two paradigms can and do coexist in the same decision-making space, even at the level of individual consumer choices. The proposed information archetype mixture model is tested in four studies that span different product categories and levels of task complexity. The findings have ramifications for choice modeling theory and implementation, beyond the disciplinary boundaries of marketing to applied economics and choice-focused social sciences.

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Kubicová, Ľubica, Kristína Predanocyová, Zdenka Kádeková, and Ingrida Košičiarová. "Slovak consumers´ perception of bakery products and their offer in retails." Potravinarstvo Slovak Journal of Food Sciences 14 (January 28, 2020): 24–32. http://dx.doi.org/10.5219/1240.

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Bakery products represents an important part of the diet and have an irreplaceable role in the proportion of nutrients, but their popularity in the diet of Slovak consumers continues to decline. For this reason it is necessary to address the issue of bakery products with regard to their consumption. The aim of the paper is to point out the development of consumption of bakery products in the Slovak Republic and to identify the main factors determining their purchase from the perspective of Slovak consumers. Secondary and primary data were used to meet this aim. Secondary data were obtained from the Statistical Office of the Slovak Republic in order to describe trends in consumption of selected foodstuffs in the period 2009 – 2018, as well as to predict the development of consumption of wheat and durable bread by 2020. The development of consumption is influenced by a number of factors, which may include, in particular, the price of products, the existence of substitution products, changes in eating habits and preferences of Slovak consumers, consumer health restrictions, as well as the taste factor. The primary data were obtained through consumer and business-oriented research in the Slovak Republic. The results of the consumer survey showed both rationality and irrationality in consumer decisions when buying bakery products. Rational aspects in the purchase of bakery products are factors of composition and durability. Irrationality in consumer behavior when buying can be accompanied by psychological factors, which include the perception of freshness of bakery products, the perception of prices, the perception of the country of origin, as well as sensory aspects such as taste. The achieved results were confronted with the results of a retail-oriented survey. The results showed that the commercial premises, when offering bakery products, mainly take into account the freshness, price and country of origin of selected foods.

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Feinberg, Fred M., Aradhna Krishna, and Z. John Zhang. "Do we care what others Get? A Behaviorist Approach to Targeted Promotions." Journal of Marketing Research 39, no. 3 (August 2002): 277–91. http://dx.doi.org/10.1509/jmkr.39.3.277.19108.

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Increased access to individual customers and their purchase histories has led to a growth in targeted promotions, including the practice of offering different pricing policies to prospective, as opposed to current, customers. Prior research on targeted promotions has adopted a tenet of the standard economic theory of choice, whereby what a consumer chooses depends exclusively on the prices available to that consumer. In this article, the authors propose that consumer preference for firms is affected not just by prices the consumers themselves are offered but also by prices available to others. This departure from the conventional strong-rationality approach to targeted promotion results in a decidedly different optimal policy. Through a laboratory experiment, calibration of a stochastic model, and game-theoretic analysis, the authors demonstrate that ignoring behaviorist effects exaggerates the importance of targeting switchers as opposed to loyals. This occurs, though with intriguing differences, even when only part of the market is aware of firms’ differing promotional policies. The authors show that both the deal percentage and the proportion of aware consumers affect the optimal strategy of the firm. Furthermore, the authors find that offering lower prices to switchers may not be a sustainable practice in the long run, as information spreads and the proportion of aware consumers grows. The model cautions practitioners against overpromoting and/or promoting to the wrong segment and suggests avenues for improving the effectiveness of targeted promotional policies.

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Babar, Muhammad, T. P. Imthias Ahamed, and Essam A. Alammar. "The Consumer Rationality Assumption in Incentive Based Demand Response Program via Reduction Bidding." Journal of Electrical Engineering and Technology 10, no. 1 (January 1, 2015): 64–74. http://dx.doi.org/10.5370/jeet.2015.10.1.064.

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Widijantoro, Johanes. "THE ROLE OF FINANCIAL SERVICES AUTHORITY IN THE CONSUMER PROTECTION AMID THE GROWTH OF FINTECH INDUSTRY IN INDONESIA." Mimbar Hukum - Fakultas Hukum Universitas Gadjah Mada 31, no. 2 (June 3, 2019): 297. http://dx.doi.org/10.22146/jmh.43129.

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The growth of the financial technology (fintech) industry is a necessity as an effort to make financial services more practical and efficient. On the other hand, consumers of financial services are still low in financial literacy levels, especially in considering various risks that can occur in dealing with the fintech industry. Indonesian Financial Services Authority (OJK) is the body responsible for carrying out the protection of consumers of financial services. This article describes how legal matters in the fintech business, which are actually useful and can encourage financial inclusion, but on the other hand have the potential to harm consumers if they are not properly regulated. Existing related OJK Regulations would be examined and what things should be regulated by the OJK so that consumers of financial services are protected amid the development of fintech, will also be elaborated in this article. This article respectively describes the rationality of consumer protection in the financial services, the dynamics of fintech growth and its problems, and an analysis of the role of OJK in the era of fintech industry.

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Pavlova, Natalia. "BEHAVIORAL ASPECTS OF REGULATOR DECISIONS." Scientific Research of Faculty of Economics. Electronic Journal 9, no. 1 (March 28, 2017): 7–18. http://dx.doi.org/10.38050/2078-3809-2017-9-1-7-18.

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The findings of many behavioral economics studies have led many experts to share the view that the effects of limited rationality can be solved through the proper development of the menu options available to the consumer. The devising of such a menu rests on the shoulders of regulators. However, the question arises as to how regulators themselves, in turn, are limitedly rational, and how much they are motivated to provide an optimal menu of contracts that ensures maximum social welfare, given that designing such a menu is costly. This paper systematizes the main manifestations of limited rationality which can influence decision-making by regulators. An attempt is made to answer two questions: is there a need and possibility to take into account the limited rationality of civil servants in modeling the actions of the regulator and are special practical measures required to correct for the identified effects.

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Leggett, Angela. "Bringing green food to the Chinese table: How civil society actors are changing consumer culture in China." Journal of Consumer Culture 20, no. 1 (September 4, 2017): 83–101. http://dx.doi.org/10.1177/1469540517729009.

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Environmental and health effects of China’s rapid economic growth since the 1980s have been especially tangible in the food sector, with ‘green’ products emerging as alternatives for consumption networks wishing to avoid ‘conventional’ foods produced using chemicals. Despite state support for increased sustainability in large-scale farming over the past decade, formal institutional voids remain, with regard to consumer trust and small-scale farmers. Green food consumption is increasing in China, as civil society actors work to fill voids and promote green purchasing behaviour. In this article, I investigate how civil society organisations are changing Chinese consumer culture around green food through two stages of empirical research. Qualitative content analysis of microblogs of four Chinese environmental non-governmental organisations was conducted in 2013, and insights were further explored through fieldwork interviews and participant observation in Beijing during 2016. Responding to previous consumer behaviour studies which over-emphasise individual rationality, marginalising contextual and collective aspects, this analysis adopts Bajde’s enrichment of Consumer Culture Theory with Actor Network Theory to explore microelements and macroelements, their interrelations and processes of change. Based on co-production of subject and object within Consumer Culture Theory with Actor Network Theory, this study analyses engagement with and re/creation of materials, discourse and social meanings by green food consumption networks, including non-governmental organisations, farmers, retailers and consumers. Although findings reflect particularities of the Beijing cultural context, themes parallel wider phenomena at the national and international levels.

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Journal articles on the topic 'Consumer rationality'

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