Rationalizing the Irrational Consumer: How Behavioral Economics Impacts Marketing

Rationalizing the Irrational Consumer: How Behavioral Economics Impacts Marketing

Behavioral economics is studying the reasons why people make the economic decisions that they do, based on psychology. Before behavioral economics, most economists assumed consumers were rational in their decisions, which is a false assumption. Consumers are impacted by a variety of different sources to make the decisions that they do, which is why their choices can fluctuate and seem irrational. Marketing strategies can be influenced for the better by behavioral economics, by seeing the reasons why consumers may or may not choose a product and marketing the product based on these responses. This essay strives to explore different principles of behavioral economics and use different marketing examples to display how incorporating behavioral economics impacted consumers and producers.