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An evolutive model of a boundedly rational consumer with changing preferences and reference group consumptionAnnals of Operations Research10.1007/s10479-024-05885-x
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A dynamic model of adaptive consumers with endogenous unimodal preferencesCommunications in Nonlinear Science and Numerical Simulation10.1016/j.cnsns.2022.106984

A Model of Consumer Choice With Bounded Rationality and Reference Quantity

Gian Italo Bischi, Fabio Tramontana

Source Title: International Journal of Applied Behavioral Economics (IJABE)11(1)

ISSN: 2160-9802|EISSN: 2160-9810|EISBN13: 9781683182665|DOI: 10.4018/IJABE.312248

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MLA

Bischi, Gian Italo, and Fabio Tramontana. "A Model of Consumer Choice With Bounded Rationality and Reference Quantity." IJABE vol.11, no.1 2022: pp.1-8. http://doi.org/10.4018/IJABE.312248

APA

Bischi, G. I. & Tramontana, F. (2022). A Model of Consumer Choice With Bounded Rationality and Reference Quantity. International Journal of Applied Behavioral Economics (IJABE), 11(1), 1-8. http://doi.org/10.4018/IJABE.312248

Chicago

Bischi, Gian Italo, and Fabio Tramontana. "A Model of Consumer Choice With Bounded Rationality and Reference Quantity," International Journal of Applied Behavioral Economics (IJABE) 11, no.1: 1-8. http://doi.org/10.4018/IJABE.312248

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Abstract

The authors consider the economic problem of consumers' demand under the assumption of bounded rationality. They move from the hypothesis that the consumer does not know the amount of the good maximizing the utility but he/she is able to understand, at each time period, if the current consumption is above or below than the optimal choice and decide consequently for the next period. Moreover, they also take into consideration the role of a reference amount of consumption that can influence the consumption choice of the consumer. They show that this assumption led to a failure in the convergence process towards the rational choice because the equilibrium of the model, even when locally stable, is located on an intermediate value between the rational choice and the reference quantity.