Logo
Munich Personal RePEc Archive

Sunk costs of consumer search: economic rationality of satisficing decision

Malakhov, Sergey (2014): Sunk costs of consumer search: economic rationality of satisficing decision. Forthcoming in: Theoretical and Practical Research in Economic Fields , Vol. 5, No. 1(9) Summer (2014)

Warning
There is a more recent version of this item available.
[thumbnail of MPRA_paper_55089.pdf]
Preview
PDF
MPRA_paper_55089.pdf

Download (740kB) | Preview

Abstract

The paper argues that sunk costs’ sensitivity can lead to the optimal consumption-leisure choice under price dispersion. The increase in quantity to be purchased with the extension of the time horizon of the consumption-leisure choice equalizes marginal costs of search with its marginal benefits. The implicit optimal choice results in the explicit satisficing decision. The transformation of cognitive mechanism of discouragement into satisficing happens only in the “common model” of consumer behavior. The paper argues that the cognitive mechanism of aspiration takes place when consumers try to get marginal savings on purchase greater than the wage rate and, therefore, they follow the “leisure model” of behavior where both the marginal utility of labor income and the marginal utility of consumption become negative.

Available Versions of this Item

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.