Consumer behaviour

• Bounded rationality


  Individuals are rational decision makers who endeavour to maximise their utility, but have limitations
• Bounded self-control


  Consumers are able to exercise self-control, but unable to do so with some decisions
• Law of diminishing marginal utility


  Every extra unit consumed provides a smaller benefit to the consumer
• Consumers know saving for pension benefits them in long run


  This limits their spending in the short run
• Heuristics


  Simplify the decision making process to come to a reasonable decision, avoiding taking too long or having imperfect information
• Social norms


  The behaviour of other people affects how the consumer acts
• Social pressure encourages consumers to do things they would not otherwise do, or that they know could be harmful
• Anchoring


  The human tendency to rely on the first piece of information they are given, causing bias towards it
• Availability


  A form of bias towards events that were recent, personal or memorable, causing them to be overestimated and elicit emotional responses
• Altruism


  The act of being selfless and considerate towards other people