04-Consumer Preferences

04-Consumer Preferences - Consumer Behavior: Consumer...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
Consumer Behavior: Consumer Preferences Reading: Chapter 3 I have forced myself to contradict myself in order to avoid conforming to my own taste. - Marcel Duchamp, Dada artist
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 Theory of Consumer Choice Three steps involved in the study of consumer behavior: Approach: perfectly rational consumers pursuing their self-interest What consumer wants (preferences) => What consumer actually buys (choice) What consumer can afford (budget)
Background image of page 2
3 Consumer Preferences Three crucial assumptions: 1. Completeness: consumer can make a decision Either a preferred to b , or b preferred to a , or indifferent between the two 2. Transitivity: consumer is consistent If a preferred to b , and b preferred to c , then a preferred to c 3. Non-satiation: consumer prefers more to less If a has more of all goods than b , then a is preferred to b
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4 The consumer prefers A to all combinations in the yellow box, while all those in the pink box are preferred to A.
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 15

04-Consumer Preferences - Consumer Behavior: Consumer...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online