Consumer Behavior, Rationality, and Nudge Theory

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What does traditional economic theory say about how consumers behave?

Consumers are rational and aim to maximize utility given their budget constraints. They make informed decisions by weighing costs and benefits.

How do factors like brand loyalty, peer influence, or celebrity endorsements affect decisions?

These factors lead consumers to make emotional choices, ignoring better alternatives. People may follow trends instead of comparing options logically.

Provide examples where consumers act irrationally.

Overpaying for brand-name products when cheaper alternatives exist, Panic-buying during crises

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