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By making calculative decisions, it is considered as rational action. Individuals are often making calculative decisions in social situations by weighing out the pros and cons of an action taken towards a person. The decision to act on a rational decision is also dependent on the unforeseen benefits of the friendship.
The theory of consumer choice is the branch of microeconomics that relates preferences to consumption expenditures and to consumer demand curves.It analyzes how consumers maximize the desirability of their consumption (as measured by their preferences subject to limitations on their expenditures), by maximizing utility subject to a consumer budget constraint. [1]
As part of consumer behavior, the buying decision process is the decision-making process used by consumers regarding the market transactions before, during, and after the purchase of a good or service. It can be seen as a particular form of a cost–benefit analysis in the presence of multiple alternatives. [1] [2]
The consumer, however, may violate this logical assumption and purchase product C regardless of the availability of the preferred others when there is no way to rationalize the purchase of A or B instead of C. [9] As rationalization is associated with the decision making the process more so than the decision itself, the explanation for this ...
In reference to economics, rational agent refers to hypothetical consumers and how they make decisions in a free market. This concept is one of the assumptions made in neoclassical economic theory. The concept of economic rationality arises from a tradition of marginal analysis used in neoclassical economics.
Marketers can take advantage of rational ignorance by increasing the complexity of a decision. If the difference in value between a quality product and a poor product is less than the cost to perform the research necessary to differentiate between them, then it is more rational for a consumer to just take his chances on whichever of the two is more convenient and available.
Rational decision making is a multi-step process for making choices between alternatives. The process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. Irrational decision is more counter to logic. The decisions are made in haste and outcomes are not considered. [57]
Because consumers are modelled as being rational, they seek to extract the most benefit for themselves. However, due to bounded rationality and other biases, consumers sometimes pick bundles that do not necessarily maximize their utility. The utility maximization bundle of the consumer is also not set and can change over time depending on their ...