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Satisficing Decision Procedure and Optimal Consumption-Leisure Choice

Listed author(s):
  • Sergey Malakhov

The paper argues that a satisficing consumer decision equalizes marginal costs of search for satisficing price with the marginal benefit of search where the marginal costs of search are equal to the marginal loss in labor income and the marginal benefit of search is equal to the marginal savings on purchase. When the liquidity constraint is soft, a consumer maximizes the utility of his consumption-leisure choice with regard to the equality of marginal values of search. Therefore, the satisficing decision becomes optimal. And the equilibrium price of the satisficing optimal choice becomes equal to the willingness to accept.

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File URL: http://www.macrothink.org/journal/index.php/ijssr/article/view/6158/4949
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File URL: http://www.macrothink.org/journal/index.php/ijssr/article/view/6158/4949
Download Restriction: no

Article provided by Macrothink Institute in its journal International Journal of Social Science Research.

Volume (Year): 2 (2014)
Issue (Month): 2 (September)
Pages: 138-151

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Handle: RePEc:mth:ijssr8:v:2:y:2014:i:2:p:138-151
Contact details of provider: Web page: http://www.macrothink.org/journal/index.php/ijssr

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  1. Sergey MALAKHOV, 2014. "Sunk Costs Of Consumer Search: Economic Rationality Of Satisficing Decision," Theoretical and Practical Research in Economic Fields, ASERS Publishing, vol. 0(1), pages 56-62, June.
  2. Simon, Herbert A, 1978. "Rationality as Process and as Product of Thought," American Economic Review, American Economic Association, vol. 68(2), pages 1-16, May.
  3. Werner Güth & Gerlinde Fellner & Ev Martin, 2006. "Satisficing or Optimizing? - An Experimental Study," Papers on Strategic Interaction 2006-11, Max Planck Institute of Economics, Strategic Interaction Group.
  4. Malakhov, Sergey, 2012. "A paradox of little pre-purchase search for durables: the trade-off between prices, product lifecycle, and savings on purchases," MPRA Paper 37376, University Library of Munich, Germany.
  5. Grewal, Dhruv & Marmorstein, Howard, 1994. " Market Price Variation, Perceived Price Variation, and Consumers' Price Search Decisions for Durable Goods," Journal of Consumer Research, Oxford University Press, vol. 21(3), pages 453-460, December.
  6. Mark Aguiar & Erik Hurst, 2007. "Life-Cycle Prices and Production," American Economic Review, American Economic Association, vol. 97(5), pages 1533-1559, December.
  7. H. Leibenstein, 1950. "Bandwagon, Snob, and Veblen Effects in the Theory of Consumers' Demand," The Quarterly Journal of Economics, Oxford University Press, vol. 64(2), pages 183-207.
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