Adaptive Learning Models of Consumer Behaviour

Ed Hopkins

Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh

Abstract: This paper applies recent advances in the theory of learning to the analysis of consumer behaviour. The working assumption is that while sellers are rational in the traditional sense, consumers are boundedly rational. The differences in outcomes for search goods and experience goods are investigated. In the latter case, if consumers fail to take into account that information is only partial, they can become locked into the habit of purchasing inferior goods. Surprisingly, however, prices are lower than when information is complete. Firms have an incentive to offer lower prices to prevent consumers becoming locked into their rival's product.

Pages: 14
Date: 2002-02
New Economics Papers: this item is included in nep-dev
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http://www.econ.ed.ac.uk/papers/id80_esedps.pdf

Related works:
Working Paper: Adaptive Learning Models of Consumer Behaviour (2010)
Journal Article: Adaptive learning models of consumer behavior (2007)
Working Paper: Adaptive Learning Models of Consumer Behaviour (2006)
Working Paper: Adaptive Learning Models of Consumer Behaviour (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:80

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