The hypothesis of rational consumer behavior is very interesting and entertaining. It can be useful to both an ordinary person and an entrepreneur.
general information
Now it is difficult to find a person who would not believe that everything in the economy revolves around the consumer. This is the norm for the development of the economic sector. It is believed that each individual person himself knows what he needs. When an economy satisfies its needs, then it acts best. Ultimately, it is the decisions of individuals about the purchase of a product that form the
market demand. Thus, we influence the volume of real sales and the level of
equilibrium prices. In economic science, a phrase such as rational economic behavior of a consumer is used to denote this process.
What is the point?
When a consumer enters the market, he tries to satisfy his needs as much as possible and get the highest level of utility when using a certain good. It should be noted here that both the individual and the manufacturer are not completely free in their choice. It is necessary to take into account not only the available
personal preferences, but also the income that is available. Also, services, goods, and other competition factors exert their influence. Therefore, the rational behavior of the consumer and the manufacturer is aimed at obtaining the maximum possible usefulness in limited conditions.
Principles
The theory of rational consumer behavior is a component of microeconomics. The analysis assumes that the individual’s behavior is rational, that is, maximum satisfaction is achieved with a limited budget. Most important in this is the principle of maximizing utility. It is considered fundamental in human behavior and in determining its choice. A small terminological clarification: utility is the ability of a certain good to satisfy the specific needs of a society or an individual. It is directly related to their characteristics, among which quality plays the largest role. In addition to it, durability, appearance, ease of use, comfort, luxury and the like have a significant impact. Another important principle that affects the rational behavior of a consumer is human sovereignty. That is, how much he is not subject to external influence. So, everyone should eat well in order to be healthy and active. Let's say that a touch-screen phone has appeared on the market, which many consider status. And a person has a choice: to buy an expensive and not very necessary thing and then eat for six months anyway, or how to do without such a thing and spend money on food and other utilities. If he chooses the first option, then there is no need to talk about rational consumer behavior. Examples of this attitude are very numerous, and advertising specialists are involved in these people.
Theoretical component
There are two main approaches:
- Cardinalist theory of utility. Also known as a quantitative approach. He hypothesizes the possibility of measuring the usefulness of goods. The main bet is on the quantity (in pieces, liters, kilograms and so on).
- Ordinalistic theory of utility. Also known as ordinal approach. He defends the point of view according to which one can rank the usefulness of a person. The best to worst score system is commonly used. At the same time, the quantitative measurement of the usefulness of goods is rejected. The basis of this analysis is a certain set of a small number of initial hypotheses, on the basis of which indifference curves are built and the consumer optimum is calculated.
Common features
The rational behavior hypothesis is possible due to the presence of a unifying framework for all people. For instance:
- The average consumer has a preference system.
- The demand is significantly influenced by the presence / absence of related products.
- Everyone wants to maximize their usefulness.
- The demand of a particular consumer depends on his income level.
Effects
We are interested in rational consumer behavior. The action plan of each individual person provides for activity within the framework of his system of preferences. But it is extremely difficult to take into account specific values because of the effects of consumer interference. Let's consider what their types exist:
- Snob effect. In this case, it means creating a situation where the purchase is made solely in order to emphasize one's social position.
- Veblen effect. By this is meant a situation where purchases are made in a pointed and emphasized manner that make it possible to highlight a person’s position. As a rule, this applies to the acquisition of goods that are extremely expensive and not accessible to most people.
- The effect of alleged quality. This designation of a situation when goods with the same characteristics in different stores are sold at different prices.
- The effect of joining the majority. It is an expression of desire in no way inferior to other people who are more "successful".
- Irrational demand. The purchase is made only due to the fact that it was made by some other person who has a significant influence on the buyer.
- Speculative demand. It arises when there is a shortage of goods.
About the manufacturers put in a word
Their success and failure completely depend on the total behavior of all consumers. Thus, we can even influence large enterprises. Consider this example. A company has emerged that produces quality products. Over time, it literally “captures” the market, since its products have very high rates. When she is literally in a monopoly position, she decides to lower the quality of manufactured products, while leaving the price unchanged. Over time, consumers will realize that something is wrong and stop buying products of this brand. And they will begin to switch to products from other manufacturers that offer the best price / quality balance. Each person in this situation votes his wallet. With such massive events, the situation in the market breaks, and new players rise on it.
Conclusion
One of the rather significant drawbacks of the hypothesis considered is that the assumption is put at the forefront that a person will act rationally. Alas, this is not always the case. Often we spend money on various little things, putting off important events in our lives for the future. Of course, this is not good. To avoid this state of affairs, every important step should be considered.