1.2.1 - Rational Decision Making

• Rational behaviours in households, workers, firms include aiming to maximise utility, profit, or social welfare.
• Consumers gain benefits from buying goods and services such as brand loyalty, lack of information, laziness, safety, health, taste, pleasure/happiness, durability, better living standards, and saving time and money.
• Workers maximise utility by gaining experience or new skills, job security and stability, pensions, and financial security for the future, which increases their feeling of safety.
• This increased sense of safety leads to a reduced need for loans and early retirement.
• Firms maximise profits by increasing levels of advertising, which increases engagement awareness amongst consumers and can attract new customers to purchase goods.
• This is particularly important for firms with no high street presence, such as online or competitive areas.
• Firms can attract new customers by offering free samples, big sales, free shipping and returns.
• The government maximises social welfare by allowing the public to vote for it, so it should make decisions that make the public happy.