rationality

• rationality


  being able to rank the order of different outcomes from an action in terms of their net benefits to themselves
• factors that affect consumer choice (3)

  1. herding behaviour
  2. habitual behaviour
  3. weak at computation + information overload
• herding behaviour

  1. links to impulse
  2. following the crowd doing what others do without considering personal net benefits
• habitual behaviour

  1. link to addictiveness
  2. continuing out of convenience

  eg. insurance, phone deals
• weak at computation + information overload

  1. unable to process lots of information makes less well informed decisions

  eg most people don't put enough money in their pensions and financially struggle in their 60's and 70's