Observations of violations of consumer optimum predicted by consumer choice theory could provide support for I. utility analysis
II) bounded rationality
III) behavioral economics
A) I only.
B) III only.
C) both I and II.
D) both II and III.

Question

Quizplus · Accepted Answer

Observations of violations of consumer optimum predicted by consumer choice theory support both bounded rationality, which suggests that consumers aim to make satisfactory decisions rather than optimal ones due to cognitive limitations, and behavioral economics, which studies the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions and how those decisions vary from those implied by classical theory.

Observations of Violations of Consumer Optimum Predicted by Consumer Choice