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Imperfect Information, Consumer Theory, And Allocative Error In Consumption

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  • Kinsey, Jean D.
  • Roe, Terry L.
  • Sexauer, Benjamin

Abstract

Traditional economic theory of the consumer assumes the existence of perfect information. However, in reality this assumption is rarely fulfilled. In this paper a model is presented which relaxes this assumption and explicitly introduces the possibility of imperfect information into the theory of consumer behavior. Specifically, the focus is on consumer decision making when the utility realized form a bundle of goods and services can be different from the utility anticipated during the budget allocation process.

Suggested Citation

  • Kinsey, Jean D. & Roe, Terry L. & Sexauer, Benjamin, 1980. "Imperfect Information, Consumer Theory, And Allocative Error In Consumption," Staff Papers 13742, University of Minnesota, Department of Applied Economics.
    • Handle: RePEc:ags:umaesp:13742
    DOI: 10.22004/ag.econ.13742
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    References listed on IDEAS

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