Rational behavior of consumer and producer: description, examples and theories

The hypothesis of rational consumer behavior is very interesting and entertaining. It can be useful to ordinary people and entrepreneurs.

general information

Now it is difficult to find a person who does not believe that everything in the economy revolves around the consumer. This is the norm of development of the economic sector. It is believed that every single person himself knows what he needs. When the economy meets its needs, it operates best. Ultimately, it is the decisions of individual people about the purchase of a particular product and form the market demand. Thus, we affect the volume of real sales and the level of equilibrium prices. In economic science, this phrase is used to refer to this process as the rational economic behavior of the consumer.

What is the point?

When a consumer enters the market, he tries to meet his needs to the maximum and obtain the highest level of utility when using a certain good. Here it should be noted that both the individual and the producer are not absolutely free in their choice. We have to take into account not only the available personal preferences, but also the income that is available. Also, their influence is exerted by services, goods, and other factors of competition. Therefore, the rational behavior of the consumer and the producer is aimed at obtaining the maximum possible usefulness in limited conditions.

Principles

The theory of rational consumer behavior is a component of microeconomics. In the analysis it is assumed that the behavior of the individual is rational, that is, the maximum satisfaction with a limited budget is achieved. The most important in this is the principle of maximizing utility. He is considered the main in human behavior and in determining his choice. A small terminological specification: utility is the ability of a certain good to meet the specific needs of society or of an individual. It is directly related to their characteristics, among which quality plays the greatest role. In addition to it, the longevity, appearance, ease of use, comfort, luxury and the like have a significant impact. Another important principle that affects the rational behavior of the consumer is the sovereignty of the individual. That is, how much he is not subject to external influence. So, everyone should eat well to be healthy and active. Let's say that a touch phone appeared on the market, which many consider to be a status phone. And a person has a choice: to buy an expensive and not very necessary thing and then half a year to eat anyhow as or do without such a thing and spend money on food and other utilities. If he chooses the first option, then it is not necessary to talk about the rational behavior of the consumer. Examples of this attitude are very numerous, and these people are engaged in advertising specialists.

Theoretical component

There are two main approaches:

1. Cardinal utility theory. Known as a quantitative approach. Pulls out the hypothesis about the possibility of measuring the usefulness of goods. The basic rate makes for the quantity (in pieces, liters, kilograms and so on).
2. Ordinalist theory of utility. Also known as ordinal approach. Defends the point of view according to which it is possible to rank the usefulness of a person. Usually, the best-to-the-worst calculation system is used. At the same time, the quantitative commensurability of the utility of goods is rejected. At the heart of such an analysis is a certain set of a small number of initial hypotheses, on the basis of which indifference curves are constructed and the optimum of the consumer is calculated.

Common features

The hypothesis of rational behavior is possible due to the presence of a unifying basis for all people. For example:

1. The average consumer has a system of preferences.
2. Demand is significantly influenced by the presence / absence of conjugated goods.
3. Everyone wants to maximize their usefulness.
4. The demand of a particular consumer depends on its level of income.

Effects

We are interested in the rational behavior of the consumer. The plan of action of each individual provides for activity within the framework of his system of preferences. But to take into account specific values here is extremely difficult because of the effects of consumer interaction. Let's look at their types:

1. The effect of the snob. In this case, it means the creation of a situation where the purchase is made solely in order to emphasize one's social position.
2. Veblen effect. This implies a situation where demonstratively and emphatically made purchases that allow us to distinguish a person's position. As a rule, this refers to the acquisition of goods that are extremely expensive and not available to most people.
3. The effect of presumed quality. This designation of the situation, when goods with the same characteristics in different stores are sold at different prices.
4. The effect of joining the majority. It is an expression of a desire not to be inferior to other people who are more "successful."
5. Irrational demand. The purchase is made only due to the fact that it was made by some other person who has a significant influence on the buyer.
6. Speculative demand. Occurs when there is a shortage of goods.

On the manufacturers of the word

Their success and failure entirely depend on the overall behavior of all consumers. Thus, we can influence even large enterprises. Let us consider an example. There was a company producing high-quality products. Over time, it literally "captures" the market, as its products have very high rates. When she literally has a monopoly position, she decides to lower the quality of manufactured products, while leaving the price unchanged. Over time, consumers will realize that something is wrong, and stop buying goods of this brand. And they will start switching to products of other manufacturers that offer the best balance of price / quality. Everyone in this situation votes with his purse. In the case of mass such phenomena, a break in the market situation occurs, and new players are raised on it.

Conclusion

One of the rather significant drawbacks of this hypothesis is that the assumption is made that man will act rationally. Alas, this is not always the case. Often we spend money on various trifles, postponing for the future important events in our life. Of course, this is not good. To avoid this state of affairs, every important step should be considered.