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|
|Date of revision:|
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- 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 453-60, December.
- Mark Aguiar & Erik Hurst, 2005.
"Lifecycle Prices and Production,"
NBER Working Papers
11601, National Bureau of Economic Research, Inc.
- 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.
- 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.
- 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.
- 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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