IMPACT OF IRRATIONALITY IN CONSUMER BEHAVIOUR

Abstract

As technology has simplified meeting basic needs, humans have cultivated increasingly psychological avenues for occupying their consumption energies. Research-led thinking is critical for all progressive companies looking to build mindful, smart and powerful products and services. There are ever-more fascinating insights about how we think and behave every day. While classic economics theories have posited that individuals are rational decision makers that make choices to maximize expected utility, recent research in both psychology and economics have repeatedly demonstrated that individuals deviate from the standard economic models in a predictable fashion. In this research, first, a review of how four classes of consumption—consuming expectancies, goals, fluency, and regulatory fit is done. Next, a survey to understand the way we make decisions regarding relative pricing, social norms, effect options have, the perception towards “free” is judged and finally the concept of hedonic treadmill is evaluated. Then the takeaways that would help to augment efforts to enhance consumer welfare are made.