Behavioral Economists Examine Choices That Consumers Make That Are Not

question 153

Essay

Behavioral economists examine choices that consumers make that are not economically rational.Economists generally assume that people are rational; that is, they weigh the benefits and costs of an action and choose an action only if the benefits outweigh the costs.Why do consumers not act rationally when the result is that they make themselves worse off?

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Definitions:

Entrepreneurial Firms

Companies that pursue opportunities, innovation, and value creation regardless of the resources currently in their possession.

Ambidextrous

The ability of an organization to simultaneously explore new opportunities while exploiting existing ones to achieve superior performance.

Exploration

The act of searching or traveling around a new area in order to discover what it contains.

Innovation

The act of introducing new ideas, devices, or methods to improve processes or products.