Evaluating Aggregated Predictions From Models Of Consumer Choice Behavior

Author : Johnny Ch Lok
Publisher : Independently Published
ISBN 13 : 9781792998577
Total Pages : 386 pages
Book Rating : 4.9/5 (985 download)

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Download or read book How to Predict Consumer Psychology written by Johnny Ch Lok and published by Independently Published. This book was released on 2019 with total page 386 pages. Available in PDF, EPUB and Kindle. Book excerpt: Part TwoPsychological method predicts consumer behabiorIntroductionWhat is the standard economic model? It is the standard economic model, the way most economists think about consumer welfare and consumer choice. What is the rationality in the standard economic model? The standard economic model relies heavily on the assumption that consumers are rational. Standard economic model assumes that consumers are fully aware of all the options who have, who can always and consistently, rank whose options in accordance with their preferences, and always choose the option, who like the best option. Thus, what the assumptions of the standard economic model of consumer are? The assumptions include consumers act with full information, consumers have known preferences, consumers choose the best option available.The standard economic model of consumer behavioral prediction method advantages includes: A logically consistent theory of consumer behavior can be built, that theory can be used to make predictions about consumer behavior and those predictions can be compared with reality and those models often correspond to actual behavior of consumption reasons. What is the inconvenient truth? It includes clear evidence from psychology has shown that the rationality assumptions of standard economic model are wrong. Evidence from psychology has shown that consumers often are irrational and also who are predictably irrational. So these are wrong view point to influence how economists judge what cause consumption of behavior. Thus, it beings this question? What is mean of predictably irrational? It means that of irrational consumers were irrational in random ways, who would cancel each other out, leaving the overall outcomes determined by the behavioral consumption of rational consumers. As that case, economic theories that ignored irrational behavioral consumption would work just fine. But, psychology has shown that consumers are irrational in similar and predictable ways. Therefore, irrationality doesn't cancel out and can't be ignored to judge why the behavioral consumption has been caused.