Consumer behaviour : an inquiry into consumer rationality

Abstract

Should you visit the backstage of economic theory, there is one particular actor which has now become a permanent presence in the cast. Also known as the rational man, this actor draws scores of enthusiasts as they flock to the theatre to view his shows. Indeed very interesting shows, which portray the actor as he acts out his consumption decisions within a particular world. The particular world as created by the much acclaimed scriptwriter known to the public as the economist. Yet, though the crowd loudly discusses and reviews the play, few of them actually question as to why the rational man is acting in such manner and why is such an unrealistic world depicted. They seem to take such acting for granted and in turn interpret the actual reality that surrounds them in their everyday life through the particular viewpoint as proposed by the scriptwriter. This study moves away from such unquestioning and directs its energies to gain some understanding into the reality of the actual consumption decisions. Contrary to the trend, this research does not blindingly assume rationality. Instead it seeks to understand the roots of this concept whilst also embrace other views of sciences dedicated in their entirety to the analysis of human and consumer behaviour. Whilst economics conventionally assumes that each individual has stable and coherent preferences, and that one rationally maximizes those preferences (Rabin, 1998), there is a growing school of economists who are drawing on a vast range of behavioural traits identified by experimental psychologists which amount to a frontal assault on the whole idea that people, individually or as a group, mostly act rationally (The Economist, 1999). Psychological research suggests various modifications to this conception of human choice (Rabin, 1998). Such trends and evidence, in addition to causal observation, portray consumer behaviour as indeed, a very ambiguous decision process. A process, far more complex, far more diverse, than as depicted by the straightforward and simple notions of rationality. These are the principal dilemmas which inspired this research project. Specifically, this project addresses two principal questions; first, what is rational choice theory, and which factors, partially identified by alternate fields make it seem unrealistic. And, in seeking to identify a real-world case of irrationality, we shall undertake an inquiry into why people purchase branded products when cheaper alternative substitutes are available;