By Ran Spiegler
Traditional financial thought assumes that buyers are absolutely rational, that they've well-defined personal tastes and simply comprehend the marketplace atmosphere. but, actually, shoppers can have inconsistent, context-dependent personal tastes or just no longer sufficient brain-power to guage and examine advanced items. hence the normal version of purchaser behavior-which depends upon a fantastic marketplace during which shoppers are boundlessly rational-is referred to as into query. whereas behavioral economists have for a while proven and characterised those inconsistencies, the logical subsequent step is to ascertain the results they've got in markets.
Grounded in key observations in buyer psychology, Bounded Rationality and business Organization develops non-standard versions of "boundedly rational" shopper habit and embeds them into wide-spread types of markets. It then carefully analyses every one version within the culture of microeconomic conception, resulting in a richer, extra life like photo of client habit. Ran Spiegler analyses phenomena akin to exploitative rate plans within the credits industry, complexity of economic items and different obfuscation practices, buyer antagonism to unforeseen fee raises, and the position of default strategies in purchaser choice making. Spiegler unifies the suitable literature into 3 major strands: restricted skill to expect and keep watch over destiny offerings, constrained skill to appreciate advanced marketplace environments, and sensitivity to reference issues.
Although the problem of enriching the psychology of determination makers in monetary versions has been on the frontier of theoretical study within the final decade, there was no graduate-level, theory-oriented textbook to hide advancements within the final 10-15 years. hence, Bounded Rationality and business association bargains a welcome and the most important new figuring out of industry behavior-it demanding situations traditional knowledge in ways in which are fascinating and economically major, and which finally impression the healthiness of all industry participants.
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Extra info for Bounded Rationality and Industrial Organization
Bounded Rationality and Industrial Organization 1 Introduction Consider the following market situations you may have encountered as a consumer: • You receive an invitation to accept a new credit card. You are reluctant to accept it because you are concerned that, armed with this new credit card, you will be tempted to spend more than you wish. • You consider acquiring a new service at what seems like an attractive price. You suspect, however, that you may be unaware of certain future contingencies that will make it considerably more expensive than you can estimate at present.
In terms of necessary background, the book presupposes that the reader knows basic microeconomic theory, preferably in the form of a core graduate course. It does not require any additional mathematical knowledge. Part I is perhaps the one most suited for advanced undergraduates. STYLE OF THE BOOK The pedagogical orientation of this book dictates a style of presentation that seeks the simplest framework that could express the ideas I wish to convey. Thus, instead of presenting a catalogue of the literature, in each chapter I study thoroughly a single model (or a family of closely related models) and use it to synthesize and adapt ideas from a number of papers, which themselves often follow diverse modeling approaches.
Bounded rationality and industrial organization / Ran Spiegler. p. cm. Includes bibliographical references and index. ISBN 978-0-19-539871-7 (cloth : alk. paper) 1. Consumer behavior. 2. Decision making. 3. Consumption (Economics)–Psychological aspects. 4. Industrial organization (Economic theory) I. Title. 2 Do Self-Control Costs Hamper Competition? 2 Are More Sophisticated Consumers Always Better Off? 3 Does Competition Curb Exploitation? 4 Can the Market Educate Consumers? 4 How Effective Are Competition and Consumer Protection Policies?
Bounded Rationality and Industrial Organization by Ran Spiegler