Behavioral Economics And Its Effect On Consumer Decision...

Abstract This paper will cover the study of behavioral economics and its effect in consumer decision-making. The impact of human factors, importance of making rational decisions, and how all this ties into the economic market will be discussed in the report. This paper will include models, tables, and real world examples of a decision making process as it relates to behavioral economics and consumer buying process. The usefulness of the utility theory will be illustrated as an example pertaining to consumer behavior. The findings will show how consumer rational is Introduction Everyday, every minute, and every second consumers are making decisions on whether or not they should purchase a given product. The product could be as small as a candy bar to as big as a car. The processes that flow inside the mind of a consumer when making a decision is both psychologically and economically based. So, understanding the process is central to making rationally based decisions. However, this decision is not only important to the consumer purchasing the product, it’s also of important significance to the marketers and policy makers. Reasons why making decisions can be so difficult is that the consumer is dealt with many alternatives, and with the rapid pace in technology this is making it more difficult. Economist, business analyst, and statisticians all are using consumer decision-making as a strategy. They use the information to ponder, â€Å"how different amounts of prior knowledgeShow MoreRelatedClassical Financial Theory : Cognitive Psychology And Economics952 Words   |  4 Pageswhat influences people’s decision making can help solve some of the world’s most complex problems. Research in the financial sector has been dumbfounded by this very question since the advent of the stock market. Classical financial theory assumes investors behave with rational expectations in order to maintain an efficient market. 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