Factors Affecting Rational Choice
Factors Affecting Rational Choice
Most consumer behavior analyses and programs seek to dig out consumers’ needs and wants, which direct their purchasing and decision behaviors. Consumer behavior and choice are complex, inherently dynamic and potentially affected by a number of factors. According to this, it seems that the rational choice theory should make some adjustments to be adopted to this increasingly more dynamic reality and marketing environment and thus set a realistic and stable base for consumer behavior analysis.
1. Brief introduction about rational choice theory
1.1 Rational choice theory as an economic notion
“Rationality” can also be substituted by other technical terms, such as utility, probability, product, optimization, equilibrium (Steven M. Shugan, 2006).The most common form of rational choice theory is similar with the notion of “Economic Man Model ”, which serves as the foundation for what has been termed the law-and-economics movement(Jacob Jacoby, 2000),but involves a plenty of unrealistic assumptions. The mainstream theory of rational choice simply defines "rationality" as a situation that an individual using all possible resource and information to make complex trade-off between cost and benefits in order to maximize and optimize their action results. When this theory is applied to consumer behavior, the result turns out to be that all consumers are supposed to be rational and are able to make full use of all available resource and information to maximize their consumption utility. This model has been repeatedly challenged, both for its assumptions and conclusions. An interesting saying is that if consumers really follow the rigorous rational decision-making steps when they go shopping, their entire life would be eventually spent on choosing and selecting and leave no time for enjoying the utilities of what they decide to purchase.
1.2 The principle of bounded rationality
Complete rationality requires consumers to possess boundless
Most consumer behavior analyses and programs seek to dig out consumers’ needs and wants, which direct their purchasing and decision behaviors. Consumer behavior and choice are complex, inherently dynamic and potentially affected by a number of factors. According to this, it seems that the rational choice theory should make some adjustments to be adopted to this increasingly more dynamic reality and marketing environment and thus set a realistic and stable base for consumer behavior analysis.
1. Brief introduction about rational choice theory
1.1 Rational choice theory as an economic notion
“Rationality” can also be substituted by other technical terms, such as utility, probability, product, optimization, equilibrium (Steven M. Shugan, 2006).The most common form of rational choice theory is similar with the notion of “Economic Man Model ”, which serves as the foundation for what has been termed the law-and-economics movement(Jacob Jacoby, 2000),but involves a plenty of unrealistic assumptions. The mainstream theory of rational choice simply defines "rationality" as a situation that an individual using all possible resource and information to make complex trade-off between cost and benefits in order to maximize and optimize their action results. When this theory is applied to consumer behavior, the result turns out to be that all consumers are supposed to be rational and are able to make full use of all available resource and information to maximize their consumption utility. This model has been repeatedly challenged, both for its assumptions and conclusions. An interesting saying is that if consumers really follow the rigorous rational decision-making steps when they go shopping, their entire life would be eventually spent on choosing and selecting and leave no time for enjoying the utilities of what they decide to purchase.
1.2 The principle of bounded rationality
Complete rationality requires consumers to possess boundless