1f. Rational and irrational decision making

Assumptions about economic agents

• Consumers want to maximise their utility/economic welfare
• Workers want to maximise their welfare at work (pay)
• Firms want to maximise their reward for ownership (profit)
• Governments are assumed to want to maximise the welfare of citizens

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Alternative views of consumers in economics

• Consideration of the influence of other people’s behaviour
• The importance of habitual behaviour
• Consumer weakness at computation

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