Are Consumers Rational?
- Pages: 5
- Word count: 1092
- Category: Economics
A limited time offer! Get a custom sample essay written according to your requirements urgent 3h delivery guaranteedOrder Now
Last couples of decades have witnessed the change of emphasis on study of consumers behaviour. Nowadays it is universally acknowledged that consumers behaviour has gradually transformed from rational buying to progressively impulsive purchase (Holbrook & Hirschman, 1982). Individuals’ perspectives towards commodities were no longer merely a concentration on utilitarian functions, instead, social and psychological utilities have become a significant yardstick against products and services. Consequently, a variety of motives should be taken into account while studying buying choice. Under this circumstance, consumers were attached with irrationality which could spawn excessive purchasing.
Initially, we should take a glance on why humankind are motived. A hierarchy to demonstrate how people seek to satisfy and prioritize needs states that people would serve primitive, physical and biological needs (eg.ease their hunger)first, transiting to belongingness needs then, with eventually a satisfaction of self-actualization needs (Maslow, 1943, cited in Baines et al, 2011:99).
Traditional assumptions commit a notion that consumers are rational. Viewed from a economic perspective, there are three predominant conceptions of rationality (Mele & Rawling, 2004). Firstly, the instinctive goal of a person is to optimize self-interest. At this stage, consumers would seek a path to the boost of self-interest. Secondly, von Neumann and Morgenstern (1953) pointed out that consumers are in a desire of maximum of utility. Thirdly, a well accepted statement argued by Simon (1958) as cited in Howard and Seth(1969), that consumers are under ‘bounded rationality’, that is, in brief,consumers behaviour are consciously rational, but the rationality is under constraint. In fact, researchers would assume consumers as rational due to the consumers’ lack of effective information as well as limitation of cognition (Howard & Seth 1969). As recognized by many, to some extents,consumers do behave in a rational manner. As mentioned above, people generally would satisfy their physiological needs and focus on functional benefits above all. Thus,they spent quite a lot time considering and measuring if a product is worth the cost. According to neoclassical economics theory, consumers were assumed to possess a series of decision-making process. Similarly, Baines et al (2011) claimed consumers perform a series of proposition acquisition process, thereby helping make a decision.
However, as time went by,drawbacks of assumption that consumers were considered as absolutely rational, regardless their social and cultural experience, have been aware of by research institutions. A series of studies have depicted a tendency that consumers have become increasingly irrational when making buying decision. Donovan and Epstein (1997) suggested that a decision was made by consumers under two distinguishing processing mode -rational and experimental. The rational mode involves logical analysis, prediction and measure of evidence to maximize their gratification, thereby making an unbiased judgment based on an array of thoughtful reasons. By contrast, under experimental mode, which has been recognized as hedonism orientated, people tend to seek authentic and innate pleasure (Hilgard 1962, cited in Holbrook & Hirschman, 1982).Therefore, consumers attach importance on their inherent feelings, leading them to act in an irrational manner. Furthermore, emotions are major behavioural driver that could result in irrational buying and several particular emotions play a significant role in it (Damasio, 2000 cited in Williamson, 2002:197).
Specifically, a hierarchy of three categories of emotions which are first order emotions (instinctive), liminal emotions (sub-conscious) and third order emotions (conscious) respectively, could be drawn (Williamson,2002).These three types of emotions trigger a comprehensive effect upon consumers and subsequently facilitate a decision making. Moreover, failure of self-control could also be a considerable factor to impulsive purchasing and other irrationality (Baumeister, 2002).The author described there are three elements involved in self-control – standards, monitoring, and the capacity to change. The lack of each component could result in a fact that consumers are likely to indulge themselves in impulsive buying. Statistically, a survey has offered an evidence that consumers are not utterly rational. In this survey, a substantial number of individuals (with average value of 38 per cent) admitted they have become ‘pas gravata’ of buying impulsiveness by responding a statement ‘I am an impulsive buyer.’ (DDB Needham Annual Lifestyle Survey 1974-1993, cited in Rook & Fisher:1995). The table derived by Rook & Fisher (1995) based on confirmatory factors analysis below reflects what consumers think when make a buying decision. It is effortless to observe that almost all items described by consumers illustrate an implication of irrationality. BUYING IMPULSIVENESS SCALE
Item Factor loading Mean SD I often buy things spontaneously. .81 3.08 1.18 “Just do it” describes the way I but things. .75 2.65 1.17 I often buy things without thinking. .73 2.33 1.19 “I see it, I but it” describes me. .71 2.36 1.15 “Buy now, think it later”describes me. .65 2.25 1.20 Sometimes I feel like buying things on the spur-of-the-moment. .64 3.40 1.04 I buy things according to how I feel at that moment. .63 3.17 1.19 I carefully plan most of my purchases. .62 2.81 1.16 Sometimes I am a bit reckless about what I buy. .60 2.99 1.08 Source:Rook & Fisher(1995)
Viewed from statements above, a conclusion could be drawn that at present-day society, consumers are not precisely rational under effect of multiple instinctive factors and external social context. Apart from that, with the maturity of market and a variety of socio-psychological incentives, a tendency has emerged that impulsive buying are not an infrequent phenomena any longer. However, despite the previous conclusions deduced by scholars, other potential aspects (especially irrational consumptions) still should be put into effort to investigate in order to obtain a better interpretation of consumers’ rationality.
Baumeister R.F. (2002) “Yielding to Temptation: Self-Control Failure, Impulsive Purchasing, and Consumer Behavior”, Journal of Consumer Research, Mar2002, Vol. 28 Issue 4, 670-676
Donovan S, Epstein S, (1993) “The difficulty of linda conjunction problem can be attributed to its simultaneous concrete and unnatural representation, and not to conversational implicature, Journal of Experimental Social Psychology, 33, 1-20
Hischman Elizabeth C., Holbrook Morris B. (1982), “The experiential aspects of consumption:consumer fantasies,feelings and fun”, Journal of Consumer Research,9,132-40
Howard J.A., Seth J.N, (1969), A Theory of Buyer Behaviour, [Online] Available from http://www.jagsheth.net/docs/A%20Theory%20of%20Buyer%20Behavior2.pdf [accessed 18th November 2012]
Mele A.R., Rawling P., (2004), The Oxford Handbook of Rationality, Oxford University Press,USA
von Neumann, Morgenstern, (1953) ,Theory of Games and EconomicBehaviour, 3rd edition, Princeton University Press
Rook D.W., Fisher R.J.,(1995) Normative Influences on Impulsive Buying
Behavior, Vol. 22 Issue 3, 305-313
Williamson M.(2002) “Emotion, reasons and behaviour: A search of the truth” Journal of Consumer Behaviour, Vol. 2 Issue 2, 196