2.4 critique of the maximizing behaviour of C AND P hl

what do rational conuserm choice assume?(3)

1. consumers act reationally → choosing the choice where they reive the GREATEST benefit

2. aim to maximise utilioty (satisfaction)

3. have perfect infomraiton to guide decisions

what are the limiations that prevents us from making reational consumer choice (5)

biases:

• rule of thumb(due to lazyness, preferably choose the decision that arequires less effort → e.g not doing enough reserach about the price before aactually buying the product)

• anchoring(when we rely on the infomraiton of the first thing we see → first concert i saw was %1200, after that when i went to tokyo to watch tate mcrae, the price was 800, and i think 800 is AN AMAZING and cheap price for a concert because i am anchored from the preivous infomraiton that a concert ticket should worth AT LEAST 1200.ooh i cooked)

• availability heuristic → u rely on memories that comes to ur mind at ease → i.e omg i watched the news about a crash of airplane yesterday and today im flying on an airplane, i feel liek its gonna crash → overeilaince on data that is vivid on ur mind but not the actual truth → probit of airplane crash is much LESS than a car crash

bounded raitnality

• limited ability to process informaotin

bounded self control:

• conusmers struggle with being discipleine, like overspending andHOLY over consumption on clothes (me)

Boundedselfsihness

• we donate to ppl for free guys <33 but this apprently is not reationl cuz u nodont have gains

imperfect informaoitn

• lack of information of certian knowledge -. not good of a decsiojn

types of choice architectre → struvting decisions to inlfuence bhaioru

• defualt choices: automatic chosen choice

• trsitrctedcoices: limited cjoices provdied

• mandated choices: need ppl to make decision

• nudge thoery: small intevetions to deviate behaviour or decision making withour restrsicting freedom

business objectives (5)

1. profit maximisaiton→ traditional assumoiton about firm behvaiour → 100% profit dirven aka

2. howver thers CSR (the one u like the most) → need to be ethical and good the earth too → wil choose envirnamelly better otions even its at hgiehr price

3. market share growth → aiming for dominance even at lower profits

4. satisficing → not goign all in for the business, just satisfactory, want to have a lif eoutside of work

5. growth → edpanidng business sscale