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Is there an alternative view of the consumer that produces useful results?
by jljljl 9y ago
Is there an alternative view of the consumer that produces useful results?
- soVeryTired 9y agoThe one used by advertising: the one that understands something about human nature.
- jljljl 9y agoI don’t think advertising really contradicts the model: advertising grows demand for a good by increasing an individuals perceived or realized utility for the product.
- goialoq 9y agoThat's the key: that perceived/predicted and realized utility are different, and we focus too much on consumers horrible mismeasure of predicted utility.
- soVeryTired 9y agoBut that's part of the problem: utility isn't observable so it's actually very difficult to refute the model. Unless of course you posit a specific functional form for the utility function. Then you'll just have lots of trouble fitting any data you collect.
- jljljl 9y agoI don’t think economists believe there is a specific functional form for the utility function (although it often has certain properies). It’s more just a useful concept for representing customer preferences.