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Rational consumor
aim to choose the lowest priced product when choosing between two identical (homogenous) products.
Rational firms
choose the lowest priced product when choosing between two identical (homogenous) products.
Reasons consumers may not maximise their benefits
Herding behaviour
Habitual behaviour
Consumor weakness in consumptione
herding behaviour
Individuals are influenced by consumption norms within their social groups.
Habitual behaviour
Consumers may stick with their current situation due to a reluctance to change.
Weakness at computation
Humans are not always adept at mathematical computation, leading to biases in decision-making.
Managerial objectives
Managers may prioritize objectives like maximizing their salary or sales, which may not align with maximizing profits.
Alternate business objectives
Some businesses prioritize objectives other than profit, such as customer care or social causes.
Charitable operations
Charitable organizations may prioritize raising money or awareness for a cause over maximizing profits
