Satisficing decision procedure and optimal consumption-leisure choice

Malakhov, Sergey (2012): Satisficing decision procedure and optimal consumption-leisure choice.

Abstract

The paper argues that when a consumer searches for a lower price, a satisficing decision procedure equalizes marginal costs of search with its marginal benefit. The consumer can maximize the utility of his consumption-leisure choice with regard to the equality of marginal values of search. Therefore, the satisficing decision procedure results in the optimizing consumer behavior. The paper formulates the analytical relationship between savings on purchase, willingness to pay, and the time horizon of the consumption-leisure choice, which can be verified by careful psychological field studies.

• Item Type: MPRA Paper
• Language: English
• Keywords: satisficing, optimizing,consumption, leisure, search, reserve for purchases
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D11 - Consumer Economics: Theory; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search ; Learning ; Information and Knowledge ; Communication ; Belief ; Unawareness

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