Consumer Behavior Utility Maximization

Consumer Behavior

The study of how individuals, groups, or organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy needs and wants. (Cue: Buy–Use–Dispose)

Unique Features of Consumer Behavior in Health Economics (5)

UADPE – Uncertain Doctors Demand Pricey Effects: Uncertainty, Asymmetry of Information, Derived Demand, Price Insensitivity, Externalities.

Determinants of Consumer Behavior (4)

ESPA – Every Student Picks Answers: Economic, Sociocultural, Psychological, Accessibility.

Decision-Making Process (5)

PIEPP – People In Every Purchase Process: Problem Recognition, Information Search, Evaluation of Alternatives, Purchase Decision, Post-Purchase Behavior.

Outputs / Consumer Response (2)

BP – Buying + Post-purchase: Buying Behavior, Post-Purchase Evaluation.

Types of Consumer Buying Behavior (4)

CDHV – Consumers Do Have Variety: Complex, Dissonance-Reducing, Habitual, Variety-Seeking.

Characteristics of Consumer Behavior (10)

GCIVDRDCDL – Good Consumers Involve Various Dynamic Rational Decisions Choosing Different Learnings.

Rule of Utility Maximization

The last peso spent on each good should give the same satisfaction per peso. (Cue: Equal joy per peso.)

Utility Maximization Examples

Rice or rest — both must feel best. (Equal satisfaction from rice vs. bread, work vs. leisure.) In health: same cure, smaller cost = smart utility.

Key Takeaways (7)

PUCRPGT – Patients Understand Choices Require Proper Government Trade-offs.