Satisficing decision procedure and optimal consumption-leisure choice
The paper argues that when a consumer searches for a lower price, a satisficing decision procedure equalizes marginal costs of search with its marginal benefit. The consumer can maximize the utility of his consumption-leisure choice with regard to the equality of marginal values of search. Therefore, the satisficing decision procedure results in the optimizing consumer behavior.
|Date of creation:||22 May 2012|
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- Mark Aguiar & Erik Hurst, 2005.
"Lifecycle Prices and Production,"
NBER Working Papers
11601, National Bureau of Economic Research, Inc.
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- 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.
- 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.
- 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.
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