Please enable JavaScript.
Coggle requires JavaScript to display documents.
Economics 1.2.10 - Coggle Diagram
Economics 1.2.10
habit
consumers buy off of habit and may not maximise utility
brand loyalty
don't want the hassle of switching
default decisions don't require mental effort so become automatic
e.g. broadband or car insurance
default opt ins e.g. pensions
assumptions of rational behaviour
stable tastes and preferences
consumers act independently
complete information
always make optimal decisions
consumers maximise welfare
producers maximise profit
bounded rationality
cognitive limitations
limited attention spans
consumers satisfice rather than maximise
lack of information
lack of time
imperfect information
asymmetric information
not all information is available
consumers don't understand all information
influence of others
peer pressure
social norms
trends
anchoring
using a previous value to judge future situations
e.g. buying a house
overoptimism bias
overestimating the probability of something good happening
e.g. winning the lottery
status quo bias
not wanting to change from current position to avoid hassle
e,g, car insurance
lack of time
inhibits consumers accessing all information
loss aversion
not wanting to lose out on something more than wanting to gain something else
herd behaviour
following others
leads to sub-optimal decisions