Consumer Behavior in Uncertain Situations

Consumer Behavior in Uncertain Situations - Consumer...

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Consumer Behavior in Uncertain Situations Choice Based on Expected Value In some cases, buyers must make a purchase decision without knowing exactly what they're getting for their money. Deciding whether or not to buy a good without knowing exactly what the good is worth involves some degree of risk, as there is variation in the possible outcome. To make these decisions, buyers have to evaluate, to their best ability, how much the goods are really worth, and then decide how much they are willing to pay for the goods. For example, if Jevan is interested in buying stock in a new startup, he can't be sure what will happen to the value of his stock as time passes. The company could be a huge success, making his stock very valuable, it could be a moderate success, making his stock somewhat valuable, or it could be a failure, making his stock worthless. Before he decides to buy any stock, Jevan has to decide what is the most likely outcome, and what his stock is going to be worth: that is, based on the
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This note was uploaded on 02/09/2012 for the course ECO ECO2013 taught by Professor Jominy during the Fall '08 term at Broward College.

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