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Assess the main criticisms which may be made of the orthodox theory of consumer behavior. Briefly Comment on any modifications to the theory that you would suggest.
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Assess the main criticisms which may be made of the orthodox theory of consumer behavior. Briefly Comment on any modifications to the theory that you would suggest. Word Count: 1631 Consumer behavior is the way that consumers choose to spend their incomes. The orthodox theory of consumer behavior assumes that consumers choose their expenditures to maximize their utility subject to constraints imposed by their preferences and budget. Under this theory, consumption behavior is independent of the consumption of others, consumer's tastes are fully known, and information available to the consumer is free, complete, and reliable. Orthodox economics assume that consumers are rational and sovereign whilst making their decisions. The failure of the orthodox theory of consumer behavior to evaluate the impact of advertising, network externalities, social restrictions imposed by the environment of the consumer, and the limitations of human cognitive capacity that causes individuals to consume in an irrational...
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