Paul STOCK deposited Behavioral Insights Reveal a Consumer of Mixed Rationality in the group Labor Studies on Humanities Commons 2 years, 3 months ago
While a fundamental axiom in economics is that consumers act rationally, maximizing their utility by obeying the law of demand, it has become increasingly recognized that these individuals may make irrational decisions in situations of influence. As not all consumers have the same rationality, this study aimed to identify specific consumer characteristics associated with increased irrational behavior. A survey design was utilized to assess the relationship between consumers’ demographics with their rationality, as well determine the extent of their risk-taking behavior, impulsive buying decisions, and how they self-perceive their own rationality compared to other consumers. Among 402 participants, younger age, unmarried status, a lower income, and having no children were associated with more irrational consumer behavior (p<0.01 for each bivariate association). Nearly one-fourth (24%) of consumers self-reported being a risk-taker most of the time, generally observed among men (28% vs. 17%, p=0.02). Approximately 40% have purchased a product they wanted when they should have bought something needed. Twenty-eight percent believed their emotions affected their buying decisions with 88% making impulsive purchases they regretted later. Influences often stem from family (36%), friends (14%), or product details containing the words “gourmet”, “authentic”, or “handmade” (48%). Additionally, most participants in this study considered themselves to be more rational than the average consumer, which varied by gender (82% male vs. 71% female, p=0.01). As this study found consumers have varying degrees of mixed rationality, additional research should examine how these variations develop over time and in what specific circumstances do they hold steadfast.